Why is Charlie Munger investing in Redlands? | Redlands Forum 2020【C:C.M Ep.174】

Why is Charlie Munger investing in Redlands? | Redlands Forum 2020【C:C.M Ep.174】



JACK DANGERMOND: And so I'll simply start with an interesting question. I think it's an interesting question.

Charlie, you have Investments in a lot of places like Mill Valley and Santa Barbara and you live in Hancock Park and sometimes you say that Pasadena is your second home. And then you have various Investments around Claremont. And now investing here in Redlands.

Why are you investing at Redlands? What do you think about Redlands? What is it that attracts you here?

I mean, I can see a kind of pattern there – Santa Barbara, Mill Valley, Pasadena, Claremont and Redlands. What is it?


CHARLIE MUNGER: Well, I have a natural prejudice for this area because when I was at Caltech in 1943, I used to hang around here. My first wife went to Scripps College, and my sister went to Scripps College. And so I'm very familiar with this area.

And of course I've interfaced with a lot of people who love these universities out here. And so I started with a very – and I always liked the orange trees against the mountains and the snowcap, whatever it is. So I started with a deep prejudice.




CHARLIE MUNGER: And, but my investments here happen by accident.

What happened was I live in a neighborhood which the ascetic Jews sort of came into a few decades ago, a very successful group of people. And one day into my house, a very young 17 year old ascetic Jew came by and gave me the Hebrew Bible in Hebrew. And you know, Munger sounds like it could be a German-Jewish name and it means Peddler in both German and English.

So it wasn't totally crazy for – (Laughs) – ascetic Jew to think that Munger could read the Hebrew Bible in Hebrew, but of course, I couldn't. And I got to talking with him. And one thing led to another, and I sort of befriended, Avi, and watched him grow up. And Avi never went to college. He has a mild attention deficit disorder, but a ferociously high IQ and he was worried about it.

And I said, Avi, I said, don't worry about it, you don't need any college. You're going to succeed, mightily. Well, obvious now 32, he has four children and a hugely successful business And I was right, he didn't need college.


JACK DANGERMOND: And Avi is sitting right over there, stand up Avi. (Applause)


CHARLIE MUNGER: And Avi had a client – his main client in his apartment management business. And he was unhappy.

And I think rightly so – and so I said to him one day because I've gotten the like and trust Avi. I said, why don't you just get rid of that client? You got and buy a bunch of apartments for me. In the first ones we saw were the ones that I bought out here and that's how it happened.


JACK DANGERMOND: And by the way, they're at the end of Alabama, you know, those beautiful apartments. They're really amazing.






CHARLIE MUNGER: Parkview Terrace.


JACK DANGERMOND: It's great. I think half of the occupants of those apartments work at Esri. (Laughter)

So one day I'm sitting there and he calls me and he says, could I come out and talk to you? And of course, I didn't exactly know who Charlie was. Sure. Yeah. Okay. That's what began this friendship actually. (Laughs) It's amazing.


CHARLIE MUNGER: But we've had a fair amount of fun. Avi and his partner Reuben and I, and it's kind of creative to buy old apartments and fix them up.

And of course, we have a philosophy that there is no income unless the place is properly cared for. And the apartment management field is full of people who just milk the properties and do the very minimum. And that's a stupid mistake, if you're a long-term investor.

And Avi, and I share a belief that all these things should be immediately improved. And I think in the first what year or something like that, we spend $600,000 on trees on just four projects.


JACK DANGERMOND: He's got my heart right there. (Laughter)


LARRY BURGESS: Was that a planted question? (Laughter)


JACK DANGERMOND: No, it was not a planted question.


CHARLIE MUNGER: No, it was not. (Laughter)


JACK DANGERMOND: Oh, Larry. (Laughter)


CHARLIE MUNGER: But Jack you probably doing it out of love and I know how much better is going to work for me. So I don't deserve much credit because it's very much in my interest financially to plant all those trees. Now, I would probably plant them anyway, but I can't prove that. (Laughter)

And anyway, that's how we came out here. And of course, I like the mountains, and I like the trees, and I like the people, and I like these good colleges. And I would admit I didn't start out with the idea. I picked Redlands out of the world. It's just where this apartment project that caught my attention was.

And but once I was here, I did not know there was an Esri company. I have made my way in life with a pencil and a pen – (Laughter) – calculating machine and the compound interest table. And I haven't looked at the calculus question since I was 19 years old, so I'm totally a creature of old-fashioned, horse sense and a little arithmetic.

And so, I don't know about software companies like Esri – (Laughs) – and so, if I'd known, I would have paid more for the project. (Laughter)

You know, it's a huge blessing to go into community as a big employer that keeps hiring and so forth and obvious so smart. And I didn't suggest that he started giving – they're all kinds of rules of apartment house operators about guarantees of leases and down payments and what have you and all that.

Not every new employee of Esri qualifies and Avi just go and look at the situation and he waves all those requirements for anybody that wants to work at Esri.


JACK DANGERMOND: Thank you Avi, I really appreciate that.


CHARLIE MUNGER: Well, but there again, he doesn't deserve any credit. That's a smart business direct. (Laughter) So he doesn't know whether he's being nice or being greedy. (Laughter)

Whatever. I like these things where a confluence of two factors is working in the right direction. And but, it – I happen to think I shared Jack's interest in design and architecture which is an absolute accident.

My uncle was a graduate of the Harvard School of Architecture and I am a graduate of the Harvard Law School. And I have done a fair amount of house building for myself and building projects of various kinds in my long life. And so it's kind of a hobby with me to do what Jack does sort of professionally.

And so of course the minute I see this beautiful campus and this very successful company and I'm also a total nut on the subject that the best way to get what you want in life is to deserve what you want. And of course if you apply that to business that means you really take care of the customers.

And it's perfectly obvious that what's happened to Esri would not have happened if it weren't terribly good at taking care of the customers. And of course, that's – again, I don't deserve any credit for doing it and I know I make more money taking care of the customers. So I would if I were more short-term operated and operating.

And so I don't want to masquerade as a better fellow than I am because since it works so well, I don't think it's – it'd be nice if I be like Mother Teresa and do something I didn't like doing. (Laughter)

Because I'm a noble soul, but I can – my life is organized so that just time after time, what works for my pocketbook what works for every moral teaching of I've been taught. And anybody who was in such a position, it's very lucky. And you people who work for a company, like, Esri are hugely lucky too. Because there are a lot of employers that are defective. (Laughter)

(Source: https://youtu.be/Rh1WCzfCP24)


[YAPSS Takeaway]

1. Always invest within your circle of competence.

2. The best way to get what you want in life is to deserve what you want.

3. Give credit where credit's due, don't take credit that you don't deserve.

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