While Michael Milken is obviously a controversial person, that he was and is influential is impossible to argue. Anyone who wants to learn more about Michael Milken, including the parts of his life that sent him to jail can read Fall from Grace, The Predators’ Ball, Den of Thieves or A License to Steal. Links to these books can be found below in the Notes as is usual. This […]
This is my 150th blog post and probably my last one in the Charlies Munger series. If I get some good questions I might be persuaded to write a few more in the future. If I had to boil down Charlie Munger’s investment approach to a single phrase it would be: the best way to be smart, is to not be stupid. In other words, stay away from investments where […]
Charlie Munger’s view on philanthropy is clear: “Those of us who have been very fortunate have a duty to give back.” Among the most interesting questions related to this statement are: What is philanthropy? How does philanthropy differ from charity? Are there actions which are “giving back” that are not quite philanthropy? How does one best give back? Looking at the origins of these words is arguably helpful. I use the […]
A textbook definition of lollapalooza is: “A person or thing that is particularly impressive or attractive.” When Charlie Munger uses the word “lollapalooza” he often attaches the word “effects” (as in “lollapalooza effects”) which means that multiple factors are acting together in ways that are feeding back on each other. The lollapalooza effects phenomenon is typified by feedback creating a complex adaptive system, that can be either positive or negative […]
The short answer is: no. Every human is unique, but Charlie Munger is particularly unique. As just one example, he is rational in ways few people can emulate. He is also self-effacing and yet has a black belt in chutzpah. He is capable of being patient and yet pounce aggressively at the right time. Knowing what you do not know is a rare quality in a human. Rising to […]
Buffett and Munger use several methods which are at odds with traditional financial theory. Here is one of those nontraditional approaches: Buffett: “We don’t discount the future cash flows at 9% or 10%; we use the U.S. treasury rate. We try to deal with things about which we are quite certain. You can’t compensate for risk by using a high discount rate.” There is no law of nature requiring that […]
Charlie Munger has recommended many books, one of which is Viktor E. Frankl’s Man’s Search for Meaning. In that book Frankl writes: “When we are no longer able to change a situation, we are challenged to change ourselves…. Everything can be taken from a man but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way.” Charlie […]
Phil Fisher had a significant influence on Charlie Munger’s decision to invest in stocks based on a bargain relative to the quality of the business. On the basis of my research that included a few e-mail exchanges with Phil Fisher’s son Ken, I am skeptical that Fisher’s view was the source of Munger’s emphasis on quality. However, Fisher’s ideas probably made Munger more confident that this focus on the […]
This is the last post in a 12 part “Dozen Things” series on Charlie Munger. Collectively the first 11 posts are nearly as large as a book. The intent with this post is to distill Charlie Munger’s approach to making decisions to less than 500 words. If you don’t have the patience to read 500 words, I can’t help you. 1. STAY IN YOUR CIRCE OF COMPETENCE: Know the edge of your […]
It is important to consider a post like this in the context of the other posts in this series, like the post on mistakes. No one is perfect. Everyone makes mistakes. “Ben Franklin said: ‘I’m not moral because it’s the right thing to do – but because it’s the best policy.’” “We knew early how advantageous it would be to get a reputation for doing the right thing and […]