2017: What was Munger's favorite business deal?

AUDIENCE MEMBER: Hello, Mr. Buffett, Mr. Munger. My name’s Grant Gibson (PH). I’m from Denver, Colorado, and this is my fifth consecutive year here. So thank you for having us.

WARREN BUFFETT: Thanks for coming.

AUDIENCE MEMBER: Appreciate it. With all due respect, Mr. Buffett, this question is for Mr. Munger. (Laughter)

In your career of thousands of negotiations and business dealings, could you describe for the crowd which one sticks out in your mind as your favorite or is otherwise noteworthy?

CHARLIE MUNGER: Well, I don’t think I’ve got a favorite. But the one that probably did us the most good as a learning experience was See’s Candy.

It’s just the power of the brand, the unending flow of ever-increasing money with no work. (Laughter)

AUDIENCE MEMBER: Sounds nice. (Laughter)

CHARLIE MUNGER: It was. And I’m not sure we would have bought the Coca-Cola if we hadn’t bought the See’s.

I think that a life properly lived is just learn, learn, learn all the time. And I think Berkshire’s gained enormously from these investment decisions by learning through a long, long period.

Every time you appoint a new person that’s never had big capital allocation experience, it’s like rolling the dice. And I think we’re way better off having done it so long. And —

But the decisions blend, and the one feature that comes through is the continuous learning. If we had not kept learning, you wouldn’t even be here.

You’d be alive probably, but not here. (Laughter)

WARREN BUFFETT: There’s nothing like the pain of being in a lousy business — (laughs) — to make you appreciate a good one.

CHARLIE MUNGER: Well, there’s nothing like getting into a really good one that’s a very pleasant experience and it’s a learning experience.

I have a friend who says, “The first rule of fishing is to fish where the fish are. And the second rule of fishing is to never forget the first rule.” (Laughter)

And we’ve gotten good at fishing where the fish are.

WARREN BUFFETT: Yeah, that’s only metaphorically.

CHARLIE MUNGER: There’re too many other —

WARREN BUFFETT: I went to fish with Charlie one time. He didn’t get —

CHARLIE MUNGER: There are too many other boats in the damn water. (Laughter)

But the fish are still there.

WARREN BUFFETT: Yeah, we bought a department store in Baltimore in 1966. And there’s really nothing like being in an experience of trying to decide whether you’re going to put a new store in a area that hasn’t really developed yet enough to support it, but your competitor may move there first.

And then you have the decision of whether to jump in. And if you jump in, that kind of spoils it. Now you’ve got two stores where even one store isn’t quite justified.

How to play those games — those business games — is — you learn a lot by trying. And what you really learn is which ones to avoid.

I mean, it — you just stay out of a bunch of terrible businesses, you’re off to a very great start, as far as — because we’ve tried them all.

CHARLIE MUNGER: But you can really learn, because the experience is a lot like eating cuttle (PH) burgers. And it really gets your attention. (Laughter)

WARREN BUFFETT: Well, we won’t expand on that. (Laughter)