“The business schools reward difficult, complex behavior more than simple behavior, but simple behavior is more effective.”---Warren E. Buffett
“Simplicity is the ultimate sophistication.”---Leonardo da Vinci
“Smart people simplify things.”---Albert Einstein
Simple can be smart.
And intelligent can be stupid.
As Charlie Munger taught:
“High IQ people can be absolutely useless. And many of them are.”---Charlie Munger
Charlie credited his own success in life to “a few simple tricks that work well.”
“If something is too hard, we move on to something else. What could be simpler than that?”---Charlie Munger
Charlie said he and his partner, Warren Buffett, “have a passion for keeping things simple.”
“Simplicity has a way of improving performance through enabling us to better understand what we are doing.”---Warren E. Buffett
Charlie saw no downside to keeping it simple:
“I can’t think of a single example in my whole life where keeping it simple has worked against us. We made mistakes, but they were not because we kept it simple.”---Charlie Munger
Charlie urged us to:
“Take a simple idea and take it seriously.”---Charlie Munger
Charlie felt it was a human blind spot to “underrate the importance of a few simple big ideas.”
Charlie & Lee
A bust of Charlie’s hero, Lee Kuan Yew, founder and first prime minister of Singapore, stood in Charlie’s Pasadena home.
Lee Kuan Yew always said, “Figure out what works and repeat it.”
Charlie distilled this instruction to “Repeat What Works.”
And proclaimed it “The Fundamental Algorithm of Life.”
“The mantra he [Lee Kuan Yew] said over and over again was ‘figure out what works and do it.’ Now it sounds like anybody would know that made sense, but you know most people don’t do that. They don’t work that hard at figuring out what works.”---Charlie Munger
Here’s Charlie on Lee Kuan Yew at the Daily Journal meeting:
For more on Charlie Munger see also, “Charlie Munger and the Fundamental Algorithm of Life”
Charlie & Albert
Albert Einstein, another of Charlie’s heroes, said the highest level of cognitive prowess, beyond genius, is “simple.”
E=mc2 is simple.
“Everything should be made as simple as possible, but not simpler.”---Albert Einstein
Charlie & Charles
Charles Darwin, Charlie’s namesake and another of Charlie’s heroes, after decades of research, published his Theory of Evolution.
Evolution is a simple concept that, incredibly, explains three and a half billion years of expanding and breathtakingly varied planetary life, up to and including…us!
Charlie & Ben
A bust of Benjamin Franklin was also on display in Charlie’s home.
Perhaps Charlie’s oldest, earliest and greatest hero, Franklin’s likeness appears on every hundred dollar bill.
“The nicest people we know are the people who get their faces on dough.”---Groucho Marx and Frank Sinatra singing “It’s Only Money” by Sammy Cahn and Jule Styne in the film “Double Dynamite” (1951)
Franklin’s first rule of wealth: underspend your income.
Also, Charlie’s.
“A penny saved is a penny earned.”---Benjamin Franklin
“If you know how to spend less than you get, you have the philosopher’s stone.”---Benjamin Franklin
“To get there [wealth] a person must consistently underspend his income. Getting wealthy is like rolling a snowball. It helps to start on the top of a long hill, start early and try to roll that snowball for a very long time. It helps to live a long life.”---Charlie Munger
Franklin’s second rule of wealth: compound interest.
A simple concept, but Berkshire Hathaway’s greatest strength.
Franklin put it simply:
“Money makes money and the money that money makes makes money.”---Benjamin Franklin
“Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.”---Charlie Munger
“My life is a product of compound interest.”---Warren E. Buffett
Charlie Simple Ideas on the BBC
Interviewed by the BBC Charlie gave four simple filters for Berkshire’s investing strategy:
- A business we are capable of understanding;
- With a durable, competitive advantage;
- A management with integrity and talent;
- A price that affords us a margin of safety.
Charlie opined:
“That’s a very simple set of ideas. And the reason our ideas have not spread faster is they’re too simple. The professional classes can’t justify their existence if that’s all they have to say. It’s all so obvious and so simple, what would they have to do with the rest of the semester?”
Charlie’s Simple Secrets to a Long & Happy Life
In a 2019 interview with Becky Quick on Squawk Box, Becky noted that Berkshire shareholders looked to Charlie for much more than business and stock market guidance. Rather they sought the secrets to a long and happy life.
Charlie promptly and clearly provided a simple prescription:
