Thinking Citizen Blog — Charlie Munger — the Other “Sage from Omaha”
Thinking Citizen Blog — Tuesday is Economics, Finance, and Business Day
Today’s topic: Charlie Munger (1924- ) — the other “Sage from Omaha”
Warren Buffett is almost as famous for his quips as he is for his money. Charlie Munger, his side-kick and life and business partner is not half-bad either. Today, it’s time to give that other sage from Omaha his due. Munger is Vice Chairman of Berkshire Hathaway, and the CEO of many other companies, as well as the author of “Poor Charlie’s Almanack” which I highly recommend. Warning: the last item in this post is way, way too long, making the post itself, obviously, too long. Why? Because in the Q and A session of a speech Munger gave at Stanford Law School in 1996 he had vision of what he would do if he were Czar of the law school. To me, that vision bears an eery resemblance to what I am trying to do right now — distilling this blog into a book that would provide a rough road map for re-structuring Harvard’s General Education program in particular and K-12 education across the world more generally. Here’s a line of his that sums it up. “I believe in the discipline of mastering the best that other people have figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” Experts — please chime in. Correct, elaborate, elucidate.
WHAT TO DO EVERY DAY, A TOUGH TEST OF CHARACTER, QUANTITATIVE ANALYSIS
1. “I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.”
2. “It takes character to sit with all that cash and to do nothing. I didn’t get top where I am by going after mediocre opportunities.”
3. “People calculate too much and think too little.”
NB: “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success.”
THE POKER ANALOGY, THE IRON LAW OF NATURE, ENVY
1. “What you have to learn is to fold early when the odds are against you, or if you have a big edge, back it heavily because you don’t get a big edge often. Opportunity comes, but it doesn’t come often, so seize it when it does come.”
2. “The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.”
3. “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”
NB: “We have three baskets: in, out, and too tough. … We have to have a special insight, or we’ll put it in the “too tough” basket.”
REPUTATION, READING, PROBABILITY, AND FULL SCOPE COMPETENCY
1. “Remember that reputation and integrity are your most valuable assets — and can be lost in a heartbeat.”
2. “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads — and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
3. “If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest.”
NB: “Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it. And the brain can’t use what it can’t remember or when it’s blocked from recognizing because it’s heavily influenced by one or more psychological tendencies bearing strongly on it … the deep structure of the human mind requires that the way to full scope competency of virtually any kind is to learn it all to fluency — like it or not.”
MUNGERS’S VISION OF A REQUIRED ONE-MONTH LAW SCHOOL COURSE IN “REMEDIAL WORLDLY WISDOM” EERILY RESEMBLES MY VISION OF WHAT HARVARD’S GENERAL EDUCATION PROGRAM SHOULD LOOK LIKE — “It would be a total circus” (Munger)
1. “You have to learn all the big ideas in the key disciplines in a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life. If you do that, I solemnly promise you that one day you’ll be walking down the street and you’ll look to your right and left and you’ll think “my heavenly days, I’m now one of the few competent people in my whole age cohort.” If you don’t do it, many of the brightest of you will live in the middle ranks or in the shallows.”
2. “If I were czar of a law school — although, of course, no law school will permit a czar (they don’t even want the dean to have much power) — I’d create a course that I’d call “Remedial Worldly Wisdom” that would, among other useful things, include a fair amount of psychology. And it might last three weeks or a month…I think you could create a course that was so interesting — with pithy examples and powerful examples and powerful principles — that it would be a total circus. And I think that it would make the whole law school experience work better.”
3. “People raise their eyebrows at that idea. “People don’t do that kind of thing.” They may like the derision that’s implicit in the title “Remedial Worldly Wisdom.” But the title would be my way of announcing, “Everybody ought to know this.” And if you call it remedial, isn’t that what you are saying? “This is really basic and everybody has to to know it.” Such a course would be a perfect circus. The examples are so legion. I don’ see why people don’t do it. They may not do it mostly because they don’t want to. But also maybe they don’t know how. And maybe they don’t know what it is. But the whole law school experience would be much more fun if the really basic ideas were integrated and pounded in with good examples for a month or so before you got into conventional law school material. I think the whole system of education would work better. But nobody has any interest in doing it. Another reason why I like the idea of having a course on remedial worldly wisdom is that it would force more sense on the professors. It would be awkward for them to teach something that was contravened by lessons that were obviously correct and emphasized in a course named “Remedial Worldly Wisdom.” Professors doing so would really have to justify themselves. Is that a totally crazy idea? It may be crazy to expect it to be done. However, it somebody had done it, would you have found it useful? I think it would be a wonderful thing to have….The right way to do it would be in a book….it’s a screaming opportunity for somebody. And I’d provide the funds to support the writing of an appropriate book if I found someone with the wisdom and the will to do it right.”
NB: Munger’s focused educational vision is the mirror image of his investment style. “Our investment style has been given a name — focus investing — which implies ten holdings, not one hundred or four hundred. The idea that it is hard to find good investments, so concentrate in a few, seems to me to be an obvious idea. But 98% of the investment world does not think this way. It’s been good for us.” “Focus investing” sounds a lot like “what matters” investing which was a name pinned on my approach by a colleague about twenty five years ago. This is the origin of the idea behind the “What Matters Table” and the blog that grew out of it.
https://en.wikipedia.org/wiki/Charlie_Munger
A Lesson on Elementary, Worldly Wisdom, Revisited by Charlie Munger — Within Our Control
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PDF with headlines — Google Drive
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