Welcome back to the podcast. This is episode 10.
I recently heard an interview with Charlie Munger on CNBC. Munger of course is one of
the most quotable people you will ever come across. He's 99 years old and is sharp as
he's ever been. And he was asked a very common question that people have been debating
for centuries. And that was what is the secret to happiness. And here's what he said.
That is easy because it's so simple. Don't have a lot of envy. Don't have a lot of
resentment. You don't have a worse friend. You're income. You stay cheerful and spite of
your troubles. You deal with reliable people. Then you do what you're supposed to do.
And all these simple rules work so well to make your life better. And they're so bright.
How old were you when you're picking this out? And I'm about seven. I love how he finished
that. He figured this out when he was seven years old because it's so simple. That's
why he figured it out when he was so young. It's because what he just said is so simple
and can be summarized in just a few words. You don't need a textbook or a long novel to
summarize what he just said. It's obviously true. It's just so simple that you don't
need to expand much upon it. And that idea that you can say something really profound
and hopefully is impactful to your life in just a few words is always been really interesting
to me. I've always been a big fan of quotes. And what's great about a quote is that the
good ones pack a book's worth of information into five words, six words, sometimes three
words. I've always liked that because a, I think the best writing is a person who says
the most in the fewest words possible. And b, I think when you can summarize something
that impacts your life into a few words, you probably found something that is just obviously
true. If something is kind of true, you need to expand on it and give more details and
give more explanation. When something is obviously true, one sentence is all you need. I've
tried to do this not nearly as effective as monger of course or many other people, but
I've tried to do this throughout my life of what are the big things that I believe? And
if those things are important, can I explain them in one sentence? I just think it's a
good idea to try to summarize your life philosophies as succinctly as you can, cutting out all
the fluff, just getting to the core of what you really believe. I've tried to do this
in my writing for as long as I've been a writer and I recently shared, I don't know, 50
of these things that I came across over the years. Big beliefs that I have, just things
that I think. So what I want to do with you now is share with you a big smattering of
those beliefs and let me be clear what I'm about to do here. I'm just going to share
a bunch of random, unconnected thoughts with you about various topics whose common denominator
is this that for me personally, these have been impactful ideas that I've tried to summarize
as succinctly as I can. All right, here we go. The fastest way to get rich is to go slow.
Many beliefs are held because there is a social and tribal benefit to holding them, not necessarily
because they are true. Nothing is more blinding than success caused by luck because when you
succeed without effort, it is easy to think I must just be naturally talented. Social
media makes more sense when you view it as a place people go to perform rather than
a place to communicate. Comedy is the best way to teach about human
behavior. George Carlin, Chris Rock and Jerry Seinfeld have done more to enlighten other
people than 99% of psychology PhDs. The best measure of wealth is what you have minus
what you want and by this measure some billionaires are broke. The most valuable personal finance
asset is not needing to impress anyone. Most financial debates are people with different
time horizons talking over each other. From school, I remember every good story I was told,
but none of the formulas I memorized the night before a test. It is easiest to convince
people that you're special if they don't know you well enough to see all the ways you're
not. People like you more when you are working towards something, not when you have it. That
one is from the rapper Drake. A lot of people seem to have a necessary level of stress
and when their life is going well they make up imaginary problems to fill the void. Few
things are as persuasive as your own bullshit while nothing is easier to identify than other
people's bullshit. Everything is sales. Every employee is replaceable. Those we admire
the most in sports and business and politics and entertainment tend to share one quality.
They knew when it was time to quit. Time to pass the baton, time to disappear in a way
that preserved or even enhanced their reputation. Nothing diminishes past success like overstaying
your welcome. The hardest thing when studying history is that you know how the story ends,
which makes it impossible to put yourself in people's shoes and imagine what they were
thinking or feeling in the past. You can only ignore the critics if you also discount
the praise. Related to that last one, few traits are as destructive as an appetite for
praise. There are two types of people, those who want to know more and those who want
to defend what they already know. My jealousy of dogs, they can sit for hours doing absolutely
nothing, appearing perfectly content. A lot of people like making money more than they
enjoy having money. The change, not the accumulated amount, is the thrill.
That day, in one said, you retard socially and emotionally the moment you become famous.
Your experience of the world is never the same. That I think may be true and far more common
for those who become wealthy. Most beliefs are self-falidating. Angry people look for problems
and they find them everywhere. Happy people seek out smiles and they find them everywhere.
Messiness look for trouble and they find it everywhere. Brains are good at filtering
inputs to focus on what you want to believe. Few traits are as attractive as humility,
but few are as common as vanity. Everyone wants to be lucky and to be admired, but no
one admires a person for their luck. The stock market is rational, but investors
play different games and those games look irrational to people playing a different game.
A big problem with bubbles is the reflexive association between wealth and wisdom. So
sometimes a bunch of crazy ideas are taken seriously because a temporarily rich person
said it. Logic does not persuade people. Clarity, storytelling and appealing to self-interest
do. You only know someone well if you can correctly
predict how they will react in a stressful situation.
There is a big difference between an expert whose talent should be celebrated and a guru
whose bad ideas should never be questioned.
Past performance increases confidence more than ability. Happiness is the gap between expectations
and reality. So the irony is that nothing is more pessimistic than someone who is full
of optimism. They are bound to be disappointed.
In social fields, very few things are true all the time. Too many theories try too hard
to be laws.
The most important decision most people will ever make is weather, when and whom to marry.
But that topic is almost never taught in school. It can't be because everybody is different
and you can't reduce it to a formula or a statistic.
I've often wondered how many personal bankruptcies and financial troubles were caused by spending
that brought no joy to begin with. It's a double loss. Not only are you in trouble,
but you didn't even have any fun getting there.
Nothing leads to success like unshakeable faith in one big idea. And nothing sets the seeds
of your downfall like an unshakeable faith in one big idea.
There are two types of successful people, those with imposter syndrome and sociobats.
The bust is only dangerous if you depend on the boom. Reality will pay you back in equal
proportion to your delusion. That one is from Will Smith.
Every five to seven years people forget that recessions occur every five to seven years.
Many people check their portfolios every day, but their blood pressure every few years
if even that.
The pessimists can be wrong if just a few big things go right.
Most important communication skill is knowing when to shut up. It's good to have people
in your life who you don't want to disappoint. That one is from Warren Buffett.
Not caring about temporary things and obsessing over permanent things is underrated.
Most of things are factually true but contextually nonsense. Economies run in cycles, but people
forecast in straight lines.
You are twice as gullible as you think you are. Four times if you disagree with that statement.
Price is what you pay. Value is whatever you want Excel to say.
People's luck is easy to identify when you fail, but good luck is easy to ignore when
you succeed.
Men resist randomness, markets resist prophecy. That one is from Maggie Mayhar.
People tend to be obsessed with harm posed by others, like terrorism and crime, while
oblivious to much greater self-inflicted harms, like a poor diet and no exercise.
We underestimate the importance of control. Camping is fun even when you're cold. Being
homeless is miserable even when you're warm.
So much of what people call conviction is actually a willful disregard for facts that
might change their minds.
In school they tell you your paper must be a minimum of five pages long. In the real
world you have five seconds to catch someone's attention before they are bored and move on.
Learn enough from history to respect one another's delusions. That one is from will and
aerial Durant.
If you only wish to be happy, this could easily be accomplished, but we wish to be happier
than other people. And this is always difficult for we believe others to be happier than they
are. That one is from Matasque.
With the right incentives, people can be led to believe and defend anything.
Good marketing wins in the short run and good products win in the long run.
Such talent at its best and character at its worst. That is from Lord Acton.
If your net worth goes from zero dollars to one million dollars, that is ecstasy. If
your net worth goes from ten million dollars to one million dollars, that is despondency.
So can we agree that all wealth is relative?
There are three legal investing strategies. You can be smarter than others, you can be
luckier than others, or you can be more patient than others. That is the whole list.
The most productive hour of your day often looks the laziest. Good ideas rarely come in
meetings. They come while you are going for a walk or sitting on the couch or taking
a shower. Nothing destroys relationships in love and careers like being needy.
Schools are good at measuring intelligence, but not great at measuring passion and endurance
and character, which tend to be way more important than intelligence in the long run.
The majority of what you know comes from the experiences you have had and the people
who you have met, both of which are largely outside of your control.
Average performance sustained for an above average period of time leads to extraordinary
performance. This is true not just in investing, but in careers, relationships, and parenting.
I recently came across something called the Rule of Thirds. It says that one third of
days you should feel amazing. One third of days should feel just okay. And one third
of days should be crappy. That's a good, balanced, realistic life.
The same traits needed for huge success are the same traits that increase the odds of
failure. So we should be careful praising winners or criticizing failures because they
often made similar decisions with different degrees of luck.
Every generation is disappointed in their kids, partly because things typically get better
over time and you become resentful as you see the younger generation bypassing problems
that you yourself had to overcome.
This can be amazing at one point in time, but lose effectiveness as a virus they were
targeting adapts and evolves into something new.
The same is true for business and investing strategies. What works wonders in one era
might flop in the next as a world evolves.
A good test when reading the news is to constantly ask, will I still care about the story in
one year, two years, five years? A good bet in economics is that the past wasn't as good
as you remember. The present is not as bad as you think and the future will be better
than you anticipate.
Thank you again for listening. This was episode 10 and what's interesting about episode
10 is that I read one time that 99% of podcasts that are launched never make it to the 10th
episode. Thank you for being part of this journey as I experiment with podcasts. I hope
to keep it going for much longer. We'll see you again next week.
