Happy New Year! And Wisdom from the smartest investor for 2021

First of all, at the new year's eve, I wish all the friends a very happy and prosperous new year.

Hope all your wishes will come true!!

Given it's the last day of the year, let me just share with you some wisdom from one of the smartest

investors in the world, the 96 years old Charlie Munger. Below is the excerpt from his recent interview by

a professor at his alma mater (dating back to 1945!)!  I think you will agree with me he is still full of talent

and wisdom even nearly a century old.😇  

 

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(from C. Munger)

• What has happened in the investment field is that so many people have

gone into it and made a lot of money. When I was young there was
almost nobody in the field and nobody was smart. And now there is a
ton of people in it and almost everyone is smart, including good
Caltech graduates. There have been so many people sucked into finance,
by the money. So that's been a hugely important development that I
don't welcome at all. I don't think we want the whole world in
investing by trying to outsmart the rest of the world by buying
securities, but that's what happened.

• I think great investors to some extent are like great chess players –

they are almost born to be investors... Partly it's temperament,
partly it's deferred gratification. Good investing requires a weird
combination of patience and aggression – and not many people have it.
It also requires a big amount of self-awareness in how much you know
and how much you don't know. You have to know the edge of your own
competency. And a lot of brilliant people are no good about knowing
the edge of their own competency – they think they are way smarter
than they are. And, of course that's dangerous and it causes trouble.

• I've spent a lifetime trying to avoid my own mental biases. A) I rub

my own nose in my own mistakes. B) I try and keep it simple and
fundamental as much as I can. And I like the engineering concept of a
margin of safety. I am a very blocking-and-tackling type of thinker. I
just try and avoid being stupid and I have a way of handling a lot of
problems – I put them on what I call my "too hard pile" and I just
leave them there. I'm not trying to succeed in my "too hard" pile.

• [I think returns in the next 10 years will be less than the last 10]

because so many people are in it, and the frenzy is so great, and the
systems of management – the reward systems – are so foolish.

• "Remarkable" is not too strong a word [for how much money printing

there is] – astounding would be more like it. Well, it's unbelievably
extreme. Some European government borrowed money reasonably for some
tiny little percent of 1% for 100 years. Now, that is weird. What kind
of a lunatic would loan money to a European government for 100 years
at less than 1%?

• Nobody knows when bubbles are going to blow up, but just because it's

Nasdaq doesn't mean it will have another run like this one very
quickly again. This has been unbelievable. Again, there's never been
anything quite like it. If you stop and think about it, think what
Apple is worth compared to John D. Rockefeller's whole oil empire.
It's been the most dramatic thing that has ever happened in the entire
history of world finance.

• The other thing that's really remarkable, the last 30 years in China,

they have had real economic growth at a rate for 30 years that no big
country has ever had in the history of the world. And who did that? A
bunch of communist Chinese! Now, that is really remarkable. So, if
you're studying finance you have a lot of strange things to account
for.

• Academia is not very good at the multidisciplinary stuff. Academia

rewards the researcher who knows more and more about less and less.
And there are real difficulties with that approach... It's hard to be
that smart in the liberal arts. Partly because many liberal arts
professors are so leftist. It's hard to be pretty smart if you're
crazy leftist. You're gonna have the world a lot wrong.