Article by Investment Master Class
“The life of Darwin demonstrates how a turtle may outrun the hares, aided by extreme objectivity, which helps the objective person end up like the only player without a blindfold in a game of Pin the Tail on the Donkey” Charlie Munger
Relying On Old-Fashioned Stock Picking, Lee Ainslie Reports His “Strongest Quarter” Ever
Lee Ainslie's Maverick Fund USA enjoyed its "strongest quarter in the fund's history" during the three months to the end of June. According to a copy of the firm's second-quarter letter to investors, which ValueWalk has been able to review, Maverick Fund USA gained 18% in the second quarter. Following this performance, the fund was Read More
Charlie Munger, one of the most successful Investment Masters, has referred to the brilliance of Charles Darwin on numerous occasions. This prompted my interest in the ‘Autobiography of Charles Darwin’. I found it insightful, and as fresh and relevant today despite almost 150 years passing since its writing. At just 120 pages, it’s an easy read.
“[Darwin] is precisely the type of example you should learn nothing from if bent on minimizing your results from your own endowment” Charlie Munger
“One of the most successful users of an antidote to first conclusion basis was Charles Darwin. He trained himself, early, to intensively consider any evidence tending to disconfirm any hypothesis of his, more so if he thought his hypothesis was a particularly good one. The opposite of what Darwin did is now called confirmation bias, a term of opprobrium. Darwin’s practice came from his acute recognition of man’s natural cognitive faults arising from Inconsistency-Avoidance Tendency. He provides a great example of psychological insight used correctly to advance some of the finest mental work ever done” Charlie Munger
I’ve included some of the more interesting observations below. You’ll notice nearly all of the headings I’ve chosen are tutorial topics from the Investment Masters Class and have as much relevance to investing as they do to Darwin’s grand discovery. Whether you are looking to make the next scientific breakthrough or seeking investment wisdom, like Charlie Munger, you can learn a lot from Charles Darwin.
Education and Smarts
“I have been told that I was slower in learning than my younger sister Catherine, and I believe that I was in many ways a naughty boy”
“When I left school I was for my age neither high nor low in it; and I believe that I was considered by all my masters and by my Father as a very ordinary boy, rather below the common standard of intellect“
“During the three years which I spent at Cambridge my time was wasted, as far as academical studies were concerned”
“I have deeply regretted that I did not proceed far enough at least to understand something of the great leading principles of mathematics“
“I had strong and diversified tastes, much zeal for whatever interested me, and a keen pleasure in understanding any complex subject or thing“
“I was fond of reading various books, and I used to sit for hours reading the historical plays of Shakespeare, generally sitting in an old window in the thick wall of the school”
“During my last year at Cambridge I read with care and profound interest Humboldt’s Personal Narrative. This work and Sir J. Herschel’s Introduction to the Study of Natural Philosophy stirred up in me a burning zeal to add even the most humble contribution to the noble structure of Natural Science. No one or a dozen other books influenced me nearly so much as these two”
“When I see the list of books of all kinds which I read and abstracted, including whole series of Journal and Transactions, I am surprised at my industry”
“Looking backwards, I can now perceive how my love for science gradually preponderated over every other taste”
“My love of natural science has been steady and ardent”
"On this [first geology] tour I had a striking instance how easy it is to overlook phenomena, however conspicuous, before they have been observed by anyone"
"As far as I can judge, I am not apt to follow blindly the lead of other men.
Understanding and Patience
"From my early youth, I have had the strongest desire to understand or explain whatever I observed - that is, to group all facts under some general laws. These causes combined have given me the patience to reflect or ponder for any number of years over any unexplained problem"
"I have steadily endeavoured to keep my mind free, so as to give up any hypothesis, however much beloved (and I cannot resist forming one on every subject) as soon as facts are shown to be opposed to it. Indeed I have had no choice but to act in this manner"
"I cannot remember [with the exception of the Coral Reefs] a single formed hypothesis which had not after a time to be given up or greatly modified"
Collect the Facts
"On first examining a new [geological] district nothing can appear more hopeless than the chaos of rocks, but by recording the stratification and nature of the rocks and fossils at many points, always reasoning and predicting what will be found elsewhere, light soon begins to dawn on the district, and the structure of the whole becomes more or less intelligible"
"I think I am superior to the common run of man in noticing things which easily escape attention, and in observing them carefully"
"I was very glad to learn from him [H. Spencer] his system of collecting facts. He told me that he bought all the books which he read, and made a full index to each, of the facts which he thought might prove serviceable to him, and that he could always remember in what book he had read anything, for his memory was wonderful. I then asked how at first he could judge what facts would be serviceable and he answered that he did not know, but that sort of instinct guided him. From this habit of making indices, he was enabled to give the astonishing number of references on all sorts of subjects, which may be found in his History of Civilization"
"In several of my books facts observed by others have been extensively used"
"I keep thirty to forty large portfolios, in cabinets with labelled shelves, into which I can at once put a detached reference or memorandum. I have bought many books and at their ends I make an index of all the facts that concern my work; or, if the book is not my own, write out a separate extract, and of such abstracts I have a large drawer full. Before beginning on any subject I look to all the short indexes and make a general and classified index, and by taking the one or more portfolios I have all the information collected during my life ready for use"
".. it appeared to me that by following the example of Lyell in Geology, and by collecting all facts which bore in any way on the variation of animals and plants under domestication and nature some light might perhaps be thrown on the whole subject"
"I worked on true Baconian principles, and without any theory collected facts on a wholesale scale, more especially with respect to domesticated productions, by printed enquiries, by conversation with skilful breeders and gardeners, and by extensive reading"
".. no importance compared with the habit of energetic industry and of concentration to whatever I was engaged in"
"I wrote my Journal, and took much pains in describing carefully and vividly all that I had seen; and this was good practice"
"My mind seems to have become a kind of machine for grinding general laws out of large collections of facts"
"This paper [published on a geological formation] was a great failure, and I am ashamed of it... my error has been a good lesson to me to never trust in science to the principle of exclusion"
"It was necessary for science that [such] mistakes should be exposed"
"Whenever I have found out that I have blundered, or that my work has been imperfect, and when I have been contemptuously criticized, and even when I have been overpraised, so that I have felt mortified, it has been my greatest comfort to say hundreds of times to myself that "I have worked as hard and as well as I could, and no man can do more than this"
Thinking and Age
"A man after a long interval can criticize his own work, almost as well as if it were that of another person"
"I think I have become a little more skilful in guessing right explanations and in devising experimental tests; but this may probably be the result of mere practice, and a larger store of knowledge. I have as much difficulty as ever expressing myself clearly and concisely; and this difficulty has caused me a very great loss of time; but it has had the compensating advantage of forcing me to think long and intently about every sentence, and this I have been often led to see errors in reasoning and in my own observations or those of others"
"I saw more of Lyell than any other man both before and after my marriage. His mind was characterized, as it appeared to me, by clearness, caution, sound judgement and a good deal or originality. When I made any remark to him on Geology, he never rested until he saw the whole case clearly and often made me see it more clearly than I had done before. He would advance all possible objections to my suggestion; and even after these were exhausted would long remain dubious"
"While in thought, he [Lyell] would throw himself into the strangest attitudes, often resting his head on the seat of a chair, while standing up"
"Fifteen months after I began my systematic enquiry, I happened to read for amusement Malthus on Population, and being well prepared to appreciate the struggle for existence which everywhere goes on from long-continued observation of the habits of animals and plants, it at once struck me that under these circumstances favourable variations would tend to be preserved, and unfavourable ones to be destroyed. The result of this would be the formation of new species. Here then I had last got a theory to work with, but I was so anxious not to avoid prejudice, that i determined not for some time to write even the briefest sketch of it."
"I had, also during many years, followed a golden rule, namely whenever a published fact, a new observation or thought came across me, which was opposed to my general results, to make a memorandum of it without fail and at once; for I had found by experience that such facts and thoughts were far more apt to escape from memory than favorable one. Owing to this habit, very few objections were raised against my views which I had not at least noticed and attempted to answer"
Humility in conclusion..
"Therefore, my success as a man of science, whatever this may have amounted to, has been determined, as far as I can judge, by complex and diversified mental qualities and conditions. Of these the most important have been - the love of science - unbounded patience in long reflecting over any subject - industry in observing and collecting facts - and a fair share of invention as well as common sense. With such moderate abilities as I possess, it is truly surprising that thus I should have influenced to a considerable extent the beliefs of the scientific men on some important points
Let Charles Darwin give you an edge in the struggle for investment survival ...