Chatting with Charlie: The Mark Twain of Finance

PRESS-SHY CHARLIE MUNGER, vice chairman of Berkshire Hathaway, generally appears in public only once a year, sipping Cokes at a table with Warren Buffett, fielding shareholder questions at the company’s annual meeting in Omaha, Nebraska. Directors’ College attendees enjoyed a rare private session with Munger to kick off their second day. By turns witty and provocative, Munger, a Harvard-educated lawyer, left no doubt where he stands on issues of corporate governance.

ON NEWSPAPERS
“For years I have read the morning paper and harrumphed.There’s a lot to harrumph about now.”

ON ACCOUNTING STANDARDS
“Proper accounting is like engineering.You need a margin of safety.Thank God we don’t design bridges and airplanes the way we do accounting.”

ON THE ARGUMENTS AGAINST EXPENSING STOCK OPTIONS
“Quoting Demosthenes,‘For what each man wishes,that he also believes to be true.’I would rather make money playing a piano in a whorehouse than arguing that no cost is incurred when employees are paid in stock options instead of cash.I am not kidding.”


ON THE TRANSPARENCY OF MODERN FINANCIAL REPORTING FOR TRADING DERIVATIVES
“No CEO examining books today understands what the hell is going on.”


ON ENRON
“I think Enron is the first shoe to drop. There’s a kind of Gresham’s Law,where bad conduct drives out good conduct.”

ON INDIVIDUAL GREED
“It’s amazing the way people have sold out. It’s insane.”

ON ACCOUNTING FIRMS
“Accounting has steadily degraded over the past 30 years,and accounting firms have sold out time after time.”