(Benzinga) - During the 2019 annual meeting of Daily Journal Corp., renowned billionaire investors Warren Buffett and Charlie Munger engaged in a discussion about their hiring preferences, shedding light on their risk-averse approach.
Munger, the 99-year-old vice chairman of Buffett's Berkshire Hathaway Inc. holding company, made a playful remark about Tesla Inc. CEO Elon Musk, emphasizing that Musk would not be his ideal candidate. Munger, who has a reported net worth of $2.5 billion, was responding to a shareholder's question regarding his preference for people who accurately assess their abilities.
Munger’s Hiring Preference
The shareholder inquired about Munger's principle, which asserts a preference for working with people who have an IQ of 130 but believe it to be 120, rather than those with an IQ of 150 who mistakenly perceive it as 170. In response, Munger said, "You must be thinking about Elon Musk."
While Munger acknowledged Musk's propensity for setting seemingly impossible goals, he expressed a preference for hiring people who have a realistic understanding of their limitations. Munger believes that overestimating your abilities can lead to excessive risk without commensurate rewards. He alluded to Musk when discussing his preference for working with people who possess a modest self-assessment.
"Of course, I want the guy who understands his limitations instead of the guy who doesn't," Munger told his shareholders.
Munger's stance aligns with his long-standing investment strategy, which prioritizes stable, long-term investments over high-risk ventures. He and Buffett have amassed significant wealth through this approach, in contrast to Musk's more daring endeavors, such as challenging established automakers with Tesla Inc. and founding SpaceX for space exploration.
By Jeannine Mancini
