Charlie Munger on BYD: The Investment He Tried to Stop! | Final Interview with CNBC 2023

Charlie Munger on BYD: The Investment He Tried to Stop! | Final Interview with CNBC 2023


[Transcript]

BECKY QUICK: What besides the Washington Post though, which was one you mentioned in a 1995 speech as being one of the best investments ever, what other investments have been some of your favorites? I’m thinking of maybe a BYD or a Costco.

CHARLIE MUNGER: Well, they’ve all been favorites — but, again, BYD is a good lesson. I didn’t find BYD. Li Lu found BYD. And he encouraged me — I encouraged him to create this partnership and he found — he occasionally would do a BYD — a venture capital-type investment in his early life — something I would never do or seldom do, anyway — so he did one or two similar transactions that were a lot like Sequoia.

He went into BYD when it was so small that it would have been appropriate in an early stage Sequoia investment. And it was a public company, but it was just so small that it was barely a public company — and he went into it. And this little nothing company headed by this — we could see two things about Wang Chuanfu. One, he worked 70 hours a week, and the other was that he’s a genius.

And, of course, the idea of having somebody who is a genius and had all this mechanical aptitude that Warren and I lacked was interesting at least to me. So I was willing to take what was piddling money by Munger standards and have some of it invested by Li Lu in it.

But then he came to me and said Wang Chuanfu wants to buy a bankrupt auto plant in China and, starting there, go into the auto business. I said, “God, this is horrible news. It’s a really dumb idea." Who in the hell has ever succeeded in creating a new auto company in competition with older companies that are as admirable as Toyota and so forth, and Mercedes — and people who really know a lot about autos and have a big lead? I said, “Let’s talk him out of it.”

So we tried to talk Wang Chuanfu out of going into it. He paid no attention to us. He charged into it. Well, this year, he’ll probably sell 2 million automobiles at huge profits for an automobile. Just mouthwatering, delicious profits per auto. It’s a huge stunt. Li Lu and I share the distinction of urging him not to do it! (Laughs)

BECKY QUICK: Thank God he didn’t take you up on it.

CHARLIE MUNGER: Well, he didn’t. That’s what geniuses do. They don’t listen. It’s just amazing what he’s done. Of course, he’s been lucky — but all the great records are partly work, partly talent, and partly luck. That’s what you’d expect to win. With this many people in the game of investment, of course the big winners are gonna be people who get work and talent and luck. That’s what we’ve had.
 

Source: https://youtu.be/H5Oom5Rjp_Y?si=ZEkkZkAN6WyOWcl9

 

[YAPSS Takeaway]

Big wins usually involve talent, effort and luck.

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