Money and Finance
- Finding The Balance Between Curiosity And Focus...
From Charlie Munger: The Complete Investor: "Curiosity can provide both fun and wisdom, and occasionally trouble." —CHARLIE MUNGER, POOR CHARLIE’S ALMANACK, 2005 Curiosity about life and restraint about difficult decisions are part of Munger’s...
- Structuring Compensation Incentives...
From Charlie Munger: The Complete Investor: Munger believes that structuring compensation incentives is critical. If the right structure exists, then a seamless web of deserved trust can be created which lessens problems related to this tendency....
- The Psychology Of Human Misjudgement - Charlie Munger Full Speech (audio)
Found via ValueWalk. This is the audio of Munger's speech from 1995. The transcript of the speech is available HERE. Mr. Munger also made revisions to the speech for Poor Charlie's Almanack, which is the best source to gain from Charlie's...
- East Coast Asset Management's Q2 Letter
Found via Market Folly.Headlines related to unemployment and pending stimulus expirations have unnerved investors this quarter. As a consequence, equity markets proved volatile with fears that the recovery has been held together by government fiscal and...
- Berkshire's No. 2 Man Helps From The Background
Buffett's No. 2 man Charlie Munger plays his role at Berkshire mostly in private The two men who run Berkshire Hathaway Inc. have an arrangement: Warren Buffett is the face of the company and Charlie Munger stays mainly in the shadows. That works...
Money and Finance
Charlie Munger's Lollapalooza Effect and This Credit Fiasco
Charlie Munger, Warren Buffett's brilliant sidekick, has expounded many times on innate human biases and incentive effects. For anyone interested in this topic, I highly recommend you read the transcript of an amazing speech he delivered in 1995, called The Psychology of Human Misjudgement. I have read this speech at least a dozen times and each time I glean something new and valuable. At first it may seem somewhat rambling and confusing, but I think anyone who can get a grip on this material will have a leg up in life on the average Joe who has no idea about these important concepts.
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Mr. Munger's treatise is clearly directed towards understanding how biases and incentive effects drive much of human behavior, and are not directed specifically at investing. However, the field of behavioral finance has grown to study many of these same concepts as they apply to financial decisions.
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A major point here is that you can never underestimate the power of incentives. One should always ask themselves in any human interaction what the incentives (or reinforcement effects) of the counter party are, especially when money is involved. Munger quips, "I think I've been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther."
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Book with Charlie Munger's speeches and other wisdom: Poor Charlie's Almanack
- Finding The Balance Between Curiosity And Focus...
From Charlie Munger: The Complete Investor: "Curiosity can provide both fun and wisdom, and occasionally trouble." —CHARLIE MUNGER, POOR CHARLIE’S ALMANACK, 2005 Curiosity about life and restraint about difficult decisions are part of Munger’s...
- Structuring Compensation Incentives...
From Charlie Munger: The Complete Investor: Munger believes that structuring compensation incentives is critical. If the right structure exists, then a seamless web of deserved trust can be created which lessens problems related to this tendency....
- The Psychology Of Human Misjudgement - Charlie Munger Full Speech (audio)
Found via ValueWalk. This is the audio of Munger's speech from 1995. The transcript of the speech is available HERE. Mr. Munger also made revisions to the speech for Poor Charlie's Almanack, which is the best source to gain from Charlie's...
- East Coast Asset Management's Q2 Letter
Found via Market Folly.Headlines related to unemployment and pending stimulus expirations have unnerved investors this quarter. As a consequence, equity markets proved volatile with fears that the recovery has been held together by government fiscal and...
- Berkshire's No. 2 Man Helps From The Background
Buffett's No. 2 man Charlie Munger plays his role at Berkshire mostly in private The two men who run Berkshire Hathaway Inc. have an arrangement: Warren Buffett is the face of the company and Charlie Munger stays mainly in the shadows. That works...