Munger Michel Pireu     | Business Day Tuesday, November 13, 2018
From Jason Zweigís fireside chat with Charlie Munger

Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay.

Buying those cheap, cigar-butt stocks [companies with limited potential growth selling at a fraction of what they would be worth in a takeover or liquidation] was a snare and a delusion, and you canít do it with billions or even many millions of dollars. But he was a brilliant man, one of the only intellectuals Ė probably the only intellectual ó in the investing business at the time.


Confucius said that real knowledge is knowing the extent of oneís ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome. Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Knowing what you donít know is more useful than being brilliant.


There isnít one novel thought in all of how Berkshire is run. Itís all about what Peter Kaufman calls Ďexploiting unrecognized simplicities.í Itís a community of like-minded people, and that makes most decisions into no-brainers. Warren and I arenít prodigies. We canít play chess blindfolded or be concert pianists. But the results are prodigious, because we have a temperamental advantage that more than compensates for a lack of IQ points.

When youíre not managing for quarterly earnings and youíre managing only for the long pull, you donít give a damn what the next quarterís earnings look like.
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