Charlie Munger and Li Lu interview in China (august 18)

[Deepdive]

Give me Barbie and Ken dolls with Ivy League rowing gold medals, 6' 3" and 200 pounds of solid beef. 

[Mephistopheles]

I wouldn’t ask for Barbie dolls. Nowadays they’re made fat. PC bullshit

[Txvestor]

Not sure if you all heard the Shakespeare joke.

Shakespeare's wife was apparently a looker, and Shakespeare of course is a literary genius.

One day frolocking in bed, she said to him, if we were to procreate, just imagine, your brains and my looks, we would have a wonderful child.

Shakespeare looks at her, smiles and says indeed love, but imagine the horror of one with my looks and your brains.

As this was about Munger and he is the "Invert, always Invert guy", I could not resist.

Babies and children don't always turn out as expected, and I think there are too many variables, genetic, environmental, cultural, luck etc. to do much more than try to get a mediocre level of success, if that. The randomness of life is astonishing and complex, and those of us with a number of adult years under our belt, know it too well.

[LC]

Munger has some antiquated opinions and this is one of them.

 

Important to realize just because these two are investing geniuses, does not mean that extends to other aspects of life. Which is to be expected considering stories of WB’s fixated personality. And to Munger being a generalist - in the best sense you can say he is, but only as it applies to investing. In the worse sense, well it is just not true.

 

Finally and this last bit is just my opinion, but I think the whole “ mental models / latticework” is a crock of baloney. And you can look at the examples CM used to illustrate as proof - they are all primative. More good has been done by people specializing and becoming an expert in a certain field than by amateurs jumping around trying to form a “latticework”. Frankly IMHO it’s an arrogant statement of his, probably stemming from the same place his comments on Chinese superiority come from. 

[Cigarbutt]

Munger has some antiquated opinions and this is one of them.

 

Important to realize just because these two are investing geniuses, does not mean that extends to other aspects of life. Which is to be expected considering stories of WB’s fixated personality. And to Munger being a generalist - in the best sense you can say he is, but only as it applies to investing. In the worse sense, well it is just not true.

 

Finally and this last bit is just my opinion, but I think the whole “ mental models / latticework” is a crock of baloney. And you can look at the examples CM used to illustrate as proof - they are all primative. More good has been done by people specializing and becoming an expert in a certain field than by amateurs jumping around trying to form a “latticework”. Frankly IMHO it’s an arrogant statement of his, probably stemming from the same place his comments on Chinese superiority come from.

 

I guess it's a matter of perspective and a matter of balance.

If not useful, linking different concepts along different dimensions and disciplines is at least fun.

 

"The real voyage of discovery consists not in seeking new landscapes, but in having new eyes."

Marcel Proust

 

[LC]

That's true and on retrospect my comment was a bit harsh. I don't think the mental latticework whatnot is useless - it certainly is not. Combining disciplines can and has produced novel ideas and inventions.

 

But - I think if we are going to look to examples of that for emulation, we should pick from successful ones that truly embody the principle. Elon Musk for example build a payment processor and now look what he is doing. Or Bill Gates who built one of the greatest companies and now charitable funds.

 

CM, while certainly a great guy and teacher, did not (as far as I know) take his investment billions and develop some incredible technology elsewhere.

 

And to be fair, he is an incredible investor and in my opinion that is enough in itself to deserve acclaim - but to characterize him as some polymath investor-philosopher...this is stretching the hero worship a little too far for my taste. Of course I still asked him to sign a copy of his book for me!  ;D

[plato1976]

To me, the following paragraph is the most relevant one for an average Joe:

 

"here’s a pathway towards financial independence.

 

1. Work hard, get an education, develop a valuable skill. Munger didn’t start Facebook from his dorm room or trade penny stocks in high school. He served in the military, earned a law degree, and went to work everyday for years. At this point, work means exchanging your time for money, but hopefully at a good hourly rate.

2. Use that work career and save up 10x living expenses. Munger called himself a “cautious little squirrel” saving up a pile of nuts. He dutifully saved his salary while supporting a family and kids (and some other personal family drama that a luckier person wouldn’t have to deal with). I don’t think you’ll need 10x if you don’t have a family to support.

3. To accelerate wealth accumulation, you can now take some more risk and start some sort of business. You need something that scales, something that’s not paid per hour. Munger did real estate development. If you look at people who got wealthy quickly, nearly all of them are business owners of some type.

4. At some point, your investments will enough money to support your living expenses. This is financial independence. It doesn’t matter what you do during the day, as you earn enough money while you’re sleeping. However, many people choose to continue doing one of the paths above: (1) employee-based career, (2) active business management, or (3) actively managing their investments.

"

 

Say now you passed stage 2, how should you move to step 3? I think many folks are facing this choice. Many do stocks but I don't think for most ppl it's a good choice for step 3 b/c

1. it's not scalable 

2. it usually doesn't provide stable income

3. it's very dangerous to use leverage on stocks

 

Munger did real estate development at stage 3. I still think real estate in some form (agency, re-modeling, rental business of some sort of...) is still the best choice for stage 3 for most ppl

Any other suggestion?

 

That's true and on retrospect my comment was a bit harsh. I don't think the mental latticework whatnot is useless - it certainly is not. Combining disciplines can and has produced novel ideas and inventions.

 

But - I think if we are going to look to examples of that for emulation, we should pick from successful ones that truly embody the principle. Elon Musk for example build a payment processor and now look what he is doing. Or Bill Gates who built one of the greatest companies and now charitable funds.

 

CM, while certainly a great guy and teacher, did not (as far as I know) take his investment billions and develop some incredible technology elsewhere.

 

And to be fair, he is an incredible investor and in my opinion that is enough in itself to deserve acclaim - but to characterize him as some polymath investor-philosopher...this is stretching the hero worship a little too far for my taste. Of course I still asked him to sign a copy of his book for me!  ;D

[clutch]

To me, the following paragraph is the most relevant one for an average Joe:

 

"here’s a pathway towards financial independence.

 

1. Work hard, get an education, develop a valuable skill. Munger didn’t start Facebook from his dorm room or trade penny stocks in high school. He served in the military, earned a law degree, and went to work everyday for years. At this point, work means exchanging your time for money, but hopefully at a good hourly rate.

2. Use that work career and save up 10x living expenses. Munger called himself a “cautious little squirrel” saving up a pile of nuts. He dutifully saved his salary while supporting a family and kids (and some other personal family drama that a luckier person wouldn’t have to deal with). I don’t think you’ll need 10x if you don’t have a family to support.

3. To accelerate wealth accumulation, you can now take some more risk and start some sort of business. You need something that scales, something that’s not paid per hour. Munger did real estate development. If you look at people who got wealthy quickly, nearly all of them are business owners of some type.

4. At some point, your investments will enough money to support your living expenses. This is financial independence. It doesn’t matter what you do during the day, as you earn enough money while you’re sleeping. However, many people choose to continue doing one of the paths above: (1) employee-based career, (2) active business management, or (3) actively managing their investments.

"

 

Say now you passed stage 2, how should you move to step 3? I think many folks are facing this choice. Many do stocks but I don't think for most ppl it's a good choice for step 3 b/c

1. it's not scalable 

2. it usually doesn't provide stable income

3. it's very dangerous to use leverage on stocks

 

Munger did real estate development at stage 3. I still think real estate in some form (agency, re-modeling, rental business of some sort of...) is still the best choice for stage 3 for most ppl

Any other suggestion?

 

That's true and on retrospect my comment was a bit harsh. I don't think the mental latticework whatnot is useless - it certainly is not. Combining disciplines can and has produced novel ideas and inventions.

 

But - I think if we are going to look to examples of that for emulation, we should pick from successful ones that truly embody the principle. Elon Musk for example build a payment processor and now look what he is doing. Or Bill Gates who built one of the greatest companies and now charitable funds.

 

CM, while certainly a great guy and teacher, did not (as far as I know) take his investment billions and develop some incredible technology elsewhere.

 

And to be fair, he is an incredible investor and in my opinion that is enough in itself to deserve acclaim - but to characterize him as some polymath investor-philosopher...this is stretching the hero worship a little too far for my taste. Of course I still asked him to sign a copy of his book for me!  ;D

 

Or just keep on with your professional career if you like what you are doing and find it meaningful. And just say -- what im earning now and what i will have in my retirement are _enough_.