Sunday Finds + Remembering the Life of Charlie Munger
Podcasts on spirits and nicotine to finish up our sin stock theme
Welcome to Chit Chat Money’s Sunday Finds + Thoughts From Last Week newsletter. In this newsletter you will find some thoughts on an investing topic from last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. You can listen to Chit Chat Money wherever you get your podcasts. Check out the archive here.
Chit Chat Money Podcasts From Last Week
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Remembering the life of Charlie Munger
We had an hour-long podcast with the Investing Unscripted crew (formerly the Smattering) discussing the life of Charlie Munger. You can check that out at the link above or wherever you listen to Chit CHat Money.
Today, I thought I’d surface a few of my favorite quotes from his famous Psychology of Human Misjudgement speech. We only talked briefly about it in the Power Hour.
Here is a good blog with the full list from the speech, where I pulled the quotes from.
On incentives:
“Never, ever, think about something else when you should be thinking about the power of incentives”
On avoiding uncertainty:
“The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance. We see this in all human habits, constructive and destructive”
On reciprocation:
“The automatic tendency of humans to reciprocate both favors and disfavors has long been noticed as extreme … The tendency clearly facilitates group cooperation for the benefit of members”
On loss aversion:
“The quantity of man’s pleasure from a ten-dollar gain does not exactly match the quantity of his displeasure from a ten-dollar loss. That is, the loss seems to hurt much more than the gain seems to help. Moreover, if a man almost gets something he greatly wants and has it jerked away from him at the last moment, he will react much as if he had long owned the reward and had it jerked away”
On the lalapalooza effect:
“The tendency to get extreme consequences from confluences of psychology tendencies acting in favor of a particular outcome”
And that is scratching the surface. If you haven’t, make sure to take the time to read Charlie’s famous speech (maybe a few times). There are so many lessons to learn not just for making investments, but for understanding how our broader world works.
Thank you Charlie for all the wisdom you shared.
See you next week,
Brett
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3 Intriguing Reads
Frugal vs. Independent — Morgan Housel
The world tells you – even by a mere whisper – that everyone should want the same things: A big house, a nice car, advanced degrees, credentials, social clubs, etc.
I like most of those things. But you have to realize how much of their appeal is an attraction to status, which can be completely different from happiness.
This was just the beginning and life had to still test him out further. A year later, his 8-year-old son Teddy, got leukemia which had no treatment and no medical insurance in those days. Charlie paid for everything out-of-pocket because there was no health insurance. Each day he would take Teddy to the hospital for checkups while taking care of his other two children and practicing law. Those 11 months were the ‘toughest’ as he saw his son growing weaker nearing his death. According to his friend Rick Guerin, Charlie would visit the hospital when his son “was in bed and slowly dying, hold him for a while, then go out walking the streets of Pasadena crying.” Teddy passed away at the tender age of 9 leaving him heartbroken.
