Mungerisms

charlie-munger-totally-burned-the-accounting-firm-of-one-of-his-companies

Charlie Munger, vice chairman of Berkshire Hathaway and longtime partner of Warren Buffett needs no introduction. Over the years, Munger’s legend has grown to the point where he has a fan-club of his own, revered for his rationality and sheer breadth of knowledge, spanning nearly ever major discipline. Here are some of my favourite Munger quotes.

(1) “The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.”

Someone could be so weighed down by their own biases that they stubbornly refuse to consider that the other side may be right. (You see this all the time in political debates)

(2) “Without numerical fluency, in the part of life most of us inhibit, you are like a one-legged man in an ass-kicking contest.”

Mathematics is interwoven into the very fabric of the world and you simply cannot hide from it. Business, science, architecture, economics, finance and so on – they all have it in various degrees, and a person who isn’t comfortable with numbers is going to find himself handicapped both in understanding as well as expressing ideas.

(3) “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.”

Sunk costs are a great tragedy – where people sink more and more time and resources into a failed endeavour rather than cutting their losses. On the flip-side, opportunity is a fickle goddess who wastes no time on the unprepared, so one must always be ready to seize the chances that life provides.

(4) “Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead – through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I’m going to die, that is, so I don’t go there.”

The idea of inversion is that many problems become easier to solve if you look at them backwards instead of forwards. What not to do can be just as instructive, if not more in that it eliminates options that will lead to failure and defeat, allowing us to fight another day.

(5) “Acquire worldly wisdom and adjust your behaviour accordingly. If your new behaviour gives you a little temporary unpopularity with your peer group … then to hell with them.”

Munger was never one to care whether he was liked or popular for his views. Doing or saying what was right was more important to him than peer acceptance.

(6) “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.”

A person cannot hope to figure out everything through his own experience. Reading widely allows you to draw from the sum-total of human knowledge and experience, learning vicariously.

(7) “There is nothing more counterproductive than envy. Someone in the world will always be better than you. Of all the sins, envy is easily the worst, because you can’t even have any fun with it. It’s a total net loss.”

Munger once pointed out that his partner Buffett was fond of saying that it isn’t greed that drives the world, but envy. As human beings we often succumb to envying someone else for their talents, money, power or position. It is the ultimate exercise in futility, perhaps the worst of the seven deadly sins because it is so inherently self destructive to the person who feels it.

(8) “You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.”

Bruce Lee said that he did not fear the man who has practiced 10000 kicks once, but the man who has practiced one kick 10000 times. Taking a simple idea seriously and executing it well over time can be an easier path to success than trying to be brilliant.

(9) “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.”

A person is the sum total of their knowledge and experiences. When a person commits to self improvement, even incremental changes over a long period of time can snowball into something magnificent.

(10) “The best thing a human being can do is to help another human being know more.”

Knowledge is a commodity that is never depleted by sharing it with another person. It is the wheel that pushes humanity’s chariot forward, and I think it is our moral duty to ensure that it benefits as many people as possible.

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One thought on “Mungerisms

  1. Your blog is wonderful and inspiring. The articles are thought provoking and open you to new realms in personal finance. Please keep it going.

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