Tuesday, September 28, 2010

An Open Letter To Charlie Munger

Dear Mr. Munger:

I read, with interest, your recent interview as it was recapped in Yahoo Finance.  I must say that I found it less provocative than that of your partner, Warren Buffett.  To refresh yourself, click here: http://markostake.blogspot.com/2010/09/open-letter-to-warren-buffett.html.   Nonetheless, I found this statement by you particularly troubling.

"I don't have the slightest interest in gold.  I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.  If you're capable of understanding the world, you have a moral obligation to become rational.  And I don't see how you become rational hoarding gold.  Even if it works, you're a jerk."

I guess that makes me and my fellow gold-philes jerks.  Mr. Munger, doesn't that also make your partner a jerk, too?  According to Silver Monthly:  "Beginning in 1997, the Oracle of Omaha (Warren Buffett) saw the value of silver glinting in the dust of depressed prices.  From 1997 until 2006, his investment fund-Berkshire Hathaway-accumulated over 37% of the world’s known silver supply-even more than the COMEX! During that time, he was not only an oracle but also the all-time silver bull".  Say WHAT?  I guess hoarding Gold is bad, while hoarding Silver is good?  Please 'splain it to me.

Charlie, my lips are sealed.  The last thing I want to see are two octogenerians in a cage match.  Leave that to Vince McMahon, would ya?

Mr. Munger, you are a very educated man.  Let's take out our notebooks as we review the history of Gold for a second.  Gold is the only form of currency that has EVER endured.  Surely, you would invest in currencies, wouldn't you?  Oh, but then there's the old argument that you can't eat Gold.  True enough. I'll bet those stock and bond certificates are particularly tasty.  So is real estate.  Hell, so is a Hundred Dollar bill with butter and garlic.  And a barrel of crude...YUM!

You can eat bread and meat, but the problem is they don't keep very long.  They go rotten, dude.  Gold has a pretty decent shelf life of a few billion years, give or take an eon.  Oh, and have you heard?  There is a whole planet of jerks who will ACCEPT Gold as a form of paying for things that we DO eat.

I'm sure you were delighted by the ridiculous decisions to de-emphasize Gold.  When the Gold window was closed at Bretton Woods in 1971 and we went totally to paper, boy did our financial system take off!  Remember how fun and prosperous the 1970's were?

Now, I'm also confused by this quote from the Charlie Munger book of quotes:  "Recognize reality even when you don't like it - especially when you don't like it."

Would I be correct that this particular statement was advice given to others, rather than a credo you live by?

Do I detect a wee bit of hypocrisy, here?

Charlie, the letter contained in the Berkshire Hathaway (BRKA, BRKB) annual report is legendary and read by millions of sycophantic investors everywhere.  May I suggest that you at least include "Marko's Take"?  After all, shouldn't you recognize reality, even when you don't like it?

Mr. Munger, TAKE ME ON!

Marko's Take

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Take me on!