Collection: Charlie Munger - #11 'Wretched Excess Private Equity Sector'



[Transcript]

AUDIENCE MEMBER 00:08

Many of my classmates are considering careers in private equity and venture capital. You yourself mentioned that some of your family members are in private equity.


You also mentioned that you see a lot excess in that sphere. What advise do you give to your family starting careers in private equity and what advise would you give to young people as a whole starting careers in those sectors? Thank you.


CHARLIE MUNGER 00:36

My family is not very interested in what I think about their career choices. I respect their disinterest.


But I do think we have way too much wretched excess. Any time you have any new names to sort of mislead people, like adjusted EBITDA, think of the basic intellectual dishonesty that comes with it. When you start telling about adjusted EBITDA. You’re almost announcing you’re a flake.


And yet our respectable people talk that way and charge fees for talking that way. It’s ridiculous. So I don’t like this wretched excess.


I don’t like all these transactions where one private equity group sells to another and the guys who really own it are just sort of raising the fees higher and higher over owning the same in the intellectual mix. It’s a lot that’s financed by its nature. The temptations are too great. It goes to wretched excess.


Of course, I don’t like it. I don’t think it’s good for the country. I would argue that the wretched excess that led to the Great Depression, which led to the rise of Hitler – I think we pay a big price eventually for wretched excess, stupidity, greed, and so forth.


I’m all for staying in control. In other words, I’m all for behaving a lot more like Confucius.


(Source: https://youtu.be/HS8neXkNnhw)

 

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