Charlie Munger: Easy Money Is With Crooks And Fools

Johnny HopkinsCharles Munger, Warren BuffettLeave a Comment

In their latest interview with CNBC, Warren Buffett and Charlie Munger discussed a number of topics including the deal between Credit Suisse and Archegos Capital Management. Here’s an excerpt from the interview:

QUICK: We asked Munger and Buffett their thoughts on some of the latest headlines in the business world, those that could have lasting impact on how markets operate beginning with Credit Suisse’s five and a half billion dollar loss stemming from its business with Archegos Capital Management.

MUNGER: Think of how massively stupid that was. And of course, it was the lure of the really easy money that the idiot was paying you, being the prime broker for a jerk. But he was a convicted insider trader that came out of the craziest part of the hedge fund industry. And they were getting unusual profits by extending unusual credit. I mean, it was just, the world was shouting at them, “Crook. Fool.” And they didn’t listen. They thought, “This is where the easy money is, crooks and fools.”

BUFFETT: There’s one rule–

MUNGER: We don’t like either of–

BUFFETT: That, that we learned a long time ago is that you can’t make a good deal with a bad person. Just forget it. Now, if you think you can draw up a contract that, that is going to work against a bad person, they’re gonna win. But one thing, they, they probably enjoy litigation but ah, Berkshire Hathaway as an entity, or me personally, or anything, we don’t wanna spend our life, you know, doing that sort of thing. And, and besides, the bad guys win. They know more games. They may lose eventually in the but, but it’s no way to spend your life.

QUICK: Charlie, it wasn’t just Credit Suisse that got pulled in by that. There were a lotta firms that were doing business with Archegos and–

MUNGER: Yes. Yes. They were all foolish. But, but Credit Suisse has managed to be the biggest fool of all.

You can find the full transcript here:

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