CRUSTY-RUSTY-SHARP!
June 1, 2024
Most of my adult life I have known and admired the success of Warren Buffett and his firm, Berkshire Hathaway, Inc. Some forty years ago, I read a book about him and his firm to see if I could emulate him and benefit from some of his wisdom. There were three general impressions that I got from the book that I have tried to use as navigational tools:
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- He sought businesses that didn’t require a lot of capital.
- He wanted businesses with good products and customers that would continually return.
- He wanted businesses that were well run.
Over the years, Warren would often state that his partner, Charlie Munger, was the real brains behind the success of their firm. Seldom did I ever hear or see much of this “brains behind the organization” until recently.
Last month I was in Omaha, Nebraska for a business meeting and there at the airport terminal store was a stack of books titled “The TAO of CHARLIE MUNGER” by David Clark. I learned that Mr. Clark is also the author of the book about Mr. Buffett that I read early in my business career. To be honest, I don’t even know what the word “TAO” means but I wanted to know about Charlie Munger, who recently died. The book consists of 138 thoughts of wisdom credited to Charlie that Mr. Clark interprets and explains.
I want to share with you some of Charlie’s wisdom that I wish that I had known earlier in life.
CIRCLE OF COMPETENCE
“Knowing what you don’t know is more useful than being brilliant.”
DAWNING OF WISDOM
“Acknowledging what you don’t know is the dawning of wisdom.”
THE HERD
“Mimicking the herd invites regression to the mean.”
WAITING
“It’s waiting that helps you as an investor and a lot of people just can’t stand to wait.”
SURPRISES
“Favorable surprises are easy to handle. It’s the unfavorable surprises that cause the trouble.”
ON TECHNOLOGY
“The great lesson in microeconomics is to discriminate between when technology is going to help you and when it’s going to kill you.”
CARROTS & STICKS
”If we’re going to prosper, we have to work. We have to have people subject to carrots and sticks. If you take away the stick the whole system won’t work. You can’t vote yourself rich. It’s an idiotic idea.”
CORPORATE MERGERS
“When you mix raisins with turds, you still have turds.”
TWO KINDS OF BUSINESSES
“There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested – there’s never any cash. It reminds me of the guy who looks at all of his equipment and says, ‘There’s all of my profit.’ We hate that kind of business.”
FEW COMPANIES SURVIVE
“Over the very long term, history shows that the chances of any business surviving in a manner agreeable to a company’s owners are slim at best.”
MCDONALD’S
” ….the really great educator is McDonald’s….l think a lot of what goes on there is better than at Harvard.”
(Per author David Clark: McDonald’s is improving the strength of our culture’s weakest links by hiring people with bad work habits, giving them training, and teaching them good work habits such as coming to work on time and how to deal with customers in a pleasant manner.)
ONE STEP AT A TIME
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Slug it out one inch at a time, day by day. At the end of the day — if you live long enough — most people get what they deserve.”
KNOW-IT-ALLS
“I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.”
LIVING WELL
“The best armor of old age is a well-spent life preceding it.”
ADMITTING STUPIDITY
“I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This a wonderful trick to learn.”
MAKING MISTAKES
“There’s no way that you can live an adequate life without many mistakes. In fact, one trick in life is to get so you can handle mistakes. Failure to handle psychological denial is a common way for people to go broke.”
READING
“In my whole life, l have known no wise people who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads — and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
CAREER ADVICE
“Three rules for a career: (1) Don’t sell anything you wouldn’t buy yourself; (2) Don’t work for anyone you don’t respect and admire; and (3) Work only with people you enjoy.”
WHAT WE DESERVE
“The best way to get a good spouse is to deserve a good spouse.”
SECRET OF SUCCESS
“I have never succeeded very much in anything in which I was not very interested.”
“If you can’t somehow find yourself very interested in something, I don’t think you’ll succeed very much, even if you’re fairly smart.”
BEING FRUGAL
“One of the great defenses — if you’re worried about inflation — is not to have a lot of silly needs in your life — if you don’t need a lot of material goods.”
TAKING THE BLOWS
“Life if always going to hurt some people in some ways and help others. There should be more willingness to take the blows of life as they fall. That’s what manhood is, taking life as it falls. Not whining all the time and trying to fix it by whining.”
USELESS WORRY
“I don’t think it’s terribly constructive to spend your time worrying about things you can’t fix. As long as when you are managing your money you recognize that a terrible thing is going to happen, in the rest of your life you can be a foolish optimist.”
TRAGEDY
“You should never, when faced with one unbelievable tragedy, let one tragedy increase into two or three because of a failure of will.”
A SEAMLESS WEB
“The highest form that civilization can reach is a seamless web of deserved trust - not much procedure, just totally reliable people correctly trusting one another… In your own life what you want is a seamless web of deserved trust. And if your proposed marriage contract has forty-seven pages, I suggest you not enter.”
I hope and pray that you find some of this wisdom helpful and meaningful. God knows that I have violated these tenets throughout my career but going forward I will try to abide by them.
I highly suggest that you buy the book titled, “The TAO of CHARLIE MUNGER,” available from Simon & Schuster.
Written by KING AEROSPACE Founder, Jerry Allan King-Echevarria.