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Munger Says. Buffett Says. Dalio Says. Ackman Says. Druckenmiller Says. Random 250k Follower Guy Says.... Should you care what the Best And Brightest™ have to say?
OK. We can dismiss one of those right away. Follower count is a good indicator of successfully building a social media following, not proof of competency in any other field nor an ability to profit from, predict markets and/or the future.
Now that's out of the way, a quick reminder of Munger's Alibaba bet back in March 2022 👇
Munger thought that the company was set to outperform. Here's a chart summarising how the bet worked out... 👇
And here's how Charlie's thinking of it now...
“I regard Alibaba as one of the biggest mistakes I ever made. In thinking about Alibaba, I got charmed by their position in the Chinese internet and didn’t stop to realize, they’re still a gawd-damned retailer”
Munger is 99 years old. He's been in the investment game since 1962. Sixty one years of experience and still making mistakes.
Obviously that doesn't mean he should have his status as a market legend stripped from him, or that he has nothing of value to offer.
His pearls of wisdom can definitely be used for guidance, but nobody has a 100% strike rate, nobody's perfect, nobody is omniscient...
Omniscience is the property of having complete or maximal knowledge. Along with omnipotence and perfect goodness, it is usually taken to be one of the central divine attributes. One source of the attribution of omniscience to God derives from the numerous biblical passages that ascribe vast knowledge to him.
Just to further undermine him. Here's a Munger gem to split the crowd 👇
The point is, and always has been, that all of these 'greats' are merely humans like the rest of us.
If you ask them to explain how they did it, their stories will be full of contradictions, inconsistencies and memory errors. But the principles they've applied and used are generally valid. The lessons learned from their experiences are valuable.
The same goes for business founders. There must be tens of thousands of 'how to run a successful business' type books out there.
How many of them include this advice? 👇
Take the company's last $5,000 to Las Vegas, hit the Blackjack tables and hope for the best.
That's what the FedEx CEO did. Or so the story goes...
Asked by Rose about what happened when he ‘went to Vegas with $25,000’, Smith corrected the interviewer. He said, “Well no, I didn’t go to Vegas with $25,000, I went to Vegas with a few hundred dollars and the man I was flying gave me a credit line of a thousand dollars and I won $25,000…”
So why are we so attracted to these public figures? Why do their words carry so much weight?
The authority bias is our tendency to be more influenced by the opinion of an authority figure, unrelated to its actual content. Like all cognitive biases, the authority bias is a shortcut our brains use to save time and energy making decisions. Of course, placing trust in credible experts is a reasonable thing to do.
The problem with placing trust in credible experts (especially their trade calls) is that they sometimes change their minds and don't tell you. Inconsiderate.
To me, their role is to be thought-provoking. That's it. And if you really pay attention to what they're saying, the uncertainty shines through.
Take this recent work from Ray Dalio. Full of observations and intellectual nourishment, it's worth the read... 👇
However, he went on CNBC a couple of weeks ago and had a chat about Bitcoin...
This is how the chat was reported by Markets Insider
Compare that with what Ray said in his note 👇
Regarding where we are in the long-term debt cycle it appears that we are in the late stages, about 85% through it, but I can’t say exactly.
I guesstimate that the likelihood of a major restructuring of debt assets and debt liabilities denominated in the major reserve currencies happening over the next 10 years to be something like 60%.
Something like 60%? Is this a variation of the 40% rule?
Being famous doesn't mean they know better than you. Nor does it mean they're right. Independent thinking is crucial. Ideas and opinions are always in a bull market.
Munger knows this 👇
"We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side."
Knowing and doing are two very different things. And the advice that you must force yourself to consider arguments on the other side includes disagreeing with the arguments of authority figures.
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