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Collection: Charlie Munger - #141 'Amazon, Costco, General Electric'



Charlie, Matt McAllister has a question on Costco. He asked why, almost two years ago, did you believe that the only U.S. stock worth buying – that was the only stock (Costco) worth buying at that time. And why did you feel that Amazon had more to fear from Costco than Costco had to fear from Amazon?

And if you believe Jeff Bezos is one of the best businessmen you have ever known, would you consider investing early in any of the new projects he will inevitably focus his attention on now that he will not have to be as concerned about the day to day responsibilities of Amazon?


I’m a great admirer of Jeff Bezos whom I consider one of the smartest businessmen who ever lived. But I won’t be following him. We have our crotchets and I just don’t know enough about it to want to go into that activity.

And every investor when you get into these hard questions, there’s a lot of very intelligent honorable people who reach opposite conclusions.

And Costco I do think has one thing that Amazon does not. People really trust Costco will be delivering enormous value. And that is why Costco presents some danger to Amazon because they’ve got a better reputation for providing value than practically anybody, including Amazon.


Philip Erica from Germany. He asked, how do you control your investments in a world where reasonable companies with a good image like General Electric sink rapidly into the bottomland of the stock market. How do you recognize a potential downfall in a company you hold/invest in? Or, is it impossible to realize a deterioration quickly enough to exit without a loss?


Well, I never owned a share of General Electric because I didn’t like the culture. And, I was not surprised when it blew up.

I do think the present CEO is an extraordinarily able man and the directors made a very wise choice when they put him in charge. And I think the directors of GE deserve a lot of credit for making Larry Culp the CEO. If anybody can fix it, he can.



[YAPSS Takeaway]

2 reasons not to buy a stock;

1. Don't Buy, when you don't know enough about the company.

2. Don't Buy, if you dislike the culture of the company.

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