The Weekly is no Tom Tombrello ...
and other things learned during two awkward minutes with Charles Munger, Pasadena's richest man
By Joe Piasecki 03/06/2008
Charles Munger is a busy man, warns his gentle-sounding personal assistant, Doerthe, over the phone from his downtown office. She encourages me to hear Munger in his element, speaking at the Wesco Financial Corp. shareholders meeting - open to the public, but get a ticket, she says - in April at the Pasadena Convention Center.
Wesco is a Pasadena-based subsidiary of Warren Buffett's Berkshire Hathaway that began as a savings and loan association but now controls the Precision Steel Corp., CORT Furniture Leasing and other companies, and maintains a portfolio of more than $1 billion in stock - concentrated in Coca-Cola, American Express, Wells Fargo and Procter & Gamble.
But I want to talk about his appearance on Tuesday at Caltech, I tell Doerthe, to get a story in the paper before the event - a Q&A about what people should expect to hear about, as well as what makes a billionaire tick. She says she'll call back to schedule an interview if Munger agrees to one.
I want to know serious things, like his views on the mortgage crisis, and other things, like how he enjoys the money he makes: cars, mansions, yachts, women? You don't know until you ask.
The 84-year old Omaha native sure seems like an interesting guy, and not just because he's rolling in wealth. According to Caltech, he studied there and did a stint with the Air Force as a meteorologist before entering Harvard Law School (without having completed an undergraduate degree) and graduating magna cum laude in 1948. In 1962 he founded the Munger, Tolles & Olson law firm in Los Angeles, but gave up practicing law three years later to concentrate on managing investments.
As an investor, Munger is often identified as the lifelong friend and business partner of Buffett, who in April was ranked the third-richest man in the world by Forbes magazine, which estimated Buffett's net worth in the neighborhood of $57 billion. But Munger is also chairman of the Daily Journal Corporation and LA's Good Samaritan Hospital, and has a lengthy philanthropic record.
He's also very good at being a developer. In 2004, Munger got the City Council to go against their own zoning requirements in approving the towering Montana I and Montana II projects in midtown Pasadena. For the most part during that meeting, Munger just sat there wearing an expensive suit and incredibly old-fashioned coke-bottle glasses with thick, black rims. He looked sort of like my grandpa did, if grandpa had been rich, powerful and hadn't drank so much.
Mr. Munger, as he was called that evening, let his lawyers and architects do almost all of the talking during the hours-long discussion; however, he got up briefly to state that he liked the buildings, would like to see them completed while he's still alive, had already changed them as much as he would to meet city regulations, and that if the council didn't like it he could take his buildings elsewhere.
The projects were approved.
Mr. Munger has a book, too: "Poor Charlie's Almanac: The Wit and Wisdom of Charles T. Munger." It's basically a collection of his public talks, shareholder meeting banter and other public comments throughout the years, all based on the premise, apparently, that he's today's embodiment of Founding Father Ben Franklin, the creator of "Poor Richard's Almanac" and Munger's personal hero. Two things should have been immediately clear: Munger is not lacking in self-esteem, and he doesn't just share his wit and wisdom for free (the book sells for $49, or $200 for a signed first edition).
So, to my surprise, Doerthe calls the next morning, and not just to set up an appointment. She has Munger on the line. He says he makes it a point to return calls from newspapers, owning a couple himself.
Wanting to get further than I did years ago at Pasadena City Hall, when he declined the chance to comment about his Montana buildings, I start off the interview with a gentle question to ease into the personal ones. It comes straight from the Caltech press release: "You've talked about there being three baskets for investing: yes, no and too tough to understand. I'm guessing technology often finds itself in the too tough to understand basket?"
"Oh, that's certainly right," he says.
To get that elusive fifth word out of him, I ask how he would advise tech entrepreneurs - Pasadena has a ton of them - about getting past that hurdle.
"Well, I think you underrate Caltech if you think they're all just biology and high-tech people. There's a lot of desire around Caltech for generalized competency," he says.
I agree, but before I get in another question he says, "Well, they haven't restricted me. They're willing to let me come in and talk about whatever I want to talk about and then answer questions, and they're having the head of the Physics Department, who's one of the very smartest people in all Caltech, be my questioner. I've never met him, but I chose him because I know he is one of the smartest people at Caltech and I thought it would be fun to be ‘interogitated,' er, questioned, by somebody as talented as Tom Tombrello. So the answer is I don't know what's going to come out of it. Maybe some questions and answers; maybe a little chitchat from me. Both Caltech and Charlie Munger are taking a chance."
So I get serious and ask him for his thoughts on the mortgage crisis. (Buffet declared Monday that the US economy is stuck in a recession.)
"We'll talk some about that," he says. "That's a good subject. It would be crazy for me to do this without any discussion of the horrible mess we've gotten into in mortgage securities. We'll touch on that."
"So what should..." I start to ask.
"I don't want to go into it now, here," he says.
"I was just thinking..."
"I'm not going to say anymore about it," he says.
That old City Council meeting comes quickly to mind.
For a last-minute save, I try to bring up his hero, Ben Franklin.
"I also greatly admire Caltech. Since I greatly admire Caltech, you'll find me not a big critic. It's a terrific place. This is about all I can give you," says Munger.
"That's all you'll talk to me about today?" I ask.
"Yeah," he says. "I'm not trying to attract the world's biggest audience, and I'm not trying to repeat everything I might conceivably say to one newspaper reporter. No, I think this is enough. But best wishes to you."
And that was it.
To get a little more information about the coming lecture, I later spoke with Munger-approved "interogitator" Tombrello, chair of Caltech's Division of Physics, Math and Astronomy. Tombrello, who has researched previous Munger talks and lectures, seems to admire his thirst for knowledge in many different fields and both his and Buffett's way of looking at the world.
"They look for answers, and don't assume they automatically know them. They appear always open to new ideas," said Tombrello. "[Munger] is clearly interested in the history of science and what you can learn from it. He is very interested in the US educational system and where it goes wrong. Just count the things Charlie Munger has had something to say about ... I have a feeing, whichever way I start [the conversation], it will have a life of its own."
Tombrello said he will try to slip in a question about financial derivatives (futures, options, etc.). Tombrello's brother-in-law, Nobel Prize-winning economist Robert Merton of Harvard Business School, is the developer of the rational option pricing theory.
"I expect to be entertained enormously, but I'm there so Charlie entertains everybody else," said Tombrello. If anybody remembers I was there when it's done, I've failed. I'm supposed to set the ball up for Charlie to spike. That's my job, get Charlie to talk."
To quote Munger, best wishes to you.
Charlie Munger speaks at 8 p.m. Tuesday at Caltech's Beckman Auditorium, 332 S. Michigan Ave., Pasadena. The event is free and open to the public as space permits. For more information, call (626) 395-4652.