In the world of investing, Warren Buffett often steals the show, but let’s take a moment to celebrate his trusted partner, Charlie Munger. Like Mr. Buffet, Mr. Munger has been another torchbearer of long-term investing.
At the age of 99, Mr. Munger bid us farewell, leaving behind a legacy brimming with profound insights and invaluable knowledge.
What made Munger stand out were his pearls of wisdom—simple yet impactful insights that resonated not only in the world of investing but also in everyday life.
He had this knack for blending practical advice with a dash of wit, making it accessible and relatable to everyone. He loved reading books and kept advocating everyone to read too. He once said,
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time, none, zero. You’d be amazed at how much Warren reads–and at how much I read.”
One outstanding speech that Munger had delivered was in the USC Business School, California, USA in the year 1994. It goes by the title – Charlie Munger: ‘A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business’.
In this speech he talks about how he had gained worldly wisdom which had helped him in his investing journey. He talks about having multiple mental models in algebra, accounting, statistics, psychology, and such varied fields. It’s a wonderful speech and you can read the whole transcript here.
One of Munger’s notable contributions was introducing the concept of the “Lollapalooza effect“.
As per Munger, the Lollapalooza effect is essentially the culmination of various human biases working together, creating a significant impact on decision-making. It’s like when multiple psychological tendencies team up to drive our actions in unexpected ways. Picture FOMO, following the crowd, craving social proof and sticking to our beliefs, all combining to influence our choices in a powerful way.
Think about those times when you bought something just because everyone else was (social proof), or when you were convinced of something purely because you already believed it (sticking to our beliefs)—those are moments where the Lollapalooza effect might have been at play.
One more quote of Munger’s that I would like to leave you with is,
“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”
I believe in this quote. I hope you will do too.
Till the next time,
Happy Investing,
Vijay
CEO – InCred Money
P.S. I share my thoughts on Investing and the Economy regularly. You can follow me here.
