Charlie Munger and the Disorganised Octopus 🐙
My learnings from his writings/talks/choices
Charlie Munger passed away on 28th November and the ones who read my posts regularly asked me ‘if I was ok?’ since someone I looked up to and often quoted is no more.
I am ok.
On second thoughts, I am happy for the fact that he went in peace, having given everything he had till his last day. He inspired and influenced millions of us in professions including Investing, Law, Psychology, Economics, Architecture, Philanthropy, and more. And the irony is that he didn’t have any formal academic degrees in these subjects (except Law) to stand upon and deliver his teachings. He did it nonetheless, he created a ripple, impacted leaders/companies/institutions, and got the attention and love he truly deserved.
Bill Gates has referred to him as “the broadest thinker I have ever encountered.”
Warren Buffet often said “He the best 30-second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you even finish the sentence.
David Clark states “Charlie Munger will be seen as the proverbial enigma wrapped in a paradox—he is both a mystery and a contradiction at the same time.”
Kuntal Shah refers to him as “Modern Day Seneca”
His impact and influence have been colossal and will only grow in scope in times to come.
Ironically, billions still don’t know much about him and hence I have been thrilled to see videos, posts, newsletters, tweets, and shorts springing up across social media platforms or newsletters about what people have learned from the wisdom of Charlie Munger.
I too have my share of learnings from him which I will share below. But before I do that, I would like to express my sincerest gratitude to Charlie Munger for having been generous with his wisdom and sharing the same liberally with us all.
You’ll be surprised to learn that it was this figure that steered my writings and content toward human psychology and its impact on our decision-making. ‘Psychology of Investing’ Newsletter may not exist without my learnings from his talks/letters.
His impact on me goes deeper. His talks have also influenced my perspective on the very concept of wealth, career, relationships, work ethic, patience, reading, long-term thinking, and leadership. Sometimes I will catch myself thinking in a situation - “How would Charlie go about resolving this?”
I wasn’t brought up in a household where wisdom and values were oozing out of everyone. On the contrary, we were surrounded by financial struggles and ruined credibility due to the failed business attempts of my hard-working parents. They too were trying to do their best but did not have guidance of any sort and luck too had abandoned them at every turn. Those battles had left deep scars that seduced me into making many bad choices e.g. leverage, lies, liquor, and other vices that one normally uses as a defense mechanism.
I was like a disorganized Octopus during this phase of my life. I was earning money but I had no idea about compounding money. I was working hard but had no sense of committing to long-term results. I had friends around me but I had a very shallow understanding of the importance of durable relationships. I had opportunities to choose from, but I was hoping for them to fall onto my lap instead of seizing them when the time was right.
All this stopped when I happened to stumble upon the teachings of Charlie Munger, along with Warren Buffet’s. These were men of honor, men with battle-stained wounds, and with truckloads of wisdom. At that point in my journey, I had lost a lot of money, ruined many relationships, been disappointed by people falling short of their promises, and was at a painful low.
I was looking alright from the outside in, but within these recesses of my mind, I was broken, tired of surviving and just scraping through. But I was hungry to hold someone’s hand and learn to fight my way back and thrive.
In these situations, very few get lucky when any of the following 3 things happen -
He could be taken under the wings of someone wise
He could be in a situation to learn by observation at close quarters
He could bump into a book that transforms his life
I, luckily, loved reading and hence landed up in Camp 3. I feel incredibly grateful for that twist of fate. I happened to bump into Berkshire Hathaway letters first, which introduced me to Warren Buffet’s business partner for 50+ years - Mr. Charlie Munger.
I was intrigued by this man because Buffet would always refer to them as “We” or “Charlie & I”. For the richest man in the world to always talk in these terms was calling for respect and admiration even if I didn’t know much about him. Then I was introduced to his talks, speeches, letters, and autobiography - only to find out that the man is a unique blend of wits, wisdom, values, and tonnes of empathy.
It’s difficult to find people with even one of these traits, and it’s an extreme rarity to find them all in one human being.
You cannot walk away unchanged if you go through everything that Charlie ever expressed. Try it and maybe then you could call me and confirm the same. You will be happy beyond your imagination if you choose this route.
Let me share a few mungerisms below (in bold), my lessons from these and how have I implemented them in my life (bullet format) -
“You don’t need to pee on an electric fence to learn not to do it”
There is more to learn from failures than success stories. All success stories are different and require many variable elements to come into play e.g. education, networks, skills, financial support, luck, etc. But almost all failure stories have common elements e.g. leverage, envy, lifestyle, ego, fear of failure, or lack of focus.
I can learn a lot from the eminent dead instead of trying to repeat mistakes already committed before. A bookstore of Founders podcast is the best place to start.
I can be observant of people around me, learn about stupidities that have fatal consequences, and do everything to avoid repetition of these.
“You don’t need to ask a barber if you need a haircut”
Everyone is driven by incentives and that is basic human nature. Incentives could be financial (e.g. money) or non-financial (e.g. appreciation). One must know the incentives of people around so you can reason whether the person is being objective in his recommendation or is shoving down my throat something that only rewards him well.
Always appeal to people’s incentives/interests instead of reasons for changing habits/outcomes. Asking someone to stop smoking just because it smells bad doesn’t produce the desired result. Tell someone about the consequences of smoking and the accelerating death, chances are it would work, as it appeals to his interests.
If you want to change the behavior of people or teams, change the incentive that is driving that behavior e.g. the ant in the kitchen isn’t the problem, it’s the sugar cubes lying on the floor. Take the sugar away, the ants disappear too.
"To a man with a hammer, everything looks like a nail”
A politician may turn every opportunity into vote bank politics, a consultant will look at any opportunity to sell his advisory services, and a negative personality will always find a reason to rationalize his sorry state of affairs or his stroke of bad luck. Just like Bitcoin enthusiasts see every economic headwind as one more reason for Bitcoin to rally.
I must ensure that I don’t carry strong ideologies that make me dogmatic and extreme in my views. I should keep my identity small and avoid all kinds of labels that the world will try to tag on to me.
I am a DIY investor today, but I could turn passive tomorrow. I love gyming but I could shift to swimming tomorrow. I love reading non-fiction today but could switch to fiction tomorrow. I am not married to anything forever (except my wife😃) and I will change my opinion tomorrow if I have to and I feel like doing so.
“To get what you want, you need to deserve what you want”
Expecting from others is a waste of time. Being deserving is how I will attract success towards me. And becoming deserving is in my control to a great extent whereas other’s behavior is not. No wonder Buddha referred to expectations being the cause of all misery.
Always be the best at what you do, give more than what you are obliged to, and do more than what’s necessary. I always tell my team to be early for a meeting, always communicate and close the loop, keep their word, and inform if you are not able to. These are simple habits but they build trust in you which could lead to many opportunities in time to come.
“Show me where I will die, so I will never go there”
Always think through problems backward i.e. if I want to lose weight then I should find answers to the questions ‘What will make me gain weight?’ instead of ‘What should I do to lose weight?’. The former question would have certain solutions which are unquestionable i.e. sugar, fried stuff, junk food, eating late, no workouts, etc. Whereas the latter question may open up 100+ options overwhelming me to make an optimal choice.
Keep things simple as complexity adds to many variables in life that become difficult to manage/control in time to come e.g. a fancy house may create a kind of impression that attracts people with a fancy lifestyle. It begins with a house, then a fancy car will follow, then fancy holidays, and fancy experiences. Before you realize it, you have become a slave to your lifestyle and peer group. Now you are sucked in and trapped until you gather the courage to let go. This is all unnecessary and avoidable. Why even attract these people to begin with?
There are sure-shot ways to create a miserable life and these are - envy, being unreliable, not learning from others, staying down when adversity hits, being stuck in my old ways, and never changing my mind in light of new facts. I could repeat these and add one more story to a list of failures, or avoid these stupidities, and stay on the path of rationality.
“I never disagree with someone’s opinion, unless I understand their side better than they do”
Everyone has a perspective, a story they believe in, or an opinion. I shouldn’t waste my time altering their point of view unless I have a solid ground to discuss/debate the position. If not, then there is no need to speak or make an effort to prove a point. I should get into a passionate discussion, only when I have both sides of the story, and if I have done my due diligence.
“People think that the world is driven by greed. It’s actually driven by envy”
I don’t want what anyone else has. I don’t care what anyone else has. I will do what brings me joy and nothing less.
There will always be someone earning more than me, doing better than me, and living a life sexier than me. So what !!! This shall always be the truth. A simpleton from a town in Africa aspires to be rich like Elon Musk whereas Musk himself is selling all his houses and aspiring to live a simple life with very less possessions. There is always something that looks better than your current position in life. So don’t envy anyone, as everyone is struggling with demons of their minds that seem to be unhappy irrespective of where they are currently.
I have seen people buy a fancy car only to prove that they have succeeded. I have done this a couple of times before myself, only to regret it years down the line. I have seen people buy fancy clothes to look chic at a party. I have seen friends maxing out their cards on investments and luxurious travels. I have seen many stupidities that were induced by emotions of looking good in front of others or fitting in. I don’t need to look good or attend every party or please people. There is no stopping to it and I am not interested in being in this race to look good forever. So I choose comfort over status signaling. I choose simplicity over complexity. I choose peace of mind over looking good.
“It’s dangerous to rely on models and formulae. Reality is much more complex than that”
Projections and forecasts are ridiculous as no one has a crystal ball that exactly tells the future. Everyone talking about the future is just winging it, and will be termed a hero if his forecast comes true. If it doesn’t come true, then there will be an intelligent argument to prove why things didn’t pan out the way it was supposed to. This goes on constantly on our news channels, Bloomberg, interviews, and social media. So why even entertain views about the future, especially by those who are deluded to believe that they can see the future?
Over-skepticism and over-optimism are dangerous and seductive at the same time. Stay away from these as these tend to excite your dopamine receptors and once you get entangled, it’s difficult to get rid of these extreme opinions. Always be nimble to change opinions, when facts on the ground change.
I must always think in terms of probabilities and odds, instead of certainties. Nothing is certain in life except death and taxes. I must run away/ignore/avoid anyone or anything exuding certainties.
Overtracking and overplanning is a waste of time. Having a sense of direction is important and making the most of today matters equally. If these two are done right, then magic can unfold with time.
“Forgetting your mistakes is a terrible error if you’re trying to improve your cognition. Reality doesn’t remind you.”
Making mistakes is inevitable, as the world is too complex for all outcomes to turn out in your preferred fashion. But not learning from mistakes is absolutely stupid but commonly observed. Investors lose money in F&O but still trade in these heavily. You will gain weight eating junk food but people will do this day in day out. You will build a reputation if you think long-term but you still see people making selfish decisions only because they are consumed by short-term gains.
I must take time out to evaluate my day, think about my actions and decisions in the last 24 hrs, learn from my mistakes and record these in my journal, think before I execute my next 24 hrs, and constantly be on the lookout for keeping stupidities of past mistakes at bay at all times.
Without the commitment to be thoughtful in my choices and words, all past mistakes have gone to waste as I haven’t learned anything from them. When this happens, then I am subconsciously choosing to not improve. In this scenario, only good luck can save me, but good luck isn’t a friend I can count on.
“The best source of new work is the work on your desk”
Focusing on the work on my table, allows me to execute it brilliantly and on time. When I do that consistently, it allows the organization to achieve its desired goals and also leads to higher motivation and ownership in the team. This undoubtedly will bring in more work for me, and the whole team.
As for distractions, they reward me with short-term pleasure, but it will never lead to durable results and long-term gains. Every dream of mine is only possible when I think long term and execute for the long term, but it needs me to master the art of saying NO to short-term pleasures and juicy distractions that will keep coming my way.
Everyone began with some work that looked small or felt menial, but they did it in any case, and left their own mark. When the time came and someone was stupid enough to not do their job well, guess who got called - that very person who had done a good job. Nawazuddin Siddiqui took on a few seconds role in Sarfarosh or Munna Bhai, but he is a mega Bollywood star today. Warren Buffet was distributing newspapers in his teens, Rajnikant was a bus conductor, and Lionel Messi used to serve tea outside the stadium. Doesn’t matter where you begin, what matters is that you do your job damn well, leading to a certain reputation and good will that propels you to greater heights with every incremental move ahead.
“Always take the high road”
I should aim for win-win relationships and be ready to leave some money on the table instead of squeezing others for the best possible deal for me.
I should be mature enough to understand the mental battles people have to fight daily and hence be more forgiving to others, and to myself too.
Never judge anyone, as everyone has their reasons to think the way they do. I can draw a line and keep my distance from people I don’t like the company of. But judging them is a waste of time.
I should work with integrity, compassion, and humility. These produce phenomenal results as this road is less traveled. These virtues will always get noticed and open doors for bigger and better opportunities in years to come.
I could go on and on but I must stop somewhere. Even if I wish to express more, even if I know that my piece will not do justice to what I have in my mind, even though I know I am falling way short of what this man deserves as an eulogy.
My wish for you is that you dig more about Charlie Munger, read about him, or watch his videos on Youtube. It’s a treasure trove of sorts and you will only thank me to have nudged you in the direction of this colossal figure.
And if you are even remotely close to being the disorganized Octopus🐙 that I once used to, then you better start today.
Leaving you with one last quote that sums up Mr. Munger’s philosophy -
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Slug it out one inch at a time, day by day. At the end of the day—if you live long enough—most people get what they deserve.”
Wishing you a life that you deserve🔮
Have a smashing weekend and happy long weekend to all in UAE🍹
Sending you loads of love and luck🧿
Manish
Thanks Manish. Can you please share list of resources on Mungerism ? 🙂