Thank you charlie munger - sweat your assets

Thank you Charlie

Charlie Munger died on November 28, 2023, at age 99. He’s the lesser-known half of the team that built Berkshire Hathaway. Still, he was the most colorful of the pair.

Thanks to his witty, no-BS comments, it is always a treat to read or listen to Charlie’s interviews. For sure, there will be times, when we will ask ourselves: what would Charlie have said about it?

In his spare time, he chaired the Daily Journal, designed buildings, and played the part of a walking, talking encyclopedia. He was a learning machine who built his system of mental models to reduce errors in this complex world. His unique view of uncommon sense, as he called it, can be seen in how he invested.

Extreme concentration and inaction best describe Munger’s approach. He was comfortable with only three or four wonderful businesses in his portfolio. That’s far short of the popular broad diversification strategies recommended today (such as the 50/50 allocation, 60/40 Asset Allocation,  the all-weather portfolio, and the Yale Model).

Extreme concentration is not for everyone. First, finding a handful of wonderful companies worth owning is never as easy as it sounds. Someone not skilled in the art is likely to find awful companies more often than wonderful ones. Second, it takes a particular mindset to own a handful of stocks and do nothing because the byproduct of concentrated portfolios is higher volatility.

Despite his financial success, It might be Munger’s multidisciplinary mindset that offers the greatest lesson. He dedicated his life to learning and improving one day at a time — compounding wisdom. And he generously shared so much of it over the years. He was a teacher, above all else, for anyone open to learning. His multi-disciplinary mindset is what gave him the “thirty-second mind” that Mr. Buffett could turn to on nearly any topic under the sun:

“Charlie has the best thirty second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you even finish the sentence.” Warren Buffett

How can you develop a 30-second mind like Charlie or a similar wisdom? The answer is straightforward, but it is not easy or simple. It requires a multi-disciplinary education that builds a latticework of mental models. Only on top of a sound foundation you can layer specialization.

Over the years, I have published on my sweat your assets platform several articles, videos, and Podcasts featuring Charlie Munger:

Academic Economics (2003)

How to Guarantee a Life of Misery (1986)

The Psychology of Human Misjudgment(1995) (Youtube Podcast)

– Against Diversification (Youtube)

– A must-read is its “Poor Charle’s Almanack: The Essential Wit and Wisdom of Charles T. Munger”

His articles and speeches are pretty long and dense. Still, it is possible to isolate brilliant thoughts that summarize his humor and cunning spirit. Check out a collection of my favorite Charlie’s quotes of all time.

Charlie’s Quotes 

  • Spend each day trying to be a little wiser than you were when you woke up.”

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

  • “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

  • “In my whole life, I have known no wise people who didn’t read all the time — none, zero.”

  • “I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.”

  • “The big money is not in the buying and selling, but in the waiting.”

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

  • “The first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back.”

  • “There are worse situations than drowning in cash and sitting, sitting, sitting.”

  • “The game of life is the game of everlasting learning. At least it is if you want to win.”

  • “Bitcoin is probably rat poison squared”.

  • “Every time you hear EBITDA, just substitute it with bullshit”.

  • When confronted with the possibility of going blind and no longer being able to read he said: “It’s time for me to learn braille!”

  • “Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia… Every time you find your drifting into self-pity, I don’t care what the cause, your child could be dying from cancer [he lost his 9-year-old son], self-pity is not going to improve the situation. It’s a ridiculous way to behave. Life will have terrible blows, horrible blows, unfair blows, it doesn’t matter. Some people recover and others don’t. There I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and that your duty was not to be immersed in self-pity, but to utilize the terrible blow in a constructive fashion. That is a very good idea.”

  • “I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes.”

  • “I think a life properly lived is just learn, learn, learn all the time.”

  • “You should never, when faced with one unbelievable tragedy, let one tragedy increase into two or three because of a failure of will.”

  • “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically you get ahead, but not necessarily in fast spurts. Nevertheless, you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day – if you live long enough – most people get what they deserve.”

  • “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

  • “I 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.””I didn’t get to where I am by going after mediocre opportunities.”

  • “I want to think about things where I have an advantage over others. I don’t want to play a game where people have an advantage over me. I don’t play in a game where other people are wise and I am stupid. I look for a game where I am wise, and they are stupid. And believe me, it works better. God bless our stupid competitors. They make us rich.”

  • “I am not smart enough to make decisions with no time to think. I make actual decisions very rapidly, but that’s because I have spent so much time preparing ourselves by quietly reading.”

  • “I basically believe in the soldier on system. Lots of hardship will come and you gotta handle it well by soldiering through. And lots of – a few rare opportunities will come. You got to learn how to recognize them when they come and not that make too minor of a trip to the pie counter when the opportunity is available. And those are the simple lessons.”

  • “Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris — I wanted the independence. I desperately wanted it.”

  • “It is not supposed to be easy [investing]. Anyone who finds it easy is st#pid”.

  • “If you’re not willing to react with equanimity to a market price decline of fifty per cent two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations”.

EBOOKS

Charlie Munger Ebook

You can download here my EBOOK with Charlie’s Best Quotes.

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