WHY CHARLIE MUNGER'S ORDINARINESS WAS EXTRAORDINARY

Charlie Munger died very rich. In fact, he was richer than 99.9% of human beings who have ever lived. However, despite what you may have read over the last few days, Charlie Munger’s chief achievement was not that he started as a middle-class person and eventually became very rich.

Munger’s (and obviously Warren Buffett’s) chief achievement was the absolute ordinariness of his path to riches, and that he never tried to pretend otherwise. We live in a time of hyperbole. Every rich or talented or even merely successful person is supposed to be full of special qualities and talents that are hard to find elsewhere. This is just as true of companies, products or services. Everyone is excited, passionate and thrilled about everything all the time.

Amidst all this, Charlie Munger was like a breath of ordinary fresh air. Of the many quotable quotes from this witty and articulate man, perhaps the most characteristic was, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” That’s it.

Just don’t do stupid things. Instead, do the ordinary, sensible things and keep at it year after year, decade after decade. He propounded the long game, believing in the compound effects of small, smart decisions made consistently over time.

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This belief in gradual progress and steady accumulation of wealth was a cornerstone of his investment strategy, mirroring his approach to life. Other rich and successful people can be admired. However, the nature of Munger’s success makes it possible to emulate him, regardless of how much or how little money you have.

Not doing stupid things is easier said than done, of course. It requires cultivating certain habits and disciplines. Charlie Munger was known for being incredibly well-read across various disciplines. He voraciously consumed books, academic papers and news articles to educate himself continuously. This thirst for knowledge enabled him to make sensible, informed decisions grounded in facts and rigorous analysis.

Relatedly, Charlie Munger was also known for his willingness to change his mind and update his beliefs. He was not prone to dogmatism or stubbornness. Even into his late 90s, he engaged with people much younger than himself and welcomed critiques of his thinking. This intellectual humility was a cornerstone that allowed him to avoid stupidity and rashness. Here’s something else that he said, “I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”

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This admitting of mistakes is not just talk. While normal business people never admit mistakes, Munger and Buffett were almost enthusiastic about such confessions; their decades-long tech problem is the biggest.

Historically, they did poorly out of investing in IBM and bought Apple very late — although they have subsequently done very well. Worse, as Buffett and Munger admitted, one of their great failures was not buying Google. Back in 2004 or so, their insurance company benefitted enormously from Google's then-new advertising service. It was clear to them that this was something remarkable. They observed this, discussed it, and saw that Google was a business with tremendous potential, yet never invested in it. “We just sat there sucking our thumbs,” Munger said of failing to invest in Google.

Finally, Charlie Munger placed as much emphasis on personal character as he did on cultivating mental models and book smarts. He believed one's ability to make sensible decisions over the long run depends on acting with integrity and having the right habits and temperament. This included living modestly despite his massive wealth, not chasing unnecessary risks, and being willing to acknowledge mistakes rather than covering them up.

Charlie Munger's ordinariness was extraordinary because it entailed lifelong learning, intellectual humility, and strong character. Avoiding stupidity is simple in concept yet profoundly difficult to sustain over decades. But for Charlie Munger, starting from ordinary and never pretending to be more than ordinary enabled arguably the most sensible investment career of the modern era. His life inspires ordinary people to achieve extraordinary success with the right framework.

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2023-12-01T12:35:14Z dg43tfdfdgfd