Charlie Munger's Unusual Brilliance

I knew Poor Charlie’s Almanack was a must. The issue with “must-reads” is that one cannot measure the impact they’ll have beforehand, making the books selection order somewhat random. After some thought, I think Munger’s speeches should be read as early as possible. He transcended investing in a way I have not sensed from other investors. Charlie’s thinking process reached unexplored heights. In this article, I’ll delve into the biggest idea he tried to push forward.

Worldly Wisdom

The book’s thesis goes around the importance of taking a multidisciplinary approach. Charlie thought there are depth levels for ideas and could be ranked according to how fundamental they are. Understandably, I think he believed no correct judgement could be made if one does not count with the fundamental ideas that encompass the vertical they are thinking about.

Munger intensely advised people to “learn the great ideas”. Big theories in physics, biology, chemistry, statistics, psychology, provide lenses through which we can see the world. The latter is a very complex system. It seems rather stupid to think one could be capable of correctly dealing with its infinite complexity with only one mental model, one framework for analysis.

“To a man with a hammer, every problem looks pretty much like a nail”

Disciplines do not operate in isolation. The thing Charlie despised from academia is the fact that they try to ignore the unequivocal interconnectedness between subjects. It is irrational to not recognize that, for instance, at the basis of microeconomics, there’s people. Therefore, a proper understanding of psychology is required for microeconomics to be taught appropriately. Furthermore, no idea in disciplines should be inconsistent with more fundamental ones. Theories developed in high branches of law or economics should not go indirectly against Newton’s gravity or Darwin’s evolution and natural selection.

“And it doesn’t help you much just to know something well enough so that on one occasion you can prattle your way to an A in an exam. You have to learn many things in such a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life. If many of you try that, I solemnly promise that one day most will correctly come to think, “somehow I’ve become one of the most effective people in my age cohort.” In contrast, if no effort is made towards such multidisciplinarity, many of the brightest of you who choose this course will live in the middle ranks, or in the shallows.”

On many occasions, Munger mentions he was able to realize how wrong some bright intellectuals were only because they missed ideas Charlie took from other disciplines. They were victims of having only one problem-solving mechanism.

“and the importation into many law and business schools of hard-form, efficient-market theory by misguided would-be experts in corporate finance, one of whom kept explaining Berkshire Hathaway’s investing success by adding standard deviations of luck until, at six standard deviations, he encounter enough derision to force a change in explanation”

In this line, he also states the dangers of extreme ideology. All of us are subject to the consistency and confirmation biases. Ideology, professed in its ultimate form, clouds one’s cognitive ability. It does not allow us to think clearly. Once, Charlie identified a profound mistake in a theory from a globally recognized scientist. Munger suspected such “obvious mistake” was made because the person overlooked a fundamental truth of Darwin’s theory. And this happened because the scientist ‘is so bright he knows that, if this part of Darwin’s theory is right, then it’s the beginning of the end for his leftist ideology’.

 “If you are going to live a long time, you have to keep learning. What you formerly knew is not enough. If you don’t adapt, you are like a one-legged man in an ass-kicking contest”

Taking this even further, pursuing worldly wisdom is a moral duty, and there’s no shortcut to it. Charlie mentions in one of his speeches that he gets “requests for pointers to easy learnings all the time”. Personally, I cannot understand such petitions. It would be ridiculous for there to be a compressed pathway towards the mental state people like Munger reach. “The right way to do it would be in a book”. I believe repetition and breadth is what eventually makes one’s thoughts sharp and pertinent to the discipline the thought belongs to. Else, the lack of this fundamental base makes it inevitably water down.

It is easy to confuse worldly wisdom with the appearance of it. Further, it might be the case that only by one having the proper information in place can the person be able to tell whose arguments are sound. On this note, Charlie loved sharing a story about Max Planck, father of quantum physics. I’ll leave you with the anecdote below.

Personal Commentary

Poor Charlie’s Almanack is a spectacular read. I think it’s the catalyst I needed to pursue learning more about other disciplines. I will try my best to learn some of these “best ideas” in biology, physics, psychology. Hopefully, my 2024 reads in this line eclipse investing ones. The reward, I believe, will be stupendous.

Contact: giulianomana@0to1stockmarket.com