Richard Feynman was a scientist, professor, musician and raconteur. Bill Gates adds to that description Feynman: “In 1965, Feynman shared a Nobel Prize for work on particle physics. Feynman wasn’t famous just for being a great teacher and a world-class scientist; he was also quite a character. He translated Mayan hieroglyphics. He loved to play the bongos. While helping develop the atomic bomb at Los Alamos, he entertained himself by figuring out how to break into the safes that contained top-secret research.” The Cambridge History of Science includes this text: “No doubt some of his peers dismissed Feynman’s interest in literature, art, and music as just as embarrassingly irrelevant to physics as his frequenting of strip clubs.” Rochus Vogt, a Caltech physics professor, former provost, and former division chair in Physics, Mathematics, and Astronomy adds: “He was not only a top-notch physicist, but he was an artist, a Renaissance type of person. He had certain insights and perceptions in physics that I have no word to describe other than ‘artistic.'”
Bill Gates and others have said similar things about Charlie Munger, who also has a very broad range of interests and activities. Gates on Munger: “He is truly the broadest thinker I have ever encountered. From business principles to economic principles to the design of student dormitories to the design of a catamaran he has no equal… Our longest correspondence was a detailed discussion on the mating habits of naked mole rats and what the human species might learn from them.”
Both Munger and Feynman are examples of what Bain Chairwoman Orit Gadiesh describes as an “expert-generalist.” Gadiesh has said the term describes: “Someone who has the ability and curiosity to master and collect expertise in many different disciplines, industries, skills, capabilities, countries, and topics., etc. He or she can then, without necessarily even realizing it, but often by design: Draw on that palette of diverse knowledge to recognize patterns and connect the dots across multiple areas. Drill deep to focus and perfect the thinking.” I would add that expert generalists have other qualities such as being intellectually humble and inquisitive, openness to experience and having a need fin. They also think probabilistically, accept that some areas are inherently uncertain and are open to new ideas. Expert generalists include people like Sir Alex Ferguson, Marie Curie, Pablo Picasso, Bill Gates, Elon Musk, Steve Jobs, Leonardo Da Vinci and Ben Franklin. A similar term for expert generalist is polymath, but they are not quit ethe same thing.
Here’s Munger describing himself, in effect advocating for an “expert generalist” approach: “For some odd reason, I had an early and extreme multidisciplinary cast of mind. I couldn’t stand reaching for a small idea in my own discipline when there was a big idea right over the fence in somebody else’s discipline. So I just grabbed in all directions for the big ideas that would really work. Nobody taught me to do that; I was just born with that yen.” And: “the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back.”
Michael Mauboussin describes what you should be looking for as follows:
You want to determine who has a high rationality quotient, or the ability to make good decisions. A lot of that boils down to what’s called “epistemic rationality,” a fancy way of saying that your beliefs map accurately to the world. There are sets of characteristics of the kinds of people who are actively open minded. They incorporate lots of information and various points of view, and they update their view when new information comes in.
As is usual on this blog, the Feynman quotes are in bold text. Munger’s ideas are in the commentary in regular text.
- “Imagine how much harder physics would be if electrons had feelings!” Trying to use formulas from physics in investing and economics can lead to some conclusions that are problematic. Charlie Munger describes what the right balance is in this way: ‘Economics should emulate physics’ basic ethos, but its search for precision in physics-like formulas is almost always wrong in economics.” Munger has also said: “Max Planck the great Nobel laureate who found Planck’s Constant, tried once to do economics. He gave it up. Now why did Max Planck, one of the smartest people who ever lived, give up economics? The answer is, he said, “It’s too hard. The best solution you can get is messy and uncertain.” Investing and economics will never be as predictable as physics since the systems involved are complex adaptive systems. If you do not understand economics you do not understand the world. But if it is all that you know and use, you are a danger to yourself and others. Orson Scott Card said once in a slightly different domain: “You know the old saying: To a man with a hammer, everything looks like a nail. Well, that’s only sometimes true. In the case of the academic-literary establishment — the community I lovingly call “li-fi” — the better analogy is: To a man with only a hammer, a screw is a defective nail.”
- “I’m smart enough to know that I’m dumb.” Humility and the mental model of a “circle of competence” are critically important for successful investing since the best way to be smart is to not be dumb. The most effective way to be not dumb is to know what you are doing. Munger believes: “You are a disaster if you don’t know the edge of your competency. I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.” Isaac Asimov once made the point humorously: “Those people who think they know everything are a great annoyance to those of us who do.” The old joke “You can always tell a physicist, but you can’t tell him much” just does not apply to someone like Feynman. As an example of his intellectual humility Feynman once said: “I think I can safely say that nobody understands quantum mechanics. … I am going to tell you what nature behaves like. If you will simply admit that maybe she does behave like this, you will find her a delightful, entrancing thing. Do not keep saying to yourself, if you can possibly avoid it, ‘But how can it be like that?’, because you will get ‘down the drain’, into a blind alley from which nobody has escaped. Nobody knows how it can be like that.”
- “The first principle is that you must not fool yourself and you are the easiest person to fool.” “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.” This is the Feynman quotation which Charlie Munger likes to cite when he is talking about the many dysfunctional biases that make up what he calls “the psychology of human misjudgment.” Understanding behavioral economics is helpful to making better decisions but it is not a panacea. As Daniel Kahneman says, you can study human psychological bias for decades and yet still fall for it. Not fooling yourself is a lifetime struggle – it never ends. Stephen Jay Gould put it this way once: “The most erroneous stories are those we think we know best–and therefore never scrutinize or question.”
- “I never pay attention to anything by ‘experts’. I calculate everything myself.” Working through an analysis from first principles generates big rewards and often an edge versus other investors who follow the crowd or an analyst with conflicted motives. Munger likes to say: “Warren and I do more reading and thinking and less doing than most people in business. We do that because we like that kind of a life. But we’ve turned that quirk into a positive outcome for ourselves.” Marvin Minsky said about Feynman: “When he faces a problem, he’s unusually good at going back to being like a child, ignoring what everyone else thinks… He was so unstuck — if something didn’t work, he’d look at it another way.”
- “There are 10^11 stars in the galaxy. That used to be a huge number. But it’s only a hundred billion. It’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.” Big numbers are funny. I was once in a bank and because I was dealing with large numbers at work I wrote a check for 20 million dollars somewhat absent mindedly when the right amount was $20. No matter how many zeros are involved, the underlying investing principles remain the same. Janet Lowe writes in her book Damn Right: “Munger has said that accumulating the first $100,000 from a standing start, with no seed money, is the most difficult part of building wealth. Making the first million was the next big hurdle. To do that a person must consistently under spend his income. Getting wealthy, he explains, is like rolling a snowball. It helps to start on top of a long hill—start early and try to roll that snowball for a very long time. It helps to live a long life.”
- “For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.” Public relations is a funny thing. That means both funny in the sense of strange and funny in the sense of haha. One weird attribute of humans is how much people fall for news reports that are essentially press releases. Briefly stated, Gell-Mann Amnesia effect works as follows says Michael Crichton: “You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward-reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.” A Feynman biographer named Lawrence Krauss has said on this point: “the greatest lesson I’d like to leave with – for Feynman, is that it’s nature that tells us how it behaves. And if we want to learn how the universe works, we have to get our answers from nature. And we have to be willing to go fearlessly in that direction and do whatever is possible to find out. And Feynman was nothing if not fearless.”
- “You can know the name of that bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird. You’ll only know about humans in different places, and what they call the bird. … I learned very early the difference between knowing the name of something and knowing something.” Munger makes the same point: “You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life.” And “It’s not given to human beings to have such talent that they can just know everything all the time. The law student in the book The Paper Chase with a photographic memory failed. To be an investing success you must think and understand, not just recall.
- “Everything is interesting if you go into it deeply enough.” I have found that even people you may find boring have interesting things to say if you bore into a subject that they are passionate about. I once spent a few hours talking on an airplane to someone who knew just about everything about fishing in the Gulf of Alaska. Munger says: “The game is to keep learning, and I don’t think people are going to keep learning who don’t like the learning process.” If you do not have a broad education is is hard to understand anything really. Munger has developed himself into an expert generalist to complement areas where he has a circle of competence. “You have to realize the truth of biologist Julian Huxley’s idea that ‘Life is just one damn relatedness after another’ So you must have the models, and you must see the relatedness and the effects from the relatedness.”
- “Physics is like sex: sure, it may give some practical results, but that’s not why we do it.” Having passion for what you do is important. Passionate people are far more likely to do the required work since they enjoy it. If you are not passionate about investing you should buy a diversified portfolio of low cost index funds. Munger believes: “You need to have a passionate interest in why things are happening. That cast of mind, kept over long periods, gradually improves your ability to focus on reality.” Also from Munger: “Like Warren, I had a considerable passion to get rich. “Not because I wanted Ferraris– I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t know where I got that notion from, but I had it.”
- “I think it is much more interesting to live not knowing than to have answers that might be wrong… In order to make progress, one must leave the door to the unknown ajar.” Munger has said something that is quite similar to the sentiment expressed by Feynman: “When I run into a paradox I think either I’m a total horse’s ass to have gotten to this point, or I’m fruitfully near the edge of my discipline. It adds excitement to life to wonder which it is.” Munger likes to say that if he does not destroy one of his most cherished ideas every year, it is a wasted year. Munger again: “We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”
- “There’s all kinds of myths and pseudoscience all over the place. I may be quite wrong, maybe they do know all these things, but I don’t think I’m wrong. You see, I have the advantage of having found out how hard it is to get to really know something, how careful you have to be about checking the experiments, how easy it is to make mistakes and fool yourself. I know what it means to know something, and therefore I see how they get their information and I can’t believe that they know it. They haven’t done the work necessary, haven’t done the checks necessary, haven’t taken the care necessary. I have a great suspicion that they don’t know, that this stuff is and that they’re intimidating people.” Munger says: “Organized common (or uncommon) sense — very basic knowledge — is an enormously powerful tool. There are huge dangers with computers. People calculate too much and think too little.” Investors and speculators will often encounter people, usually salespeople, but not always, who try to intimidate them. Just say no to intimidation. Think for yourself. I have a friend who likes to say: ‘If someone tries to hand you a turd, say ‘no thanks’ and walk away.” this apprpach applied to ideas as well as other forms of turds.
- “Scientific knowledge is a body of statements of varying degrees of certainty — some most unsure, some nearly sure, but none absolutely certain.” “We absolutely must leave room for doubt or there is no progress and no learning. People search for certainty. But there is no certainty.” “I have approximate answers and possible beliefs in different degrees of certainty about different things, but I’m not absolutely sure of anything.” Predictions are hard to make correctly, especially about the future is an old joke. Many people try to get away with predicting the present and calling themselves futurists. Munger points out: “We have the same problem as everyone else: It’s very hard to predict the future… If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one legged man in an ass kicking contest. You’re giving a huge advantage to everybody else.” In his book Margin of Safety Seth Klarman writes:
“Most investors strive fruitlessly for certainty and precision, avoiding situations in which information is difficult to obtain. Yet high uncertainty is frequently accompanied by low prices. By the time the uncertainty is resolved, prices are likely to have risen. Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty. The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.”
Stephen Hawking puts it this way: “The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.” Stay passionate, but stay humble too. Never stop learning. Be an expert generalist if you can.
The right decision making process has two steps: Know your circle of competence. If the bet is not in your circle of competence don’t invest.If you decide that it is wise to make a bet based on your circle of competence then use your skill as a expert generalist to check your decision. Do everything make sense base don worldly wisdom too? Munger: “Common stock investors can make money by predicting the outcomes of practice evolution. You can’t derive this by fundamental analysis — you must think biologically” and “I find it quite useful to think of a free market economy—or partly free market economy—as sort of the equivalent of an ecosystem.” “Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group … then to hell with them.”“If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.” “It’s kind of fun to sit there and out think people who are way smarter than you are because you’ve trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.”
What was left on Feynman’s blackboard after he died.
The Feynman Lectures: http://www.feynmanlectures.caltech.edu/
Feynman Talk: Cargo Cult Science https://www.lhup.edu/~DSIMANEK/cargocul.htm
Feynman Talk: There’s Plenty of Room at the Bottom: http://www.zyvex.com/nanotech/feynman.html
Feynman Nobel Lecture: http://www.nobelprize.org/nobel_prizes/physics/laureates/1965/feynman-lecture.html
Michael Crichton on Gell-Mann Amnesia: http://www.goodreads.com/quotes/65213-briefly-stated-the-gell-mann-amnesia-effect-is-as-follows-you
Feynman Videos: http://www.richard-feynman.net/videos.htm