Lesson #3 – Don’t be a fool

Lesson #3 – Don’t be a fool

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Article highlights

  • All the super-investors had distilled years of learning into a simple philosophy which could, in most cases, be articulated in a few easy-to-understand bullets
  • The top investors almost had an obsession to reduce mental clutter
  • Another common insight was that to be successful over the long-term, it was critical to both survive and avoid catastrophic mistakes

Charlie Munger, the legendary 97-year-old investor and billionaire partner to Warren Buffett is renowned for his multi-disciplinary intellect and wicked sense of humour. 

So, when he described William’s Green new book, ‘Richer, Wiser, Happier’ as “one of the best investment books ever written” and that he “had not read a book that good in sometime” it had me rushing to buy the book to see what I could learn. 

Green, an Oxford educated financial journalist and author has spent hundreds of hours interviewing some of the world’s super investors. These investors include well-known luminaries such as Charlie Munger, Jack Bogle, John Templeton, Joel Greenblatt, Bill Miller and Howard Marks as well as less-known but equally exceptional investors such as Nic Sleep, Arnold van der Berg, Ed Thorp and Tom Gaynor. 

While these investors share remarkable track records over long periods of time (from two to six decades!), they have different investment and life philosophies. Green uses his unparalleled access to these billionaires to identify key nuggets, common characteristics and lessons that are transferable. 

There are many fascinating insights – both investing and life lessons – including how many of these legends have “non-normal” financial backgrounds and almost stumbled into investing as a career, how they are intellectually curious, hardworking, and surprisingly non-ostentatious. 

What can we learn by standing on the shoulders of these investing giants? Three clear lessons stood out for me: 

Lesson #1: Simplicity and consistency 

All the super-investors had distilled years of learning into a simple philosophy which could, in most cases, be articulated in a few easy-to-understand bullets. These frameworks were both extremely logical and had been applied and refined consistently for decades. This superpower of steadfastly sticking to a few key foundational principles and beliefs helped guide them successfully through the fog of complexity that is the markets and economy. It also proved to be a particularly valuable philosophy to fall back on during periods of crises or under-performance. 

It was also apparent how conscious they were of their own potential behavioural flaws and how they had designed explicit systems to minimise these shortcomings. 

Lesson #2: Subtraction 

The top investors almost had an obsession to reduce mental clutter. In an age of guilt-inducing reminders and click-bait, they have worked hard to understand which things genuinely make a difference and to minimise all unnecessary complexity. 

Many made sure they allocated long periods of time to be able to think quietly. They enforced periods where they physically distanced themselves from “noise” such as Bloomberg terminals or email notifications. They also clearly identified and acknowledged the things that were not in their circle of competence or where they had no real edge and did not waste time on focusing them personally. 

Lesson #3: Not being a fool 


Another common insight was that to be successful over the long-term, it was critical to both survive and avoid catastrophic mistakes. A large part of this meant simply not doing stupid things or avoiding being a fool! 

While it may be difficult to be smart, it is much easier to be non-idiotic. Charlie Munger has spent decades studying mistakes in investing and life and then trying to avoid the obvious ones such as leverage or chasing fads (in investing) and chemical abuse or envy (in life). 

He often talks about the power of inverting when trying to address a problem. For example, instead of asking what one should do to live a successful life, he inverts and asks, “If you want to have a disastrous life, what would you do?”. He then tries to avoid those obvious things. 

These three lessons – simplicity, subtraction and not being a fool – are simple but profound. They can help us all be better investors and lead happier and more meaningful lives. 

I encourage you all to read the book if you find the time over this festive season and I’d love to hear your thoughts on it if you do. Feel free to engage with us on our social media channels where you can also stay up to date with the latest news, events and developments at Nedgroup Investments. 

Wishing you all a peaceful holiday season and looking forward to continuing to manage and protect your investments as we head into 2022.