While the financial markets experienced strong gains last month, the financial world lost a giant, a titan. Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett’s right-hand man, passed away November 28, just weeks shy of his 100th birthday, which he would have celebrated this coming New Year’s Day.
Munger was an extraordinary investor, with a record of his own that rivaled Buffett’s, and Buffett has often said that it was Munger’s influence that truly propelled Berkshire Hathaway into the stratosphere. Early on, the value-minded Buffett was hyper-focused on picking what he described as discarded cigars that had a few more puffs left in them. His approach was a deep value philosophy he learned under the legendary Benjamin Graham. Munger was also a value investor, but with a twist. He did not mind paying a little more for a truly wonderful business. Munger convinced Buffett over the years that it was often better to pay a fair price for a good business than to pay a good price for a fair business. As a result, the two men and their fine lieutenants built Berkshire Hathaway into the colossus it is today, and while Buffett is far wealthier than Munger because of his larger proportionate ownership, Munger, too, became a billionaire and an important philanthropist.
Munger’s financial success speaks for itself, but the assets for which he will be best remembered were his wit and his life philosophy, which governed not just his investing but his interactions with the world. For the investor pilgrims who travel to Omaha every year for the Berkshire meeting, the main attraction was not necessarily Buffett—it was Charlie Munger, whose acerbic wit was a flamethrower of truth right up until the very end. His remarks were often hilariously funny, but the humor was fueled by a total mastery of the craft of not just investing but living. Hearing him opine on a subject was different than listening to someone who had just read a Twitter thread or a Wikipedia page about China or Israel—the man had spent an entire century committing himself to learning; it was an act of breathtaking bravery to even ask him a question. Unsurprisingly, he was a sought-after speaker, and his writings often seem like scripture in their profundity.
More than 20 years ago, I had a meeting in New York City with Christopher Davis, chairman of the well-regarded investment firm Davis Advisors. As a parting gift, he handed me a copy of a book of Charlie Munger speeches and essays he had compiled. It was one of the great gifts of my lifetime, and I do not exaggerate when I say that this book is usually in my briefcase, carried with me every day. So, while few people would confuse Charlie Munger with Santa Claus, I would like to share some of my favorite “Mungerisms” as a part of this Christmastime letter, which, up to now, has had nothing to do with Christmas. In classic Munger fashion, this is a sort of Inverted Christmas List in that it’s a list of things one would like to do or give instead of receive. Enjoy!
Charlie Munger’s Inverted Christmas List
- The quest to think clearly, behave rationally, and earn trust is lifelong.
- The surest way to get what you want is to deserve what you want.
- Deliver to the world what you would buy if you were on the other end.
- Seek out the big ideas in all disciplines and apply them to your decision making.
- Avoid twaddle (trivial or foolish speech or writing; nonsense)
- Invert! – if the correct answer is unclear, try inverting the question. (For example, if you’re struggling to figure out what would help India, consider what might hurt India).
- There’s no love that’s so right as admiration-based love, and such love should include the instructive dead.
- The acquisition of wisdom is a moral duty. It’s not something you do just to advance in life. This requires lifetime learning. Go to bed at night a little wiser than you were in the morning. Boy, does this habit help, particularly when you have a long run ahead of you. You can progress only when you learn the method of learning.
- Complex bureaucratic procedure does not represent the highest form civilization can reach. One higher form is a seamless, non-bureaucratic web of deserved trust.
- Munger’s prescriptions for guaranteed misery in life (consistent with his utilization of inversion, he often would say, well, I might not know how to guarantee happiness, but I can guarantee you misery if you just can master these prescriptions):
- Over-ingest chemicals in an effort to alter mood or perception.
- “While susceptibility varies, addiction can happen to any of us through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken.”
- “Envy joins chemicals in winning some sort of quantity prize for causing misery. It was wreaking havoc long before it got bad press in the laws of Moses.” (Note: Buffett agreed with this one, adding that envy was the stupidest of sins because at least with other sins such as lust and gluttony, you could have yourself a great time at least for a little while.)
- Life is hard enough to swallow without squeezing in the bitter rind of resentment.”
- Be unreliable.
- “Do not faithfully do what you have engaged to do. If you will only master this one habit, you will more than counterbalance the combined effect of all your virtues, howsoever great. If you like being distrusted and excluded from the best human contribution and company, this prescription is for you.”
- Learn everything you possibly can from your own experience, minimizing what you can learn vicariously from the good and bad experiences of others, living and dead.
- Go down and stay down when you get your first, second or third severe reverse in the battle of life.
- Ignore the method of the rustic, who said, “I wish I knew where I was going to die, and then I’d never go there.” (Invert, always invert.)
- Minimize objectivity (as a bonus, never give priority to information that might disconfirm whatever cherished or hard-won theory you already have.)
- Over-ingest chemicals in an effort to alter mood or perception.
- Avoid extremely intense ideology (it cabbages up one’s mind.)
- I feel like I am not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition.
- Avoid the self-serving bias (the tendency to behave as though the “true little me” is entitled to do what it wants to do, such as overspend one’s income.)
- In addition to envy and resentment, revenge and self-pity are disastrous modes of thought.
- Intense interest in any subject is indispensable if you’re really going to excel in it.
- Have a lot of assiduity. Sit down on your ass until you do it.
- Every mischance in life, however bad, creates an opportunity to behave well, become wise and instruct others.
- Anticipate trouble.
“The thoughts of others
were light and fleeting,
Of lovers’ meeting
Or luck or fame.
Mine were of trouble
And mine were steady,
And I was ready
When trouble came.”
- “My sword I leave to him who can wield it.” – Valiant For Truth, Pilgrim’s Progress