Consistency of opinion

There’s a blog post I’ve liked for a long time now. It’s from a guy who sent a postcard to Warren Buffett, asking for a piece of wisdom to someone who Warren had never met.

The reply on the postcard was “read, read, read”.

I’ve always liked this answer. And now I like it more.

Bob Rodriguez is CEO of First Pacific Advisors, and is a ridiculously successful investor. In 1974 he asked Charlie Munger (Buffet’s business partner) what would make him a better investor.

“In the fall of 1974 I was in graduate school at USC taking a portfolio-management investment course. The financial markets were in difficulty, and I didn’t understand how securities were being sold at such depressed levels. I had only recently discovered Security Analysis by Graham and Dodd when we had a guest lecturer come in named Charlie Munger, who went on about this idea of value investing. After the class was over, I walked up to Charlie and asked him if there was one thing that I could do that would make me a better investment professional. His answer was, ‘Read history, read history, read history.’ And so I became a good historian, reading both economic and financial history as well as general history.

“What I learned is that people relate to the crises they have experienced. So when the crisis of 2008 came, it felt like an old friend to me because it had so many similarities to the banking crisis of 1907. Asking Charlie’s advice and then reading history allowed me to put those things in context.”

And 34 years later, in 2008, Buffet tells some random guy to “read, read, read”. He didn’t use the words “read everything you can” or “be sure to read lots of books” or “get off my damn lawn”. It was “read, read, read”.

Makes me happy.

Bonus image from reddit the other day, titled “The Issue In A Nutshell”


IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
‘ Or walk with Kings – nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man, my son!

If – Rudyard Kipling

Charlie Munger’s Thoughts on the World

Economists have long been divided by a simple problem. When you go to the movie theater, soda and popcorn costs a totally unfair price compared with other locations. This just tortures economists. At least 1 million man-hours have gone into trying to solve this problem. Economists understand that a first-class ticket on an airplane costs more than coach. They get that one. Its marginal utility. But they cant figure out the movie theater to save their lives.

Here’s the Munger approach to the problem. In the auto world, a car manufacturer will sell a car for $40,000, and charge $200 for the extra gizmo. No one cares about the extra $200 when you’re already spending $40,000. Its insignificant. The movie theater is basically the same thing. People are OK paying that much for a soda after they’ve paid so much for an admission ticket.

Now, psychologists can explain this clearly. Economists can’t for the life of them. Its so simple what happens when you think beyond your trained field. Its amusing to see someone spend 1 million man-hours on something I can solve with my left hand.

– Charlie Munger

I dig the guy. He’s a little angry-cynical, but often right. I wonder about his million man-hour claim on the above problem.

You can read both parts of his last annual meeting by going through Google (to get around the registration process Motley Fool has):

On Innovation

I invented nothing new. I simply assembled the discoveries of other men behind whom were centuries of work.

Had I worked fifty or ten or even five years before, I would have failed. So it is with every new thing. Progress happens when all the factors that make for it are ready and then it is inevitable.

To teach that a comparatively few men are responsible for the greatest forward steps of mankind is the worst sort of nonsense.

– Henry Ford

Al Qaeda is to explosions as MTV is to music.

I’m finally getting around to reading The Post-American World by Fareed Zakaria. I opened it this morning on the drive to work (Chas drove, not me), and in the first 20 pages, I read something that I wanted to share before I get started with my day.

In the six years since 9/11, Al Qaeda Central — the group led by Osama bin Laden and Ayman Zawahiri — has been unable to launch a major attack anywhere. It was a terrorist organization; it has become a communications compnay, producing the occasional videotape rather than actual terrorism. *

* Even if an attack were to take place tomorrow, the fact that, for six years, Al Qaeda Central has been unable to organize one explosion anywhere is surely worth noting.

Al Qaeda is to explosions as MTV is to music. Or, Al Qaeda : explosions :: MTV : music


Looking for things in all the wrong places

“The truth that many people never understand, until it is too late, is that the more you try to avoid suffering the more you suffer because smaller and more insignificant things begin to torture you in proportion to your fear of being hurt.” – Thomas Merton, American Trappist monk (1915–1968)