RIP Charlie Munger; What I learned from Munger; Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

I was filled with sadness when I heard about the death of Charlie Munger yesterday, just a month shy of his 100th birthday.

A short while later, I was a guest on CNBC's Fast Money, where I shared my thoughts for eight minutes. You can watch the first 4:28 here, I learned a lot about areas outside investing from Buffett and Munger: Value Investor Whitney Tilson, and CNBC subscribers can watch the entire segment here: Watch CNBC's full interview with Whitney Tilson on lessons learned from Charlie Munger.

Nearly all of the obituaries (for example, this one in the Wall Street Journal: Charlie Munger, Warren Buffett's Partner and 'Abominable No-Man,' Dies at 99) focus on him as an investor – and, indeed, that's why I first sought him (and Warren Buffett) out in the mid-1990s as I was first getting interested in investing.

I wanted to be successful and make a lot of money for myself – and my investors, after I launched my first fund in 1999 – so I studied Buffett and Munger obsessively. I read everything by and about them and have traveled to Omaha to attend the Berkshire Hathaway (BRK-B) annual meeting every May. (I've now been to 26 in a row!)

What I learned from these two wise men about investing was invaluable.

In the early days of my career, I had so little experience – and they were such brilliant, inspiring, and patient teachers! Had I not absorbed all the investing lessons they imparted, I would never have achieved anything close to what I did.

I beat the market year after year in my first dozen years and grew assets under management from $1 million to $200 million across three hedge funds and two mutual funds. I also launched successful investment conference and newsletter businesses, appeared regularly on CNBC for many years, was on 60 Minutes twice, wrote hundreds of articles, and coauthored three books.

I've come to realize, though, that the most important things I learned from Buffett and Munger go well beyond investing – so much so that I can say, other than my parents and my wife Susan, they are the two people who've had the greatest impact on my life.

Much of what they preach is simple (as Munger joked, "If it's trite, it's right!"): work hard, become a learning machine, develop what Munger calls "worldly wisdom," have high integrity, develop good habits, be nice to everyone, marry the right person and maintain a strong relationship, and so forth.

As Munger once said:

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up, and boy, does that help, particularly when you have a long run ahead of you.

Develop into a lifelong self-learner through voracious reading. Cultivate curiosity and strive to become a little wiser every day.

If you can reduce your distractions and carve out 12 focused hours a day to work/study/learn, you'll be well on your way to success. But how you use those hours is key... You must become a learning machine at work, at school, and in your personal life.

Starting in preschool, I was incredibly fortunate to attend some of the best schools in the world: Bing Nursery at Stanford, Eaglebrook in seventh and eighth grade, Northfield Mount Hermon for high school, Harvard University for undergrad, and finally Harvard Business School ("HBS").

After two decades of nonstop studying, I remember thinking when I graduated from HBS at the ripe-old age of 27, filled with the hubris Harvard seems to instill in many of its graduates, that I was ready to go forth and conquer – reaping the benefits of my hard work, prestigious degrees, and vast knowledge and capabilities.

How wrong I was!

In reality, I was an inexperienced naïf with nothing more than a good foundation for what I now know has been my lifelong learning journey.

Thanks largely to Munger, I eventually came to understand that my brain was my single most valuable asset. It's not just what I knew, but how I processed information and behaved that would determine my trajectory in life. So, to become truly successful, I had to become a learning machine – get on a steep learning curve and never get off it.

Related to this, I recall Munger at a long-ago Wesco annual meeting using a tennis analogy to highlight the importance of developing deep expertise:

When you're young, you should practice your forehand, backhand, serve, overheads, and net game. But at some point, if you have a particularly great forehand, you should structure your life so that all you do is pound forehands all day long.

The world is too competitive these days to simply be a smart generalist. The best jobs (and highest incomes) are going to those who have a broad skillset, to be sure, but also those who have developed deep expertise in a particular area.

To do so, you need to start by developing what Munger calls "a latticework of mental models," which is a fancy term for a broad background of knowledge in science, engineering, math, history, literature, psychology, one or more languages, etc.

But that's just the foundation...

Then you need to figure out what you're truly interested in and passionate about and then do three things: get a job at a great firm with a strong training program, get a graduate degree in your field from a prestigious institution, and find multiple mentors for whom you can apprentice.

I was fortunate to get these things right in my 20s: I got a job at the Boston Consulting Group out of college, went to HBS, and worked with renowned HBS Professor Michael Porter for five years.

Lastly, Munger spent a lot of time talking about calamities.

I still remember the moment when I was at the Wesco annual meeting two decades ago when he said, "All I want to know is where I'm going to die, so I never go there."

Everybody laughed, but he continued:

I'm serious. Once you reach a certain position in life, you should spend most of your time trying to avoid the things that can derail your life and send you back to "go," or worse.

That's true in investing, but it's also true in life. What happens to many people is that even when they've got it made, they can't help but stretch to try to grab the brass ring – and fall, bringing themselves to ruin.

Munger's wise advice had such a big impact on me that when I wrote a book dedicated to my three daughters – titled The Art of Playing Defense, where I share my thoughts on how to be successful in life – I channeled Munger's maxim, "invert, always invert," and structured it around the five calamities that are the cause of nearly all human misery.

Avoiding calamities is all about assessing risk – and that's what I've been doing full time for more than two decades in the investment world. Most people aren't very good at it because they tend to focus on vivid but unlikely risks while ignoring far more dangerous ones right in front of them.

For example, when I started mountaineering in 2016 – summiting hairy peaks like the Matterhorn, the Eiger, and The Nose of El Capitan – my mom flipped out. She begged me to stop and, when I refused, tried to enlist Susan in an "intervention."

I explained to her that she was worried about the wrong thing. I'd estimate that I'm 10 times more likely to die riding my bicycle nearly every day on the streets of Manhattan than climbing mountains a few days a year.

Another risk many people ignore until it's too late is the risk of their marriage going bad.

In recent years, I've seen this derail the lives of over a dozen close friends and relatives. In each case, I asked them to tell me what happened so I could learn from it and take steps to ensure it didn't happen to Susan and me. (For more on this, see my column on The 12 Questions to Ask Before You Marry Someone.)

A final example of risk that I'll cite is car safety...

In the past few years, my wife, three cousins, and three friends have been in seven serious accidents. In each case, their cars were totaled, resulting in multiple concussions and, tragically, two deaths. This affected me deeply and, even though our 10-year-old Volvo was running fine and built like a tank, led me to buy a new car – the exact same model, but with a lot more safety features. It was a wise decision, as Susan was in a serious accident not long afterward.

If you'd like to learn more about Munger and his teachings, a quick Google search will lead you to hundreds of videos, interviews, and articles. I'd suggest starting with his 1995 classic, "24 Standard Causes of Human Misjudgment" (transcript here and audio here).

There are also well over a dozen books about him, but one stands head and shoulders above the rest: Peter Kaufman's brilliant biography, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger. Kaufman invited me to be a contributor to it because I had transcribed five of Munger's speeches that comprised the heart of the book. It was such an honor! Here's a picture of the team behind it that appears in the first pages:

That's (a much younger) me wearing a red tie in the lower left. Others I recognize are Kaufman, the primary author, in the front also wearing a red tie, and the three women to his right: legendary journalist Carol Loomis, who has worked with Buffett for decades on his annual letter, Buffett's assistant Debbie Bosanek, and Munger's assistant Doerthe Obert.

Finally, I just want to say thank you Charlie for making such a difference in my life!

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.