#28: Thinking Smarter and Gaining Wisdom

In 1959 two men met during a dinner party in Omaha, Nebraska. They had much in common and over several hours of storytelling they admired each other’s wit, sense of humour and intelligence. 

Despite this instant connection, the 35-year-old lawyer and 29-year-old investor would have been hard pushed to predict how things would turn out. Over the next 6 decades they built the greatest investment fund ever – Berkshire Hathaway.

If you had been lucky or shrewd enough to invest $100 in 1965 into Berkshire and never sold, it would now be worth a cool $2.94 million! The fund that Warren Buffett and Charlie Munger built is now worth $800 billion and is the ultimate case study of continued high performance. 

Perhaps more amazingly, they remained friends throughout; working together well into their 90s, helped educate a generation with financial and life wisdom and unusually for two multi-billionaires were much loved.

Charlie passed away in late 2023 just a month shy of turning 100. He spoke his razor-sharp mind, didn’t suffer fools, had caustic one-liners on every topic and genuinely tried to help people. Let’s learn from this inimitable legend.

WISDOM 💎

“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.”

Charlie Munger

Charlie was an avid reader devouring 500 pages a day! That’s extreme, but consistently reading 20 pages a day, will add up to over 300 books in a decade. Reading and knowledge compound just the same as money.

"You’ve got to have models in your head, and you’ve got to array your experience – both vicarious and direct – onto this latticework of mental models.”

Charlie Munger

Charlie didn’t just read to acquire facts. He read to gain understanding to help make better decisions. Charlie used a multidisciplinary approach building mental models from physics, chemistry, biology, psychology, economics, engineering, philosophy and architecture and applying them liberally wherever they were useful.

For example, from psychology he learnt how incentives rule human behaviour – making sure incentives are aligned is crucial for any endeavour. Having such a generalist approach to learning can help us greatly in life.

Tip 1 - A SMART PLAY ✅

People calculate too much and think too little’.

Charlie Munger

Charlie espoused the importance of independent thinking. Bombarded by information and opinions, it’s crucial to do our own research, think independently and to question everything. He didn’t take an opinion on a matter until he knew the opposing arguments better than its promoters.

Charlie encouraged opposite thinking by inverting a problem. Rather than focusing on the positive, he would focus on what he didn’t want – a bad marriage, an early death etc. and figure out how best to avoid that.

Tip 2 - AVOID 🚩

Learning from just your mistakes. Charlie expressed that millions of people have made the same errors in life. Learn from them - human nature isn’t that original.

Tip 3 - ACTION 💪

To truly learn if you know a topic, perhaps have a go at teaching it.

'The best thing a human being can do is to help another human being know more’.

Charlie Munger

Thanks to Charlie for making us all a little smarter. Charlie Munger RIP