RIP Charlie Munger

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I want to say, rest in peace to Charlie Munger. Longtime listeners of this program, clients of either firm, people who’ve been reading my newsletters for decades, understand my affinity for this gentleman and many others. Great teachers out there. Charlie died 99 years old, he would have turned 100 on New Year’s Day.

this year and always, always put a smile on my face. Again, I love having this daily discourse with everybody out there. And I also appreciate the fact that many of the things that I rant and rave about here on the program, you know, I look back, Charlie yelled and screamed about it years ago, in some way, shape, matter or form, or the fact that I’m talking about something and Charlie at

you know, the Woodstock of Capitalism out at Omaha or some interview, basically saying something in the same way that I would, except he do it in a much, much more pithy way. A lot, a lot he can learn from this guy. And quite frankly, his simplicity. Wall Street Journal, their headline was Charlie Munger Investing Genius. And Warren Buffett’s right hand man dies at age 99.

Um, I don’t think Charlie would not call himself a genius. Yeah. And I was thinking about it. And what is your definition of genius? There’s certain words out there like to define to me, someone who’s genius, someone who’s got this unbelievable talent or argument for to me, it’s math, because I’ve never been very good at it.

I just had to put a ton of work into it. And I just, you know, people that could just sit down and see it. Kind of like the same people that could stand up at a plate and have that ability to hit the curve ball. Or an artist, for example, where I had trouble coloring within the lines, just people that could do this amazing things with this God given talent of theirs. So I guess kind of everyone kind of judges genius.

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in their own way and maybe many of us look at geniuses as, you know, something that maybe God didn’t give us. Well, Charlie was a genius. He was a genius at actually studying human beings and the human condition and psychology. You know, again, oftentimes here on the program, you don’t hear us talking about charts and graphs and technical models and all of that crap because it’s crap.

It’s crap. It’s nonsense. One thing I got a kick out of is that there was this theory. It’s called the efficient market theory, hypotheses, whatever it may be. And you had all of these mathematicians out there that said, you know, well, the market’s an efficient place because it trades based upon all known information that was out there. And I thought that was stupid. Buffett Munger thought it was stupid. How is it that?

were able to outperform the markets. Well, you’re able to outperform the markets because you understand the human condition and human behavior. And some of the greatest advances, in my opinion, when it comes to economics, it’s not the stuff coming from Paul Krugman and Alan Blinder, all that other nonsense, and the people that they parade on TV or these so-called economists that work at these big brokerage firms. It’s the behavioral economists, the economists of the world.

And, you know, Charlie Munger wouldn’t even call himself a behavior commas, but he was. And actually understanding how humans behave and the mistakes that they make. I want to go through, spend some time talking about it again, some of the things over the years that he put out, just common sense type things. Again, one of the things that Charlie saw eye to eye on is a conventional wisdom.

is poison. And he always talked about that. It was fascinating about, you know, he didn’t graduate, he didn’t get an undergraduate degree. Now I didn’t finish first went to University of Michigan, then he joined during World War Two, I think was the, the Air Force, and then they sent them off to learn how to be a meteorologist in California. And it was interesting then to where he was actually what he wanted to study when he was there, was he wanted to study, you know, the things that would

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get pilots killed, the different weather patterns, and how to help them prevent from getting killed. After he finished there, he talked himself in to Harvard. He didn’t have an undergraduate degree. And he talked the dean of Harvard Law School into letting him in. And I think he graduated top of his class without an undergraduate degree.

Again, what does that say about how nonsensical our education system is and how we’re paying out of the eye tooth with it? Anyway. I like this line by Charlie said, I have a friend who says the first rule of fishing. Is to fish where the fish are. The second rule of fishing is never to forget the first rule. And he mentioned, yeah, we’ve gotten pretty good at fishing where.

The fish are. Again, some of the things, again, I couldn’t agree with more. Again, he’s also from Omaha. He had this great line he did, he said in an interview, he said, I sometimes use the old saying, they got the boy out of Omaha, but they never got Omaha out of the boy. All those old fashioned values, family comes first.

Be in a position so that you can help others when troubles come. Prudent, sensible, moral duty to be reasonable. More important than anything else. More important than being rich. More important than being important. And absolute moral duty. Warren Buffett was asked in 2018 about Charlie. He said, Charlie has given me the ultimate gift.

that a person can give to someone else. He’s made me a better person than I would have been otherwise. He’s given me a lot of good advice over time. I’ve lived a better life because of Charlie. Again, and he talks a lot about value investing, things that we go over again and again here on the program. And it’s not about old fuddy duddy companies, it’s about understanding the value of a business.

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and where it’s going to go. Little quirk about Charlie as well that many people don’t know about. He’s obviously a very rich guy and gave a lot of money away to various different philanthropical organizations, including schools. University of Michigan, Stanford, Harvard Law. And there’s a prep school in Los Angeles that he helped, he helped, he was on the board there. And…

It’s classic because it makes sense. Okay, it’s right there in front of our faces. Why don’t they do this differently? So he’s on the board at this high school in California. And one of the rules is if he’s going to donate money to a school, he was never an architect, but they had to accept his designs for the buildings if they were going to actually use his designs for the buildings, if they were going to take his money. And at this high school in California,

He ensured that the girls’ bathrooms were larger than the boys’ bathrooms during the construction of the science center there. And it says, quote, he says, “‘Anytime you go to a football game or a function, there’s a huge line outside the woman’s bathroom. Who doesn’t know that they pee in a different way than the men? What kind of idiot would make the men’s bathroom and the women’s bathroom the same size?’ The answer is a normal architect.

And think about that way he’s thinking. And again, it’s kind of the way that it’s conventional wisdom. Why is everybody doing these things the same exact way? Again, what we talk about in regards to financial preparation, financial planning, the Yahu’s that are on TV that are telling you to buy, sell, hold this, that, and the next thing. Another great bit of information.

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And again, this is not, he phrases it in a great way, but this is timeless type stuff. This is stuff that again, religion has taught us these things over the years. How to live a long and happy life. Again, this was an interview he was doing back in 2019. You don’t have a lot of envy.

You don’t have a lot of resentment. You don’t overspend your income. You stay cheerful in spite of your troubles. You deal with reliable people and you do what you’re supposed to do. And all these simple rules work so well to make your life better. And they’re so trite. Stay cheerful because it’s a wise thing to do. Is that so hard? And can you be cheerful when you’re absolutely mired in deep hatred and resentment? Of course you can’t.

So why would you take that on? Some more, again, wisdom over the years. And like I said, these are things that my longtime listeners, I’ve repeated, we’ve talked about and I’ve written about. What you don’t wanna be is like the man who, when they had his funeral, the minister said, “‘Now’s the time for someone to say something nice about the deceased.’ And nobody came forward.”

and nobody came forward. He said, surely somebody can say something nice about the deceased and nobody came forward. Finally, finally one man came up to the podium and said, well, his brother was worse. And again, some of these things that he talked about, very similar, he did it better than I have, going after the dot coms like we did back in the late 19.

90s into early 2000. Let me just get what their point was at the time. I was talking about mixing technology, great advances with bad ideas. If you mix the mathematics of the chain letter or the Ponzi scheme with some legitimate development, like the development of the internet, you are mixing something which is wretched or irrational or has bad consequences with something that has very good.

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consequences. But you know, if you mix raisins with turds, they’re still turds. Brilliant. I mean, basically what we were trying to get across to people except in many, you know, in a much more pithy way, God bless them. You particularly want to avoid evil or seriously irrational people, particularly if they are attractive members of the opposite sex.

that can lead to a lot of trouble. Competency is a relative concept. What I needed to get ahead was to compete against idiots. And luckily, there’s a large supply. And he’s sitting next to Warren Buffett. He said, Warren, if people weren’t so often wrong, we wouldn’t be so rich. Again, how many times have I talked about that here on the program, the whole concept? I talk about being a greater fool.

Don’t be one of the greater fools out there. Don’t be set up to be one of the dupes, the ones that’s holding the bag. You know, last one standing during musical chairs for crying out loud. So much of the investing world was set up like that. I talked about that when it came to the online trading houses and all the crap that was started back in the late 1990s. And I said, why, you know, the reason why this was started.

Well, the big brokerage firms like to put a lot of idiots out there so they can take advantage of you. And it works every single time. Again and again and again. Anyway.

2017, I didn’t tend to get rich. I wanted to get independent. I just overshot.

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This is ready. He said this past year. He said this past year was doing an interview and He was talking about getting old and he said I’m eating this Meeting this good peanut brittle. That’s what you ought to do if you want to live to be 99 I hate to advertise my own product, but this is the key to longevity So far, I’ve had plenty of decline but I’m pretty shrewd about the way I handle it and So far the roles results have not been that bad in my old age

Now my sex life would be a different subject. I step out of my bed these days and then sit down in my wheelchair. So I’m paying some price for old age, but I prefer it to being dead. And whenever I feel sad about being in a wheelchair, I think, well, you know, Roosevelt ran the whole damn country for 12 years in a wheelchair. So I’m just trying to make this wheelchair thing the last, as long as Roosevelt did. Investing advice. Man, I’ve done some here.

Again, I talked about a little bit earlier, diversification, something I can’t wait. It’s this ridiculous concept that’s taught to kids and money managers, and it’s a great big problem. Over diversification is a problem. Too many investments within a portfolio, you’re just throwing things at a wall, hoping things will work. It’s insane to teach that one has to diversify.

when investing. You don’t have to. At least diversify, but to a certain degree, yeah, you don’t want to put all your eggs in one basket. Maybe I said, I even talked about, yeah, Russell 3000, this 3000, I mean, are you kidding me? Is that really necessary? Anybody said, he said, it’s not that easy to have a vast plethora of good opportunities that are easily identified. And if you’ve got three, four, five, I’d rather be my best ideas instead of my worst.

And again, this is something as well, you know, knowing, know thyself, again, they didn’t come up with this, they go Socrates here. Know thyself, right? Know your strengths, know what you’re good at. They, what Buffett called the circle of competence. Focus on your expertise, what your strengths are, so you don’t make mistakes. And he said, we’re not so smart.

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But we kind of know where the edge of our smartness is. That’s a very important part of practical intelligence. Again, is it genius? Again, some might say it is because so many people are incapable of it, but it’s practical intelligence. Man’s gotta know his limitation. Clint Eastwood for crying out loud. Same thing, right? Munger valued the power of strong brands and loyal customers.

Again, they could take a look at their portfolio and you can understand that as well and see how well that worked for them. Some of the other things that he had talked about. Oh, yeah, crypto. And again, I constantly get slings and arrows when it comes to crypto. And he never mince words, and I don’t either. And he basically said that digital currencies are a malicious combination of fraud and delusion. And he says, I don’t welcome

a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like to shuffling out of your extra billions of billions of dollars to somebody who’s just invented a new financial product out of thin air. Yeah, he called Bitcoin a turd, worthless artificial gold, and trading in these things is just dementia. He was also against, like we are as well, the commission free trading apps that

facilitate and push people to do dumb things with their money. And that’s one of the things about.

Munger. These are, I just got three basic rules that I want to talk about right now in regards to that what made him successful and I happen to agree with wholeheartedly. Again, you don’t, you want to do well in life and it’s, I was talking about being Adam Smith capitalism, two people can sit down at a table, both do business with one another and walk away happy. He had a great way of putting it.

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in regards to your business. Don’t sell anything you wouldn’t buy yourself. The safest way to try to get what you want is to try to deserve what you want. It’s such a simple idea. It’s the golden rule. You want to deliver to the world what you would buy if you were on the other end. There is no ethos in my opinion that is better for any person to have.

By and large, the people who have had this ethos win in life, and they don’t just win money and honors, they win the respect and the deserved trust of the people they deal with. There is a huge pleasure in life to be obtained from getting deserved trust. Reputation and integrity are your most valuable assets and can be lost in a heartbeat.

He also talked about not working for anyone you don’t respect and admire. You particularly want to avoid working directly under somebody you don’t admire and don’t want to be like. It’s dangerous. We’re all subject to control to some extent by authority figures, particularly authority figures who are rewarding us. Dealing properly with this danger acquires both some talent and will. I coped in my time by identifying people I admired and by maneuvering mostly without criticizing

anybody said I was usually working under the right sort of people. A lot of employers will permit that if you’re shrewd enough to work it out with some tact. Generally, your outcome in life will be more satisfactory if you work under people who you correctly admire. Again, he talked about also working with people that you enjoy as well. And again, you want to maneuver yourself into doing something in which you have an intense interest alongside people with the company that

you enjoy. So much I could go over, you know, as well understanding, embracing your mistakes. It’s just common sense wisdom. And then that’s been timeless. I talk about Munger, I talk about Buffett, I talk about Kahneman, I talk about Druckenmiller, I talk about Taleb, Benjamin Graham, who’s Buffett’s teacher, all of these people that, yeah, and you look at my bookshelf, you’re lined with everything. These are the people that

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have taught me. And you can go back even further. So I said, you’re going to learn more. You’re going to learn more about investing properly and building portfolios and understanding human nature by reading the classics. By going back and understanding reading read Socrates. Encompass all of this. That’s one of the things that Munger also talked about

as well as important in life is constantly educating yourself, constantly reading, constantly trying to learn more in a myriad of different topics. The specialization, that’s no good. You wanna know a lot about the things because you can pull it all in. Anyway, rest in peace Charlie Munger. Can it’s not, can’t talk about his lived to nine years. It’s not sad. It’s something that needs to be celebrated. And again,

We’ll be talking about you as long as I’m still here on air. That’s for sure. Watchdog on wallstreet.com.