Charlie Munger on Investing Lessons from Kodak's Bankruptcy | Final Interview with CNBC 2023 【C:C.M 324】

Charlie Munger on Investing Lessons from Kodak's Bankruptcy | Final Interview with CNBC 2023 【C:C.M 324】


CHARLIE MUNGER: The last 2 centuries created almost all the growth. Before that, everybody, not everybody, but like something like 80% of all people were farmers.

BECKY QUICK: And what's happened over the last 100 years has been pretty remarkable too.

CHARLIE MUNGER: Yes, the 100 years I've lived has been even more remarkable. That's pretty much all of modern biology, modern medicine, modern industrial civilization, modern chemistry. Just imagine what the world would be like. We had photographs for 100 years before we had modern chemistry. But it was done by a guy who was a natural, very good chemist. But nonetheless, he created a mighty company, a great growth stock and so forth. And it finally wiped out the shareholders in bankruptcy.

BECKY QUICK: Eastman Kodak?

CHARLIE MUNGER: Yes, Eastman Kodak. It was just an amazing story that that could happen. And of course, it helped me because if somebody as brilliant as Old Eastman and somebody who hired as many brilliant people as Old Eastman did could take the company into bankruptcy, I figured that lesser people could easily take big companies into bankruptcy eventually, in spite of their best efforts. It wasn't like Kodak didn't try. They hired the most brilliant graduate students. They gave them all kinds of time to think. They learned everything any important man on Earth learned as quickly as they could and so on and so on. And even so, they wiped out the common shareholders.

BECKY QUICK: And that taught you what as an investor, as a businessman?

CHARLIE MUNGER: Sure. And I was going to be a common shareholder someday in some company. And it helped me to know that it was very easy to wipe out the common shareholders, even in a great company run by a genius.

BECKY QUICK: I mean, that's an argument for being diversified, but —

CHARLIE MUNGER: Yes, it is an argument for being diversified.

BECKY QUICK: — But that's not really what it was when you took over.

CHARLIE MUNGER: And there's some argument for being diversified. But there's also some argument for being non-diversified. And the argument for being non-diversified is better for a few people than the argument for being diversified.

BECKY QUICK: So the lesson I would take out of that is to be diversified. That's not the lesson you took out. What's the lesson you took out?

CHARLIE MUNGER: Well, it was going to be very difficult to be excellent enough at anything to make any money. That's the lesson I took out of it.




[YAPSS Takeaway]

Even the best companies with brilliant leadership and innovative ideas can fail due to market changes and new competition, highlighting how challenging it is to achieve and maintain excellence in any field and consistently make money.

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