Four classic tips from Charlie Munger by Mark Tobak
Charlie Munger, financier, polymath, famed vice-chairman of Berkshire Hathaway, now shares with his partner, Warren Buffett, a reputation as an Oracle of Omaha.
Little more than a month ago, at this year’s Daily Journal meeting, Charlie confidently predicted “lots of trouble” down the road as a result of “too much wretched excess.”
Top value fund managers are ready for the small cap bear market to be done
Lots of trouble shortly arrived: pandemic, recession, market turbulence, world-wide, deep and unprecedented.
Tools to cope?
Gratefully, Charlie, having predicted our adversity, provides eloquent and sagacious guidance. As a thoughtful and observant child of the Great Depression, now 96 years young, Charlie proffers prescriptions for enduring hard times.
Like the seasoned old gold prospector, portrayed by Walter Huston in the classic 1948 movie “Treasure of the Sierra Madre,” says of the potable water splashed about by his younger partners, sage advice borne of bitter experience is “precious, sometimes more precious than gold.”
Four Tips From Charlie Munger
Here are four classic tips from Charlie Munger, each more precious than gold:
Never Yield to Self-Pity
In his 2007 USC commencement address, available online on YouTube, Charlie cautioned graduates never to drift into self-pity: “Your child can be dying of cancer. [As one of Charlie’s children, sadly, did.] Self-pity is not going to improve the situation. Self-pity is the standard condition. You can train yourself out of it and get an advantage over everybody else.” There are times in life when pausing to nurse our sorrows is an unaffordable luxury. We are surely in such a time.
Learn from the Greek Slave-Philosopher Epictetus
In the same USC address Charlie assured his listeners that “life will have terrible blows in it, horrible blows, unfair blows. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every missed chance in life was an opportunity to behave well…and utilize the terrible blow in constructive fashion.”
Here Charlie reformulates his longstanding admonition to utilize mathematical inversion to solve real-life problems. Invert a problem in math or life and the solution rolls out before you. As when, in the beloved 1946 movie “It’s a Wonderful Life,” George Bailey’s guardian angel, Clarence, reveals what George’s world would be like if George had never been born. George sees his whole life afresh and is reborn.
Recognize We Have Lived in Atypically Bountiful Times
In a recent panel discussion available online on YouTube, Charlie mused that “the place we’ve all lived and the time we have lived in has been the easiest any group of humans have ever had. So those who found it difficult, all I can say is everyone else had it worse. It’s been a very easy period based on what our ancestors had. Imagine having half your children die in your presence, which happened to all previous generations. Think of the agony that causes.”
Let us all pause to remember that “infant mortality,” now well under one percent in our United States, was once a commonplace rather than a minimal statistical rate. In the Middle Ages few children survived to adulthood and few adults survived to old age.
Final Tip From Charlie Munger: Realize We Are All in This Together
In Charlie’s 2017 talk at the Ross School of Business, at his alma mater, The University of Michigan, Charlie reiterated his family’s “moral duty to be reasonable” in the face of the Great Depression. Charlie recounts that his paternal grandfather, a federal judge, sent his musician son-in-law to pharmacy school and bought him a bankrupt pharmacy to run. The judge also saved his own son’s failing bank through an exchange of assets. Charlie’s maternal grandfather divided his house and moved extended family in under a single roof. Finally Charlie notes that amidst poverty, want and need, they suffered through, lived their lives and remained cheerful notwithstanding.
Invaluable lessons all, best heard directly from the master at the above sites.
And if that should wet your appetite for more of Charlie’s wisdom, for good times and bad, see Poor Charlie’s Almanac: The Wit and Wisdom of Charles T. Munger.