Weekend reading: A hunger for Munger

This week’s best articles and blogs from the web.

There were two excellent articles on The Motley Fool this week, and both consisted of nothing but quotes from the great Charlie Munger.

The 87-year old billionaire and business partner of Warren Buffett is as quotable as Mr B., and also tougher-minded, more acerbic, and invariably correct.

I could quote Munger all day, but here’s just a few of the gems he delivered at what he says will be the last of his annual meetings with investors.

On financial collapse

You don’t ever want to do anything to push an economy to collapse. Terrible things result.

Think about this. During World War II, Japan tortured our soldiers to death. They marched them around. The Germans put people in ovens. Just awful. And what did we do after the war? We gave them money to rebuild. We said, “Let bygones be bygones.” The result was a magnificent global economic system and a win for human rights.

Who deserves the most credit for this? That would be John Maynard Keynes and his book The Economic Consequences of the Peace.

Why capitalism works

Joseph Stalin can achieve division of labour and there would be benefits. That doesn’t mean it’s capitalism.

The major success of capitalism is its ability to drench business owners in feedback and allocate talent efficiently. If you have an area with 20 restaurants, and suddenly 18 are out of business, the remaining two are in good, capable hands. Business owners are constantly being reminded of benefits and punishments. That’s psychology explaining economics.

On the evil of envy

There is nothing more counterproductive than envy. Someone in the world will always be better than you. Of all the sins, envy is easily the worst because you can’t even have any fun with it. It’s a total net loss.

On the dollar depreciating 95% over the past 50 years

If you think the past half-century was bad, you will have serious problems in life. The period you describe as miserable was a tremendous time for the American economy. You’ve described success.

On US unemployment

Part of the problem is that Asians are so damn smart. For years they were in this Malthusian trap, stuck in agriculture. Now they’re unleashed, and human talent is just awesome when unleashed. They’re formidable competitors.

On Charlie Munger

Most of you know exactly what I think about every subject, but you still come anyway. It’s a damn cult.

On financiers and Wall Street

To the extent that all I’ve done is pick stocks that have gone up, and sat on my ass as my family got richer, I haven’t left much contribution to society. I guess it’s a lot like Wall Street. The difference is, I feel ashamed of it. I try to make up for it with philanthropy and meetings like this one today. This meeting is not out of kindness. This is atonement.

Read more Munger!

I could go on quoting until I got sued by The Motley Fool, whose writers must already be feeling pretty miserable given that they write for a living and Munger just spouts these pithy gems as a side hobby!

That goes for me as a blogger, too, by the way: If Munger started a blog I’d be tempted to give up writing!

Just go read part one and part two for yourself, and remember these are unscripted off-the-cuff responses from one four-hour session with an octogenarian – not even a lifetime’s wisdom distilled.

For that you’d have to read Munger’s book.

But good luck getting a copy. It’s only available secondhand, and it can fetch more than £100!

From the blogs

• Fear and loathing in the Eurozone – The Psy-Fi blog
• Every purchase is a trade-off – Get Rich Slowly
• From billionaire to broke – Smart On Money
• Risk has been rewarded in this two-year rally – The Munro Blog
• Should you own stocks in retirement? – Oblivious Investor
• 25 things every Wall Street intern should know – CNBC
• A tranquil weekend away – Simple Living in Suffolk
• Paper: How winning the lottery can kill you [PDF] – Science Direct
• Paper: Disagreements, tastes, and asset prices [PDF or summary] – French & Fama (via Mike)

Mainstream money and investing

• Deleveraging will go on for years – The Economist
• Greece has spent 50% of its history in default – FT Alphaville
• Andreessen: There’s no new Dotcom bubble yet – New York Times
• Avoid herd thinking created by ‘filter bubbles’ – Forbes
• ETF loaning is growing – Wall Street Journal
• Warning clouds over earnings season – Wall Street Journal
• Silicon Valley is winning quants back from Wall Street – FT
• Investment trusts beat sister funds due to lower fees – FT
• NS&I index-linked bonds NOT sold out yet – FT
• The seven deadly sins of premium bonds – Telegraph
• Houses price falls, inflation-adjusted – Telegraph
• Generation rent: Goodbye social mobility – Telegraph
• Triodos sells shares in green energy firm – The Guardian
• The strength of niche social networks – Slate

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