Charlie Munger 1924-2023

As everyone knows by now, Charlie Munger passed away at 99 years old, he would have been 100 on January 1st. Bloomberg as part of its coverage referred to him as Warren Buffett's sidekick which made me cringe. I'm no Munger scholar to be sure but most people in the investment industry know at a least a little about who he was and some of his beliefs. I knew a couple of the quotes attributed but learned a whole bunch more yesterday. 

Here's a list that RampCapitalLLC compiled on Twitter.

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

2. "The best thing a human being can do is to help another human being know more."

3. "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."

4. "In my whole life, I have known no wise people who didn't read all the time — none, zero."

5. "I never allow myself to have an opinion on anything that I don't know the other side's argument better than they do."

6. "The big money is not in the buying and selling, but in the waiting."

7. "You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time."

8. "The first rule is that you can't really know anything if you just remember isolated facts and try and bang 'em back."

9. "There are worse situations than drowning in cash and sitting, sitting, sitting."

10. "The game of life is the game of everlasting learning. At least it is if you want to win."

These quotes reflect Munger's emphasis on continuous learning, rational decision-making, and a long-term perspective in investing and life.

It is human nature when we see lists like this to try to see ourselves in the positive attributes. I like to think I came to some of these attributes even without ever having heard Munger talk about them. Number 5 is very important for my volunteer gig as fire chief. It helps in dealing with the public and also the many realms of the fire service I deal with. 

Number 3 resonates. Mark Baker (Guruanaerobic on Twitter) refers to that as via negativa, removing the negative. This has applied to my investment career most tangibly being very underweight financials going into the financial crisis (you can look at the archives of my posts on Seeking Alpha from that time, I was also on CNBC early in 2008 crapping on the financials if you need documentation) and then having essentially no duration in client portfolios long before interest rates blew up. The framing in both instances was an observation of extreme, and to me obvious, risk having no idea when or if that risk would ever have a consequence. This sort of thing will come up again in some other pocket of the market and you won't have to figure out when or if, you just need to avoid it, whatever it turns out to be. 

Stocktwits attributed the following quote to Munger.

Simplicity has a way of improving performance by enabling us to better understand what we are doing.

That's not one I'd ever heard from Munger before but this is something we talk about here all the time related to portfolio construction. The simplest portfolio you could possibly think of, probably one index fund or one target date fund, can get the job done provided it's accompanied with an adequate savings rate and without ever panicking. 

In my opinion, something that simple isn't ideal because of the wild ride investors who do go that simple will go on but it is valid. When I describe building a portfolio comprised of simplicity hedged with a little complexity, having a simple equity portfolio is going to be the most effective way to invest for people who need growth for their financial plan to work. Equities are the thing that goes up the most, most of the time, that is pretty simple. The complexity that I am talking about is not essential but I do believe it makes navigating through the full stock market cycle much easier to do by hopefully smoothing out the ride which speaks to not panicking as mentioned in the previous paragraph. There's no reason my process should necessarily resonate with you of course but the idea of some measure simplicity probably should.

Back to Ramp's list, number 2 has the most meaning for me. I take it as being about living a life of service, maybe replace helping people to know more with just trying to help people. It's an important attribute and makes life far more fulfilling. 

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