“Simplicity has a way of improving performance through enabling us to better understand what we are doing.” – Charlie Munger
Most people with a some background in business know about Warren Buffett and Berkshire Hathaway’s investment prowess through the years. He’s a darling of the media and provides an inescapable light in the overly complex darkness of financial matters. The company’s annual meeting in Omaha, Nebraska is a mecca for the likes of Bill Gates to hear his thoughts on the world and investment. Charlie Munger is his partner and absolutely genius in the investing community. This book “Charlie Munger: The Complete Investor” is a decent piece of work curating Munger’s thinking about the world.
Griffin takes us through chapters on value investing following in the tradition of investment guru Benjamin Graham and how Munger’s “lattice of mental models” help him make decisions on the value and opportunity of companies. Griffin breaks down a lot of these thoughts into helpful chapters and sections on different biases and tendencies that investors have. For example, the “Reward + Punishment Super-response Tendency” or the idea that people will stick to ideals that inherently reward or punish their behavior.
The core principles of value investing involve finding simple, undervalued core assets and holding on to them as they make money while decoupling rationality and emotion. Many principles and details fall under that, but it can simply be summed up by the ability to find dispassionate variations in the market.
I was interested in this book not because I’m interested in buying/selling undervalued individual stocks (I prefer index funds), but because it offers a way of thinking that can be extrapolated to broader life skills. For example, Munger recommends setting aside periods of the day to read and just think. Too much time I think is spent in “reactive” mode today, pressured by technology and environments that seem designed to push as much information at us as possible, overreacting and stressed out with little frameworks for how to view the world.
A lot of value investing or decision-making is limiting your own mistakes. It comes down to not being reactive to situations, but knowing when to wait and when to put a stake in the ground and commit. It also requires a tremendous amount of work. “I have known no wise people who are not reading constantly,” Munger states. It’s not a matter of finding a “hot tip” or knowing a company is going to hire a hot new talent. It’s about core knowledge of a company/industry and finding value from long-term involvement, ignoring the fluctuations of the market.
The writing does veer into some repetitions, with Griffin often either repeating a quote from Munger or simply re-stating it several times. I think Griffin could have benefited from an editor, but the overall message gets across.
Overall: A great read, if not a bit repetitive, on the frameworks of thinking by Charlie Munger.
Where can I find it? On Amazon.