Charlie Munger often says, “Common sense is not so common.”
International Value with Distillate Capital’s Thomas Cole
ValueWalk's Raul Panganiban interviews Thomas Cole, CFA, CEO and Co-founder of Distillate Capital. In today’s episode we discuss value investing in the current environment and why you should look internationally. Q3 2020 hedge fund letters, conferences and more International Value with Thomas Cole, CFA, CEO and Co-founder of Distillate Capital
Playing upon two meanings of the word “common.”
Common can mean ordinary and conventional.
Or it can mean naive and untutored:
“The common sense you were born with.”
And exchange for conventional common sense.
Charlie Munger's Common And Uncommon Sense
We see that uncommon sense in imaginative inventors, great scientists, successful investors, daring entrepreneurs and creative composers.
All of whom push the envelope of conventional common sense because they never surrender to it.
Irving Berlin assured that had he been classically trained he would never have produced his vast and wondrous playbook of popular song.
Thus we observe uncommon common sense in children.
Decades ago my four-year-old daughter taught me a lesson in uncommon sense waiting on line for the Snow White ride at Disney World.
I asked her if she feared the witch.
She answered without an instant’s reflection:
"The witch is not thinking about me. She is thinking about Snow White."
She did not, as adults do, need Charlie Munger’s advice to follow incentives.
Or to ask why.
She knew them instinctively.
Because she had not yet been taught to see the world conventionally.
To live inside “the box” of conventional common sense.
Like acculturated and socialized adults.
"Think Outside The Box"
To solve difficult problems people say, “Think outside the box!”
But never realize what “the box” actually is.
The box is conventional common sense.
The box constrains what you think and believe.
We presume the box is rational thinking.
But it is just acculturated conventionality.
Politicians advocate war to “fight for freedom,” never to pursue interests.
"Pay No Attention To That Man Behind The Curtain"
It takes courage to look beyond the conventions we have absorbed.
They are part of the price of civility.
It is no accident that Charlie Munger is at once plainspoken and courageous.
He has never surrendered his child’s wonder.
He has never stopped asking why.
The “why” that reveals hidden incentives.
He has never accepted reality at face value but struggled to be and remain rational.
Employing the uncommon common sense that makes him brilliant.
And tactful Warren Buffett laughs when Charlie goes “colorful” and speaks what few dare even think.
Charlie watches the incentives and asks why.
So, like my little girl, he can see more and fear less.
Witness firsthand Charlie Munger on common and uncommon sense, the deep wisdom and lightning wit of his extraordinary 2008 conversation with late Professor of Physics Thomas A. Tombrello at Caltech, the DuBridge Lecture: