Damn Right! - Things I Learned

I have had a life long obsession with books. Since I was a child I visually scarfed down everything I could get my hands on. But as with most readers, the RAM of my brain is very limited, and I tend to forget a lot. The purpose of this newsletter is to codify the things I read worth remembering and in doing so, hopefully you learn something as well. Without further ado, here are Ten Things I Learned from Damn Right! I hope you enjoy.

1. Know What You’re Idea Of Success Is (Hint: it probably shouldn’t be a number)

   Charlie Munger knew very early on in his career what his idea of success was: a house with a lot of children, filled with books, and enough money in his investment accounts to be independent. Munger’s idea of success is totally self defined, and not subject to the opinions of others. To this day I think it is one of the best definitions of success. Success should be freedom to do what you want, when you want, with who you want.

2. Choose The Game Whose Rules Suit You Best

   The world is full of an abundance of opportunity. You can do whatever you want with the precious life you have (if you don’t believe me, look at a list of majors at any public university - mine has 125). Although the abundance of choice can be intimidating, it should also be comforting in a way. You can choose to play any game you desire, which means you can give yourself an early advantage simply by choosing the game your best at. Early on, Charlie wanted to pursue mathematics, but he recognized that he could never become the greatest in that field after watching the extraordinary numerical feats his professors were capable of. This principle has also been adopted by Warren Buffett who is only willing to entertain investing in companies he deems within his circle of competence.

3. Never Let One Tragedy Lead To Many More

   Though many lack sympathy for Charlie Munger due to his vast amount of wealth, Charlie faced more than his fair share of sorrow early on in life. Before his business success Charlie experienced a divorce and the passing of his eldest child. In the same way that successive positive actions over time can compound into unbelievable results, repeated negative actions on account of a lack of resolve can compound in the opposite direction. Charlie refused to let his early setbacks deny him happiness and success. You only hurt yourself further, and more severely, by staying down.

4. A Great Strength Is Often An Equal Weakness

   Like many investors, Munger has a unique ability to remove emotions from his decisions, and while this has reaped him great financial fortunes, it is not without its downsides. Reflection and the ability to stay in touch with our emotions is what makes us human and what allows us to relate to others. Relating to others on an emotional level is one of the great joys of life and to deprive yourself of that can be a great tragedy to yourself and the ones who surround you.

5. Many Things Are Sexier Than They Appear

   The thing that drew Munger to investing was the idea of being an independent capitalist. His conception of a capitalist was one who reads, studies, and makes calculated bets from the comfort of their study, developing great fortunes through their intellect and analysis. While this is an accurate description of what Munger and Buffett now do, it is rather romanticized. Both Buffett and Munger read for hours on end, and not just books. They read tons of financial statements that would glaze the eyes of most within the first couple pages. The idea of making money from the comfort of your home may sound appealing at first, but reading hundreds of pages of 10-ks is oftentimes the reality of the job, and not as sexy as many would dream. Oftentimes our desires aren’t as great, or easy, in reality as they seem in our imagination.

6. Want To Advance In Your Career? Do The Work In Front Of You

   The quickest way to advance in your career is to do the work on your desk. This was the advice that Munger would give young lawyers seeking to level up their careers. Good work is recognized and though it may take time to earn recognition, it is the best way to progress. Yet so many people, especially those active on Twitter, are looking for shortcuts, life hacks, and career advice when at the end of the day, the best thing for them to do is the work in front of them. Diligent work combined with patience often renders reward. Don’t delude yourself into thinking you can achieve remarkable results without a remarkable amount of work. You can’t career hack your way to the top.

7. Combining Several Ideas In A Novel Way Generates Amazing Results

   This idea has so many applications. My favorite writer, Morgan Housel, says that there is maybe one original idea in his bestselling book, The Psychology of Money. The rest are “stolen” from years of reading, writing, and researching. But what makes Morgan so great is the way he combines ideas with stories. Initially, the readers struggles to understand how the story connects to finance, but by the end, they’re slapping their heads in an “a-ha” moment. The way Charlie uses this philosophy is by stealing frameworks from fields such as biology, economics, and psychology in order to clarify the way he thinks about investing in a way others do not. Combining ideas from various disciplines informs Munger’s investment philosophy in a sound way. This can also apply to managers. Munger is famously quoted saying that Sam Walton didn’t have a single original business idea or strategy. He simply stole the best ideas from competitors and put them all together to build one of the greatest businesses ever. Don’t insist on being original, be smart about what you steal instead.

8. Think Correctly And Think Independently

   These were the two rules of investing that Ben Graham, the father of value investing, gave to his students. So much of our thought is influenced by others. Our mind is essentially software and the programs that inform the way that software behaves are written by external factors like where we live, who we spend time with, and what content we consume. Buffett deliberately lives in Omaha away from the group think of Wall Street, so that he can form conclusions independently from the crowd. In order to succeed as an investor, you must take advantage of mispricings in the market which, by definition, means being contrarian. You can be right about something but if the market has the same belief as you, you may not get the results you desire. For example, Zoom has become more relevant in the world as a result of COVID. However, if you made a bet on Zoom due to this belief, you would not be pleased with your returns despite the validity of the thesis.

9. If You Have Exceptional Talents, Don’t Do Unexceptional Things

   Munger worked with young lawyers at his firm who graduated first or second in their classes at the most prestigious and elite universities in the country. These lawyers did law in the traditional way, taking on promising clients who would likely generate large fees for the firm. Munger did his fair share of this as well, but he also helped clients he genuinely liked, even if they didn’t promise a heyday for the firm. This behavior puzzled the young lawyers but the young lawyer’s behavior puzzled Munger even more. He encouraged them to do unconventional things, because they were unconventionally smart and gifted people. Jeff Bezos is a great example of this wisdom in action. After graduating from Princeton, Bezos got a well paying job at a hedge fund in New York City. While the job paid well, it was a conventional path for a Princeton grad to take. Bezos left his job and opted to build an online bookstore, a path untaken by any in the past. Bezos was remarkably intelligent and as such took a remarkable path.

10. Tie The Great Ideas To The Great People Who Discovered Them

    The same way Morgan Housel combines narrative with ideas, Munger believes you should learn the great ideas by reading the personal narratives of those who developed them. When you learn from the greatest minds by reading about their lives, desires, and motivations it helps you internalize them better. Reading the biographies of the eminent dead also prevents you from becoming captive to the ideas of your time. By knowing the great ideas of history you can think independently and prevent yourself from falling victim to the next big craze.

Taking the great ideas from great people is a very appropriate way to end my first post. I hope you enjoyed reading this as much as I enjoyed writing it.