What is 'first liens against the passage of time'? At the Wesco Financial annual meeting, Munger put it this way: what he wants are “idiot-proof” businesses. He pointed to Coca-Cola and the Washington Post as examples and described them as “first liens against the passage of time.” *
Sep 22, 2018 3:25 PM
Answers · 3
A lien is security on a loan. If you mortgage your property with the bank, as holder of the first lien they will have a preferential interest in the property if you default on the loan. I think Munger was trying to use this as a metaphor for a solid investment, placing the wise investor (perhaps himself) as holder of the lien, and Coca-Cola shares as the property. Quite how the passage of time fits the metaphor is unclear; a lien is an asset held to mitigate risk, whereas I personally associate the passage of time with the inevitable. Generally it doesn't pay to analyse the language of business people too much, they create and recycle bad metaphors and clichés without thinking too hard: the demand for clever new thinking is always greater than the supply.
September 22, 2018
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