Charlie Munger on BYD, Tesla, Alibaba and Bitcoin — Daily Journal 2023

ELI5/TLDR

Charlie Munger, 99 and in a wheelchair, takes two and a half hours of unscreened questions at the Daily Journal annual meeting. He explains why he prefers China’s BYD to Tesla, why Bitcoin is “massively stupid,” why he botched the Alibaba investment, and why the single best lifetime trait is just consistently not being crazy. The throughline: almost every business eventually dies, the trick is to own the rare great ones cheaply and hold, and most of investing is avoiding obvious idiocy rather than being a genius. Peanut brittle, he insists, is the secret to longevity.

The Full Story

The business everything is built on: a dying newspaper

The Daily Journal is two companies stapled together. One is a legal newspaper that once had a Monopoly on publishing California’s appellate court decisions, minted about $30 million in the foreclosure boom, then got gutted by the internet. The other is Journal Technologies, which sells software to automate the world’s courts. Munger is blunt about which one matters.

“The safe rule is they’re all dying. It’s just in different states of near death.”

That is the newspaper business. The future is the software business, and the software business is a slog — bidding for contracts from court bureaucracies via requests-for-proposals. The good news is the market is enormous and not going away; the courts of the world are “still in the Stone Age.” The bad news is it is “a long slow grind.” The reason the Daily Journal can win is that the big software firms who could be competitors hate this kind of work — they want easy, repeated, standard-issue software, not muddy little consulting contracts. Munger is happy to slug it out in the mud.

BYD vs Tesla: capitalism is not easy

Asked why he prefers BYD to Tesla, Munger barely pauses.

“Tesla last year reduced its prices in China twice. BYD increased its prices. We’re so much ahead of Tesla in China it’s almost ridiculous.”

BYD’s story is the one he clearly loves telling. A Chinese engineer named Wang Chuanfu — the eighth son of a peasant, put through engineering school by an older brother who sacrificed for him — was running a small company knocking off Japanese cell phones, then decided to buy a bankrupt car company and enter the auto business from a standing start. Munger and his partner Li Lu both begged him not to do it. Last year that company made over $2 billion after tax in autos.

“Which shows that there’s some accident in life.”

The mental model underneath is that capitalism is brutally competitive even for geniuses. Munger calls Elon Musk genuinely talented — “what he’s done with Tesla, oh, it’s unbelievable” — but then notes there’s always “some little BYD that comes out and does better.”

The Alibaba confession

One of the more useful moments is Munger admitting a clear mistake rather than spinning it.

“I regard Alibaba as one of the worst mistakes I ever made. I got charmed with the idea of their position on the Chinese internet. I didn’t stop to realize it’s still a goddamn retailer.”

Online retailing, he reminds himself, is still retailing — competitive, no Cakewalk. He frames this as the discipline of “rubbing my own nose in my own mistakes… because I think it’s good for myself.” On Jack Ma, who criticized the Chinese government and then vanished from public view: “It’s like poking a bear in the nose with a sharp stick. It’s not smart.”

Crypto: the one topic with no other side

Munger had earlier said you shouldn’t hold an opinion unless you can argue the other side better than its supporters. A questioner calls him on it for crypto. He refuses to back down.

“I don’t think there are good arguments against my position. I think the people that oppose my position are idiots.”

His reasoning is that national currencies were one of the greatest things ever to happen to the human race — they turned apes into a civilization by enabling convenient exchange. Inventing a fake replacement is “like saying I’m going to replace the National Air.” It is, in his words, “massively stupid,” a gambling casino with enormous house odds where the operators also cheat. He praises China for simply banning it: “He’s right and we’re wrong.” On legalized sports betting he is gentler — a modest bet with a friend doesn’t bother him; he reckons he’s bet against the odds maybe a few thousand dollars in his entire life.

China, taxes, and where the cheap great companies are

Munger is more sanguine on China than most American investors, for an unsentimental reason: you can buy stronger companies at cheaper valuations there. The extra geopolitical risk, he argues, is worth the extra value. He also thinks the Ukraine war made a Chinese move on Taiwan less likely, not more — Russia’s “cakewalk” turned ugly, so Taiwan is “off the table and sat on for a long long time.”

On why the Daily Journal won’t sell its bank stocks despite Berkshire dumping theirs: he bought them on “the bottom tick” of the foreclosure crisis, so selling means handing California and the feds 40-odd percent in tax, while the dividends are nearly tax-free. California, he says, “is trying to force its wealthy people and its wealthy corporations out of the state, and I must say it’s working fine.”

Everything dies

The deepest thread of the meeting is biological. Munger says the thing that surprised him most over a long life is how closely the business world tracks the natural one.

“All the animals die and eventually all the species die. That’s the system. When I was young I didn’t realize that same system applied… they’re all on their way to dying, so other things can replace them and live.”

He runs the roll call: Kodak, which knew more about film chemistry than anyone and went to zero. IBM, the most admired company in America for decades, now an also-ran. Xerox, a “pale shrink.” The great downtown department stores, which looked eternal and are “basically all dying or dead.” Quoting Bill Gates: when a truly disruptive technology arrives, the incumbents almost always screw up their reaction, because it’s hard to abandon the ways that made you successful. This, he says, is what made him a better investor — once you accept that no eminence lasts, you hold the rare great business differently.

Ben Graham didn’t get rich the way he taught

A sharp piece of investing history: Munger points out that Benjamin Graham, the father of cigar-butt value investing, actually made more than half the money in his whole life from a single great business — GEICO — not from the cheap-and-mediocre approach he preached. Graham’s bargains existed because the post-Depression world was full of low-hanging fruit that later disappeared. Munger’s own evolution toward paying up for great businesses he describes with characteristic flatness: “Because it’s so obvious, and I’m good at doing things that are obvious.”

Self-insure, defer, and the math of an old man buying cheap trousers

Munger offers a genuinely counterintuitive take for a Berkshire insurance man: most people should self-insure far more than they do. He’s never carried collision insurance on a car, and stopped carrying fire insurance on his houses once he was rich — if one burns down, he’ll just write a check and rebuild. You should only insure against things you genuinely cannot afford to lose, because the rest is paying for other people’s fraud and the hassle of claims. (Medical care is the exception — there the insurer pays a fraction of the sticker price.)

On deferred gratification, he ties it back to the marshmallow experiment: the kids who can wait tend to succeed, and “it’s kind of sad that so much is inborn.” He learned the trick early and never stopped. He closes the loop with self-deprecation, recalling pulling on his trousers that morning: “I really economized in buying those trousers… why am I economizing in my trouser buying? It is just so ingrained I can’t stop.” Whatever you are, age and wealth make you more so.

On living to 99

The longevity questions get the driest answers. No exercise, ever, on purpose — “for the first 99 years I’ve gotten by without doing any exercise at all.” When old age threatened falls, he skipped the cane (his cane-using friends still fell) and used a walker for six and a half years without falling once. Now in a wheelchair, he reaches for Roosevelt, who “ran the whole damn country for 12 years in a wheelchair.” And the peanut brittle, his own Daily Journal product, he advertises shamelessly as the key to longevity.

Key Takeaways

Almost every business is dying. Kodak, IBM, Xerox, the department stores — eminence does not last. Invest knowing the species turns over.
A great business beats a great manager. Berkshire never got rich putting good managers into lousy businesses. Coca-Cola in its heyday could be run by “someone mentally defective” and still thrive — that’s the test of a wonderful business.
Good businesses don’t stay cheap. The hard part is recognizing greatness before it’s recognizable, because by the time it’s obvious it trades at 25–35x earnings.
Denial is the most destructive bias. People believe what they wish were true (Demosthenes, 2,000+ years ago). The whole money-management industry runs on it — charging fees for advice worse than an index fund.
For the average investor, index funds are the default. “Sitting on your ass” in an index is the great default position; fewer than 5% of managers consistently beat the averages after costs, and “two and twenty” worth the fee is rarer still.
Position sizing on conviction. If you’re genuinely right and something is a cinch, the logical answer can be 100% — “maybe 150%.” Nobody teaches this, but Munger and Buffett both used leverage on their way up.
The three things that ruin people: ladies, liquor, and leverage — but the old man knows the exceptions.
Self-insure whatever you can afford to lose. Insurance is for catastrophes you can’t cover yourself; otherwise you’re funding other people’s fraud and a claims hassle.
Rationality is the master trait. “If you’re just not crazy you have a big advantage over 95% of people.” Add patience, deferred gratification, and keeping your commitments, and success is “practically a cinch.”
Run it as if you were on the other side. Greg Abel runs Berkshire’s utilities as though he were the regulator — the golden rule, applied to business, simply works.
Inflation is structurally inevitable in a democracy, because politicians always favor printing and spending — a reason to own equities over bonds.
Low expectations, one inch at a time. The secret to a happy life is advancing steadily and meeting people’s reasonable expectations, not chasing huge dreams.

Claude’s Take

This is Munger at the very end — 99, wheelchair-bound, fielding two and a half hours of blind questions, and still sharper and funnier than most people half his age. The format does the work: because nothing is screened, you get the unguarded version, including a rare clean admission (“Alibaba is one of the worst mistakes I ever made”) and a flat refusal to play diplomat on crypto.

The BS filter mostly comes up clean, with two honest caveats. First, the crypto answer is performance as much as argument — “anyone who disagrees is an idiot” is the one place he violates his own famous rule about being able to state the other side, and he half-admits it. Whatever you make of Bitcoin in 2026, that’s rhetoric standing in for reasoning. Second, the 2023 market calls (BYD, Taiwan being “off the table,” semiconductors) are exactly the ephemeral stuff worth ignoring; the durable signal is the mental models, not the tickers.

What earns the high score is density of reusable wisdom per minute. “Everything dies,” “good businesses don’t stay cheap,” “denial is the worst bias,” “self-insure what you can afford to lose,” the Ben Graham–GEICO reveal — any one of these is worth the price of admission, and they arrive a dozen at a time, in plain words, with a dead-eyed wit that makes them stick. The self-insurance take alone is worth sitting with: it’s the rare piece of advice that cuts against the interests of the man giving it, which is exactly why it’s credible. A 9 — one of the cleanest distillations of the Munger operating system on record, partly because he had nothing left to prove.