This article by Charles Munger titled “A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business” is such a great read that I would definately call it the read of the day if I had to.
Charles Munger has been the right man of Warren Buffet in managing Berkshire Hathaway since the old days when Berkshire was still in the textile industry. In this article, it gives great insights on what people like him have in mind and how he views the world in his own lens.
Points and comments that I’ve found interesting were on topics such as:
1. To learn and have multiple models
2. Generalize or go specific (applies to studies, business, investments etc)
4. Business models and sorts of business (and management!) that Berkshire invests in
5. Invest in stocks as if you can only have 20 choices in your whole lifetime.
6. Horse Betting and how it relates to investing
7. His comments about Warren Buffet
Perhaps point 3 and 4 were more insightful to me. Not all business models are profitable and not all businesses that earn money are scalable. Investing in a company with good management is better in the long term then to invest in business where there’s currently a hot demand (such as the mining industry).
Let me know if you have the discipline to read and digest the whole article. It’s quite long, but a seriously good read. Judging by the financial crisis that’s currently going on, reading this might just keep you sane and think logically.