Thoughts On Richer, Wiser, Happier

I’m away in New York for the weekend so I decided to post a write-up I did a few months ago on Richer, Wiser, Happier by William Green. I don’t expect to do many book reviews in the future as I prefer to do standalone articles but the bustle of this week didn’t leave me much time to write a new piece.

Richer, Wiser, Happier is a quick read, jam-packed with wisdom. I liken it to a modern version of The Outsiders by William Thorndike because it profiles investors who think unconventionally about markets, life, and fulfillment. I highly recommend you read it! Without further ado, here are ten things I learned from William Green’s Richer, Wiser Happier.

1. Humility Isn’t Only A Virtue Because It Endears You To Others, It Is Also Armor Against Pride Which Comes Before The Fall

   William Green notes the humility with which Howard Marks speaks. He has reached the epitome of wealth and respect in his field yet you wouldn’t be a fool not to guess it. This humility is not only a method of endearing himself to those around him. It is a way to prevent Marks from making mistakes that could doom him. Past performance is no guarantee of future success and he knows this.

   This reminds me of Marcus Aurelius having a servant whisper in his ear that he is mortal. Similar to the mindset of Aurelius, Marks is aware that success can be stripped away at any second and often comes shortly after moments of extreme hubris. John D. Rockefeller had a similar mindset and would always remind himself that going to sleep after a great success doesn’t mean you won’t wake up to great adversity or failure.

2. To Be A Great Investor Is To Have A Great Understanding Of Yourself

   Sometimes I crack up when I read book titles such as The Tao of Charlie Munger or Seeking Wisdom From Darwin to Munger. It’s not that I think these are poor titles, it’s that my humor is tickled when a man who nibbles at peanut brittle, abruptly leaves conversations without salutations and calls modern technology like crypto “crypto-shit” is compared to historical figures whom we regard with such mythological esteem.

   To be clear, I agree with Munger’s crypto takes (and I think he is brilliant), I just don’t think Munger resembles a Buda master when he speaks on the topic - he reminds me more of a fuming bull. Munger’s midwestern style doesn’t betray his encyclopedic knowledge of history and investing which is what makes comparisons to Seneca and Darwin so hilarious. However, the knowledge that lies within Munger’s mind makes the comparisons so appropriate.

   Ironically, as an investor, the times when you want to sell the most are often the times you absolutely shouldn’t sell, and the times you want to buy the most are the occasions when hype is reaching a climax. Because of this, investors need to be in tune with their risk tolerance. Their portfolios must reflect the level of risk they are capable of coping with which means that one of the most important aspects of investing is being introspective, understanding yourself, and avoiding self-delusion. To be a good investor you need to know yourself well. The core principles of Taoism are: inaction, simplicity, and living in harmony with nature. This is the perfect way to describe Charlie Munger’s investment philosophy. And I guess why The Tao of Charlie Munger is such a good book title.

3. Take Advantage of Universal Truths That Are Obvious To You Yet Evasive For Others

   Mohnish Pabrai steals ideas that are profoundly true to him yet elusive to others. In his mind, the less others understand them, the more valuable they are. For example, think about the eighth wonder of the world - compounding. This force is not intuitive for the human brain that was designed to extrapolate linearly. However, some of the most fulfilling things in our world: financial independence, deep relationships, and building skills are the results of thousands of actions compounded over time. An inability to understand profound truths like compounding doesn’t only condemn you to a life of financial insecurity, it can affect your ability to progress in other areas of life as well. Another profound truth mentioned in the book that eludes so many is Power vs. Force. The best way to convince someone to your point of view is rarely through forceful coercion. Instead, we should try to be honest and kind towards others. Our behavior will often be reciprocated by the recipient which is not an intuitive idea for many.

4. Retirement For The Passionate Is Deadly For The Body And Mind

   Buffett is still chugging along at the ripe old age of 92. And I don’t think this is a product of his Coca-Cola, hamburger, and peanut brittle-fueled diets. I can’t help but believe that a large part of the reason he has lived so long is because he loves his work. Buffett tap dances to work. He found his natural drift and followed it with a ferocity seen in few and I can’t help but believe that this is a huge reason he is in as good shape as he is today despite his physical health habits.

   Another example of this is Bob Caro and Bob Gotlieb. Although Gotlieb passed away tragically in June 2023, he lived until the age of 92. The passion he held for his work editing books rivaled that of Buffett and Munger’s feelings toward business. Caro is 87 and is working on completing the final volume of his five-book series on the life of Lyndon B. Johnson. Caro has pursued his work with such a unique focus and commitment that he moved to the Texas hill country to better understand the birthplace of LBJ and sold his beloved home to get the cash necessary to finish his first book, The Power Broker.

   It is so obvious that all of these men found what they were meant to do and let no object stand in the way of them reaching their goals. While I do not envy the hardship they endured to follow their passion, I do envy the unwavering confidence they held in pursuit of their purposes. The intellectual stimulation they received from chasing what they loved must have contributed to their longevity.

5. After Winning The Game Of Money, Many Become Teachers

   Being a teacher may not be the most financially rewarding profession, but it may be the most personally fulfilling one. Investors like Sir John Templeton, Ray Dalio, Mohnish Pabrai, Warren Buffett, and Charlie Munger have no obligation to share their wisdom with the rest of the world. They have made more money than they could spend in multiple lifetimes. At this point in their life, there isn’t much they could be forced to do based on a dollar amount. These people are impervious to the great motivator that is money - which makes their behavior all the more interesting. All of these men choose to teach because they enjoy it. Studying the behavior of the ultra-wealthy is fascinating because it gives you a glimpse into what matters to humans when money is no longer a factor.

6. Human Nature Doesn’t Change - Merely The Context In Which It Reveals Itself Does

   Part of Howard Mark’s favorite piece of financial writing speaks on the causes of irrational financial peaks. It goes like this “Contributing to . . . euphoria are two further factors little noted in our time or in past times. The first cause is the extreme brevity of the financial memory. In consequence, financial disaster is quickly forgotten. In further consequence, when the same or closely similar circumstances arise again, sometimes in only a few years, they are hailed by a new, often youthful, and always supremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world. There can be few fields of human endeavor in which history counts for so little as in the world of finance.“ I love that excerpt.

   No matter how much we think this time may be different it always plays out the same. The source of the craze may be different, whether it’s railroads, internet stocks, or crypto tokens, people will always fool themselves into believing the hype. We are doomed to repeat this error no matter the lessons history screams at us. The technology may be different, and very well may be life-changing. But financial markets are a reflection of human nature and euphoric optimism to the point of delusion is something that will never change.

7. Blind Pursuit Of Any Goal Can Cause One To Miss Achieving It

   Pabrai asked Buffett about a third partner of Berkshire. His name was Rick Guerin. Guerin was plenty intelligent and capable as an investor, his only fault was that he wanted to achieve wealth far more rapidly than Buffett and Munger. To do so he was willing to take on much more risk which ultimately resulted in his getting margin called. Guerin sold his Berkshire stock to Buffett in 1974 when the price was $40/share. Class A shares of Berkshire are now worth $517k. This is a cautionary tale that I am sure Munger recalls often - don’t get so caught up in the pursuit of your goals that you ignore the possible pitfalls.

   People can get so starry-eyed chasing their dreams that they ignore the possibility of things not going according to plan. They trip on a rock staring at the stars which derails their attempts to ever reach the stars. Tom Gayner preaches a similar message about the value of being directionally correct over long periods as opposed to maximizing results over a short period of time. Attempts to maximize returns in the investment world open yourself up to unnecessary danger and risk. Be directionally correct over long periods of time and allow compounding to work its magic. Always be cognizant of the stray rocks that may trip you.

8. Humans Often Prevent Themselves From Adopting Good Ideas

   In a podcast with Danny Miranda, David Senra mentioned a scene from the movie Seven. In the scene, Morgan Freeman, an investigator, burrows into a stack of books while the library guards play a game of poker. Freeman’s character is baffled by the behavior of the men. They have access to more knowledge than any of their forefathers. The accumulated wisdom and knowledge of mankind are at their fingertips. Yet instead of reading and absorbing this material, they play trifling games for fleeting feelings of pleasure. This is true of many people today. We should all observe the best people, practices, and ideas in our field. Read from the wisest people, and steal their ideas! The costs are marginal but the benefits are incalculable. Mohnish Pabrai predicated his entire investing style on Warren Buffett and Charlie Munger. He is now a billionaire thanks to the teachings of those great men. Why learn all of your lessons through personal experience when there is so much wisdom to take from the masters?

9. Extreme Levels Of Intelligence In One Area Does Not Necessarily Translate Into Extreme Levels Of Intelligence In Another

   The extremely intelligent are not immune to occasional levels of extreme stupidity. In fact, extreme intelligence can often lead to extreme stupidity as extreme hubris is often a product of intelligence and stupidity is a product of hubris. Buffett and Munger aren’t just widely admired for being geniuses. They’re widely admired for acknowledging their own limitations and the boundaries of their knowledge - what they describe as their circle of competence. One of the investors studied in Richer, Wiser, Happier, Qais Zakaria, was hugely impacted by witnessing the demise of his father’s wealth as a college student. Zakaria’s father ran a successful export business but lost most of his money speculating in the stock market. After we experience success, it is often normal for us to attribute our success to our high levels of intelligence. This belief in our intelligence can cause us to believe our specific knowledge in one industry will translate into another and this spells out the doom of many business people. Zakaria said of his father “My father made his money on things he understood and lost it on things he didn’t understand,”

10. The Art Of Being Wise Is Knowing What To Overlook

    Investor Nick Sleep spoke on the idea of information having an expiration date. Our news feeds are often crammed with information that will not be of use to us within one week. While we are blessed to live in a world of abundant information, we must use very selective filters to weed out the information that will be of greatest use to us for the longest period of time. Be wary of the content you consume daily and ask yourself will I find this information helpful far into the future? With constant streams of information from emails, Twitter, and other forms of social media it’s important to have a system that allows you to ignore extraneous information with a near expiration date.

I enjoyed William Green’s Richer, Wiser, Happier and highly recommend anyone interested in investing and wisdom pick it up. It has the most wisdom per page of any book I have read recently and is well worth the investment of time and money.