Remembering Charlie Munger
Wit and Wisdom of Charlie Munger
Charlie Munger passed away on Nov 28, 2023. He was best known as Warren Buffet’s friend, business partner, and Vice Chairman of Berkshire Hathaway, perhaps the world’s greatest compound interest engine, returning approximately 2,000,000% on its initial value.
At 31, Charlie Munger was divorced, broke, and burying his 9-year-old son, who died from cancer. Even at that moment, he did not succumb to self-pity. He worked relentlessly and trained himself out of it. Avoiding self-pity is a great way to build a competitive edge, according to Munger.
This iconic lawyer turned investor spent the first hour of his day learning new things and sharpening his fluency over mental models and multidisciplinary ideas shaping the world. He trained his mind to think about problems backwards and forwards and from the lens of seemingly unrelated subjects. In his own words, “It’s made life more fun, it’s made me more constructive, it has made me more helpful to others, it’s made me enormously rich, you name it, that attitude really helps.”
Three principles from Munger’s life explain how he has been able to function at such intensity for more than 90 years.
First, follow your curiosity. Munger says that our greatest success comes in fields we are most interested in. While we can force ourselves to be reasonably good in anything, sustained excellence needs intrinsic curiosity.
Second, partner with people of high intellect, integrity,, and work ethic. Despite having different political views, Munger and Buffet remain close friends and business partners. Everyone they choose to partner with stands out for excellence, integrity and commitment. Such partnerships have a compounding effect and create charming win-win scenarios for everyone involved.
Third, read. The secret to Munger and Buffet’s success is sitting in the office and reading all day. They spend almost 80% of their working day reading and thinking. Charlie Munger once famously said, “You could hardly find a partnership in which two people settle on reading more hours of the day than in ours,”
Like most things, knowledge builds up like compound interest, one page at a time. Munger is living example of this.
Wit and wisdom of Charlie Munger
Inverting a problem to find solutions is a concept we heard from Charlie Munger. Inspired by the mathematician Carl Jacobi, he said:
“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.”
Warren Buffett has a similar take:
“Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them.”
People with a narrow set of skills tend to approach every problem through the same lens. This not only ignores loopholes in one’s hypothesis but also amplifies biases. As Munger puts it, “To a man with a hammer, everything looks like a nail.”
Munger has an interesting mental model for framing arguments and shaping debates. He says that it is irresponsible to have an opinion on any subject if we can’t state the arguments for the other side better than our opponents. This takes both effort and rigorous mental discipline. Munger calls it the cost of having an informed opinion.
Warren Buffet and Charlie Munger remained close friends and business partners who built Berkshire Hathaway, one of the world’s largest public companies. Buffet happens to be a Democrat and Munger, a Republican. They have never had an argument and even today finish each other’s sentences or respond with their signature phrase, “I have nothing to add to what he said.”
From this example, it might seem that it is easy to disagree politically, be friends and have a functional professional relationship. But we all know that is not the case.
How is it that two vocal business leaders who have diametrically opposite political views arrive at the same conclusion? It is simple. Buffet is not an average Democrat and Munger isn’t a stereotypical Republican.
Enjoy this video and raise a toast to man who lived his life well.
Your Network Capital Team