Tech

Warren Buffett's right-hand man blasted Robinhood, slammed SPACs, questioned bitcoin, and warned against speculating at the Daily Journal annual meeting. Here are the highlights.

Published 1 hour ago - USVI News

Summary List Placement
Charlie Munger discussed GameStop, Bitcoin, SPACs, and other hot topics.
Warren Buffett's business partner spoke at the Daily Journal annual meeting.
Munger warned the speculation in stocks will end badly.
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Warren Buffett's right-hand man issued a warning to stock-market speculators, criticized the trading platforms enabling them, and blasted SPACs at the Daily Journal annual meeting on Wednesday.
Charlie Munger, the vice-chairman of Buffett's Berkshire Hathaway, is also the chairman of Daily Journal, a newspaper publisher and software developer.
Here are the meeting highlights. We'll be updating them as the meeting continues.
Speculation
Munger acknowledged that periods of mass speculation occur from time to time, and said his normal policy was to "ride them out." He cautioned amateur investors and day traders against acting recklessly.
"Shareholders should be more sensible and not crowd into stocks and just buy them because they're going up and they like to gamble," Munger said. "That's a very dangerous way to invest."
GameStop
Munger also compared the GameStop short squeeze in January to people gambling at the racetrack.
"That's the kind of thing that happens when you get people who gamble the way they would betting on racehorses," he said.
"It's very dangerous and it's really stupid to have a culture to encourage gambling in stocks," he continued. "Of course that is going to cause trouble and it did."
Trading apps
Munger also called out Robinhood and other trading platforms for "luring" novice investors into speculating on stocks.
"It's a dirty way to make money and I think we're crazy to allow it," Munger said. "All this activity is regrettable, I think civilizations would be better without it."
"Nobody should believe that Robinhood's trades are free," Munger said, adding that their practise of selling order flow was "dishonorable."
SPACs
The 97-year-old also called out the boom in special-purpose acquisition vehicles (SPACs), which offer an alternative way to go public by listing then acquiring a private company.
"Crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble," he said. "The investment banking profession will sell shit as long as shit can be sold."
"I think it must end badly but I don't know when," he added.
Wells Fargo
"There's no question that Wells Fargo has disappointed longtime investors like Berkshire. Because the old management were not consciously malevolent or thieving but they had terrible judgment.
Bitcoin
"I don't think bitcoin's going to end up as the medium of exchange for the world. It's too volatile.It's kind of an artificial substitute for gold."
Costco
"People really trust Costco to deliver enormous values and that is why Costco presents some danger to Amazon. They've got a better reputation for providing value than practically anyone including Amazon."
Tesla and bitcoin
Munger was asked to choose the more astounding event, the stratospheric rise in bitcoin's value or the astronomical rise in Tesla's stock price over the past year.
He quoted author Samuel Johnson, who when presented with two choices, said, "I can't decide the order of precedency between a flea and a louse."
"I don't know which is worse," he added.
Alibaba founder Jack Ma
"I think Jack Ma was very arrogant to be telling the Chinese government how dumb they are. Considering their system that is not what he should have been doing."
The rich getting richer during the pandemic
"That's a misplaced concern. Nobody's was trying to make the rich richer, that was an accidental byproduct of trying to save the economy under terrible conditions. It was probably wise that we acted exactly as we did."
Modern monetary theory
"Maybe the modern monetary theory is right. Put me down as skeptical."
Inequality
"I don't mind a little inequality," Munger said, describing it as an "inevitable consequence" of a growing economy.
Wealth tax
"Any rich nation ought to have a social safety net that expands a little with its wealth."
Politics
Munger bemoaned the rising amount of "hatred" in politics, but argued the country had been well governed for the past century.
"The system fo checks and balances and elections that our founders gave us actually gave us pretty much the right policies during my lifetime, and I hope that will continue."
Haven
"I don't know anything about Haven," Munger said, referring to the joint healthcare initiative between Berkshire, JPMorgan, and Amazon that was dismantled recently.
The evolution of business
"Business success long term is a lot like biology. In biology, the individuals all die and eventually so do all the species. And capitalism is almost as brutal. Just look at what's changed in my lifetime. Who ever dreamed when I was young that Kodak and General Motors would go bankrupt? It's incredible what's happened in terms of the destruction."
Learning
"I think I had the right temperament. When people gave me a good idea I quickly mastered it and used it. It's such a simple idea. Without the method of learning, you're like a one-legged man in an ass-kicking contest."
Psychology
"It's one of the most ignorant professions in the world," Munger said, highlighting that many psychologists can't connect what they know with other types of knowledge.
Adapting to technological change
"If you have a fixable disadvantage, remove it, and if it's unfixable, learn to live without it. What else can you do?"
Challenging one's beliefs
"I think I'm not really equipped to comment on a subject until I can state the arguments against my position better than the other side. That's a good way to help remove ignorance. When we shout our knowledge out, we're really pounding it in, we're not enlarging it."
Zero-commission trading
"Commission-free trading is a very good candidate if you want to emphasize disgusting lies. Commission-free trading is not free."
Sequoia Capital
"Warren and I are better at buying mature industries than we are at investing in startups. I would hate to compete with Sequoia in their field, they would run rings around me."
"I got close to Sequoia when, with Li Lu, we bought into BYD. We were buying into a venture-capital-type investment on the public market. With that one exception, I've stayed out of Sequoia's business because they're so much better at it than I would be."
The Queen's Gambit and investing
"I have seen an episode or two. To some extent, you can't be good at chess unless you have a natural gift, and even if you have a natural gift, you can't become great at it unless you start playing at a very young age. Any intelligent person can get to be pretty good as an investor and avoid obvious traps, but I don't think everybody can be a great investor or a great chess player."
Managers owning their stock
"If you do that I'm a moral leper," Munger said about the idea that managers have a moral responsibility to own their stock at as close to its fair value as possible.
"The Daily Journal stock sells way above the price I would pay if I was buying a new stock. The management should tell it like it is as all times and not be a big promoter of its own stock."
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Tech

Startups trying to change the way healthcare is paid for pulled in a record $3.6 billion in 2020. Meet the top 8 VC firms that placed the most bets.

Published 1 hour ago - USVI News

Summary List PlacementA new kind of healthcare is gaining traction among venture capitalists.
Called "value-based care," it's an approach where providers are paid based on the quality of patients' health outcomes rather than how many procedures and surgeries they perform.
This kind of payment model has been touted for years as a key component to fixing the broken US healthcare system, both in terms of cost and quality. Despite how much the US spends on healthcare — about $11,100 per person — the country has worse health outcomes than other wealthy countries.
Value-based care has struggled to take off for the better part of a decade, but recent regulatory changes and technological progress driven by startups are making investors think twice, a recent report by CB Insights said.
In 2020, these startups raised a record $3.6 billion from venture capitalists, with funding up more than 80% since 2019 and more than 300% from 2015, according to CB Insights.
Cityblock Health, for instance, raised $160 million from investors and ascended to prominence in Silicon Valley. The startup is now valued at more than $1 billion and is paid by health plans to manage their most vulnerable populations, for flat monthly fees. Oscar Health, a health insurance startup, recently filed to go public.
Bright Health raised $500 million; Devoted Health raised $380 million; VillageMD raised $275 million; and Oscar raised $225 million, per CB Insights and Insider. These startups are tackling value-based care from different vantage points. Bright, Devoted, and Oscar are focused primarily on providing health plans rather than care itself, but some of the plans, like for Medicare Advantage patients, try to boost patient outcomes.
Here are the eight most active firms since 2015, according to CB Insights:

F-Prime Capital, which has more than $2 billion under management, has made 16 investments in six value-based care since 2015, including in Iora Health, a primary care provider, and population health management tools like PatientPing.
New Enterprise Associates and Polaris Partners tie for second, with 11 deals each. For example, NEA, with more than $20 billion across funds, bought Everside Health, a primary care provider, in 2018. Polaris Partners, which doesn't disclose its assets under management, has backed Iora and Wellthy, a care coordinator.
Venrock has done nine investments in value-based care, with six of those going to Aledade, a primary care provider. Venrock has more than $2 billion under management, according to Pitchbook data.
Deerfield, a healthcare-focused, $14 billion investment firm, has made eight investments in value-based care companies, including Curation Health, a care platform, and Advantia Health, a women's healthcare provider.
General Catalyst, a $7 billion VC, has invested in seven of these healthcare startups and most recently led Cityblock's $160 million round. Oscar is among its other value-based care bets.
Alta Partners and the Founders Fund have each made four deals in value-based care. Alta has $2.3 billion under management and invested in NEA's Everside. Founders Fund, which has invested in Oscar and mental healthcare provider Modern Health, has more than $15 billion under management.
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