Li Lu: Meet the Warren Buffett of China

Li Lu, one of Charlie Munger’s investment partners, describes the method Charlie Munger uses to avoid making major mistakes. + Much More

Jun 03, 2021

Li Lu is one of Charlie Munger’s investment partners, and he is sometimes referred to as the Warren Buffett of China.

Li Lu describes the method Charlie Munger uses to avoid making major mistakes below:

"Charlie [Munger] constantly collects and researches the notable failures in each and every type of people, business, government, and academia, and arranges the causes of failures into a decision-making checklist for making the right decisions. Because of this, he has avoided major mistakes in his decision making in his life and in his career. The importance of this on the performance of Buffett and Berkshire Hathaway over the past 50 years cannot be emphasized enough."
—Li Lu

Graham Rhodes translated a speech Li Lu’s gave in 2019 speech from Chinese to English. Read the entire speech here.

I just read it, and found this gem about Charlie’s investment style:

“I have been Charlie Munger’s investment partner for sixteen or seventeen years now. We meet for dinner at least once a week and I’ve developed a deep understanding of him. Let me tell you a story about his investments. Charlie subscribes to Barron’s, a weekly magazine about the stock market published by the Wall Street Journal. He’s read this magazine for approaching 40-50 years for the purpose of finding investment ideas. And how many has he found in this time? One! There has only been one and he only found it after reading the magazine for more than thirty years. And he hasn’t found another in the ten years since. This hasn’t stopped him from continuing to read the magazine every week though. He is extremely patient and can go for a long time without doing anything at all. But when he finds an opportunity, he will go all in. And this particular investment made him a lot of money. So this is what’s required of an exceptional investor: he must have extreme patience and stay focused even when there are no opportunities. When an opportunity does come, he must then have the ability to move swiftly and decisively.”
—Li Lu

Video: Reminded me of this video of Charlie describing the Barron’s situation.