Monday, August 24, 2015

Charlie Munger on practice evolution

From Whitney Tilson's 2000 Wesco Annual Meeting Notes:
Practice Evolution 
"This is really important. For example, Hertz and Enterprise Rent-a-Car through practice evolution have developed personnel systems, etc. that work for them. They are like different species in similar ecological niches. 
"Common stock investors can make money by predicting the outcomes of practice evolution. You can't derive this by fundamental analysis -- you must think biologically. 
"Another example is Tupperware, which developed what I believe to be a corrupt system of psychological manipulation. But the practice evolution worked and had legs. Tupperware parties sold billions of dollars of merchandise for decades. 
"We wouldn't have bought CORT if we didn't like the culture, which resulted from long practice evolution."