At the 1990 SECO Financial shareholders' meeting, Munger said: "Whether it is our main business or the real estate business in Santa Barra, we have left a sufficient margin of safety, and it is not so easy for us to make huge losses, unless the whole society is hit by a catastrophe and people can't survive, then we will be in trouble."
For example, many of the loans we hold are relatively high in value and low in loan amount, such as a property worth $400,000 and a loan amount of only $20,000. Although we are strict, there are still times when the horse stumbles. There will still be sporadic defaults, but we have sufficient collateral value to guarantee it. For a housing loan of 1 million, we will consider where it is, and we will require a down payment of no less than 40%. We have a very strict control over the right to issue loans, and there are no targets for loan tasks. This arrangement was made in an effort to avoid serious loan losses.
From these details, Munger's business thinking is indeed very conservative, but it is precisely because of his cautious and cautious business strategy that his investment career has been more stable and longer.