Charlie Munger on the discipline of not having an opinion…

In his 1986 shareholder letter, Buffett discussed the concept of “owner earnings” in detail, using the example of two companies, labeled “O” and “N”. In fact, both companies were Scott Fetzer, and Buffett used the example to illustrate how a good investor must create their own estimates of a company’s earnings power. See the latest Owner’s Memo for more. theownersmemo.com/p/ringcent…

RingCentral's stock has returned 129% since early April of this year. At the time, the stock appeared to be very expensive by its income statement alone. But a closer look showed that the company was generating much more in cash and owner earnings than appeared. The Owner's Memo #27 is out: a case study of RingCentral from the perspective of Buffett's owner earnings. On reported earnings, $RNG had earned $43.4 million in 2025 against a $3.18 billion market cap as of April 2, which put the stock at 73 times trailing earnings. However, the company produced $617.4 million of cash from operations that year, and once I worked through what drove the gap (depreciation and amortization, the timing of sales commission payments, and the capital spending the business actually required), its owner earnings came to roughly $253 million, a multiple of 12.6 times. And there was more. At the time, a diligent investor could have built pro forma statements from the guidance management gave on its February 2026 earnings call: GAAP operating margins roughly doubling in 2026 and reaching about 20% within three to four years, stock comp falling from 11% of revenue toward 3–4%, and most of the free cash going to buybacks and debt reduction. Taken at its word, that guidance put the stock at under 6 times owner earnings a few years out. Today's piece walks through all that work and shows the subsequent surge that occurred in $RNG stock as the market quickly came around. Link in the comments.

Is there a definition of Economic P/E provided in the publication?

Buffett discussing the concept of "owner earnings" in his 1986 annual letter to shareholders:

"Hassabis, though, is looking beyond today’s models to general intelligence, which he says will be more consistent and capable of original thought. To him, the G in AGI matters as much as the AI itself. He’ll know AGI is here when it passes what he calls the Einstein test: Could a system trained only on human knowledge up to 1901 produce Einstein’s work from the annus mirabilis of 1905?" wsj.com/tech/ai/demis-hassab…

This is woo woo too, but it does work if you try to fake it. If the thought of being positive nauseates you, try putting that aside and doing it *for you*. Run the experiment, devote yourself to it, and see if things around you don’t feel a bit better.

That sort of reminds me of a great line from A Sportsman’s Life by Leigh Perkins, former owner of Orvis: “While I could have become some kind of playboy… I was greatly influenced in this decision by my father…. He told me that he knew only a few men who did not work and were happy and that they were inevitably men of very high intelligence. He added that he didn’t think I qualified, and I didn’t argue with him.”

Toast ($TOST) income statements, location count, and gross payment volumes. The stock trades at 40x TTM P/E, which may decline to 20-30x next year as the company continues to benefit from operating leverage.

I have noticed the LLM’s are *much* better in the past six or twelve months at stuff like this.

Well said. Because the idea that "the greatest obstacle to intellectual growth is our natural desire to be right," I think most investors must suffer from that, and somehow, relieving ourselves of that burden can create an investing edge.

@grok, give it a shot, my man.

I've worked hard over the past several years to change some aspects of my personality/psyche. It's easy to see why it's so hard for many people. I've had to become enthusiastic about the prospect that I was doing something wrong and that tomorrow would be better.

The book is great. Templeton and his co-author tried to create a guide for living a good life. It’s brief too, and it’s an easy read, although the concepts could be life-changing for some people with enough consideration.

Maybe Brian is trying to say that people also want the safety and community that comes with a team. The second paper cites “low social support and low authority at work”. Maybe what people really want is the right balance between feeling competent and in control, while serving a greater good.

I think temperament is learnable, but I’m probably stretching it. You may need a superhero’s humility to change.

"You need to own the largest companies to outperform." 🟡 YTD returns of the largest 10 S&P 500 companies: 7.4% 🟢 YTD returns of the rest: 14.9%