Munger's Four Ps

"Our experience...tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing will often dramatically improve the financial results of that lifetime. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past." - Charlie Munger in the 1996 Wesco Shareholder Letter

Munger's Four Ps seem to be:

1. Preparation
2. Prompt Action in Scale
3. Prudence
4. Patience

Actions by the Daily Journal (DJCO), where Munger is chairman, over the past decade seem consistent with what he describes above. Daily Journal generally remained in US Treasuries for most of the decade.

In early 2009 that changed.

Specifically, at the start of 2009 the company still held less than $ 24 million in cash and US Treasuries. Then, when the market was in turmoil and prices became very attractive, much of the portfolio was converted into common stocks.

That portfolio is now worth nearly $ 64 million with more than 70% now made up of equity investments.

Adam

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