This year amplified the difficulty in predicting markets and the frailties of the human condition on short-term reactions to an art/science which requires long-term thinking. At the start of 2023 the outlooks for the Australian share market were almost unanimous in predictions of doom. One must feel for the poor investors who sold based on these forecasts from unaccountable economists and analysts. We are consistently tedious in our repetitive advice to think like a business owner and look at a share portfolio as a portfolio of companies, rather than a portfolio of stock codes. This type of thinking is helpful in several ways. Firstly, it avoids knee-jerk reactions based on short-term market movements and forecasts. Second, it is far more likely to be profitable than short-term trading and third, it is far more amenable to a good night’s sleep than worrying about forecasts.
At the close of last month, we lost one of the best investors most of us will ever witness.Charlie Munger wasn’t just Warren Buffett’s right-hand man; he was a titan in his own right. A polymath with a razor-sharp wit and an insatiable curiosity, Munger’s influence transcended the world of finance. He was a philosopher, a philanthropist, and a master of “mental models,” a framework for approaching complex problems by drawing on diverse disciplines like psychology, economics, and even biology.
Munger’s wisdom left an indelible mark on Berkshire Hathaway, shaping its value investing principles and its culture of rational thinking. He preached patience, discipline, and a healthy dose of skepticism, urging investors to “invert, always invert” their thinking to avoid common biases. His pronouncements, like “the best way to avoid trouble is to not go where trouble is,” became investment gospel, passed down from generation to generation.
Munger’s legacy extends far beyond the realm of stocks and bonds. He was a champion of lifelong learning and intellectual curiosity, encouraging everyone to “be rational, be independent, and think for yourself.” He believed in compound interest not just for money, but for knowledge and wisdom, urging people to “build your inner cathedral.”
Charlie Munger was a rare breed, a man who combined brilliance with humility and humour with wisdom. He challenged us to think deeper, to see the world through a wider lens, and to live a life of meaning and purpose. His absence leaves a void in the world, but his lessons and his spirit will continue to guide us for generations to come.
Munger was a true Renaissance man whose wisdom touched all aspects of life. He was a teacher, a mentor, and a friend to many, and his legacy will continue to inspire us to think critically, invest wisely, and live life to the fullest.
He is sorely missed by all at Leyland Private Asset Management
Some of Charlie’s best observations:
- “The most important thing is to be interested in something and to pursue that interest. Everything else will sort itself out.”
- “The difference between successful people and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.”
- “If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get.”
- “Most people are terrible at thinking about things probabilistically.”
- “Envy is really stupid. I just don’t get it.”
Wishing all our readers a very Merry Christmas and a Happy New Year. We look forward to working with you again in 2024.
Charles Leyland