“I believe in the discipline of mastering the best that other people have figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” – Charlie Munger
I have a confession to make — I’m a hack. That’s right. I’m consistently stealing ideas from people that are smarter than me and using them to my advantage.
I used to think that having my own unique opinions about everything single thing was the way to go. Why be a conformist? Slowly, but surely, I learned it’s a waste of time to constantly try to create your own ideas just for the sake of being different. It’s an uphill battle against people that are much smarter than you are. Most of us will get much more out of destroying our own wrong ideas than coming up with new ones every day. Reinventing the wheel is over-rated.
Luckily, I have some good company in this line of thinking. Even brilliant people look to use the best ideas from others to find their way. Here are Warren Buffett’s thoughts on standing on the shoulders of giants:
I’ve mainly learned by reading myself. So I don’t think I have any original ideas. Certainly, I talk about reading [Benjamin] Graham. I’ve read Phil Fisher. So I’ve gotten a lot of ideas myself from reading. You can learn a lot from other people. In fact I think if you learn basically from other people, you don’t have to get too many new ideas on your own. You can just apply the best of what you see.
In The Warren Buffett Portfolio, my all-time favorite book about Buffett, Robert Hagstrom sheds some more light on how Buffett and Munger think about learning:
“It’s extraordinary how resistant some people are to learning anything,” Charlie once said. “What’s really astounding,” Buffett added, “is how resistant they are even when it’s in their self-interest to learn.” Then, in a more reflective tone, Buffett continued, “There is just an incredible resistance to thinking or changing. I quoted Bertrand Russell one time, saying, ‘Most men would rather die than think. Many have.’ And in a financial sense, that’s very true.”
I used to assume that being the first one to a piece of news was the key to sucess in the markets. But timely information is just not that important when market reactions and movements happen so quickly. I’ve never felt more informed because I was the first one to read a piece of breaking news. But I’ve always felt more informed when I’ve read a piece of advice that I can use over and over again to apply to different situations.
It’s not only important to learn from those around you, but also those who came before you. The most useful learning I do usually comes from older material. One of the best books I read this year was over 2,000 years old (On the Shortness of Life by Seneca). The best advice is timeless because it focuses on understanding and perspective over action and tactics.
Of course, it doesn’t matter how much you read or how many good ideas you latch onto if you can’t put your own spin on them and apply them to your own situation. Ideas without application are useless.
Being able to pick and choose the best ideas from some of the greatest minds out there is something not enough people take advantage of.
The Warren Buffett Portfolio
It is Always the Same Novel
We’re all Smart
My Favorite Warren Buffett Shareholder Letter
Now onto the stuff I’ve been reading this week:
- Rick Ferri, Allan Roth and Mike Piper on their respective investment philosophies (Vanguard)
- History is an outline, not a blueprint of the future (Prag Cap)
- 3 lessons on portfolio construction from Jeff Bezos (Kathryn Cicoletti)
- How to build a risk factor portfolio (Monevator)
- Be a good loser with your investments (Meb Faber) and understand that 40% of all years since 1926 have seen at least a 10% loss in a 60/40 portfolio (Irrelevant Investor)
- Josh Brown shares some wisdom from Nick Murray (Reformed Broker)
- Life is messy for everyone (Feld Thoughts)
- Andrew Luck talks smack to opposing players through encouragement and compliments (WSJ)
- Does intrinsic value matter? (Bason)
- 5 investing rules from the Colbert Report (MarketWatch)
- The Louis CK-Marc Maron WTF podcast was rated the best podcast of all-time (Slate)
- What kind of person do you not want to be (Morgan Housel)
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Excellent advice and wisdom in this piece. A great deal of my knowledge about finance and investing has come from reading the works of other folks, many of whom know much more than I do. Of course, personal experience (mainly from mistakes I have made) has also provided some very important knowledge. Learning from the mistakes others have made can save one much grief over the long term. That’s why your articles are excellent and important to folks who are currently trying to accumulate wealth for retirement.
Thanks John. I agree, not only taking the best from others but also the worst and learning from that. Let someone else pay the tuition to the market gods so you don’t have to. Well said.
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We like hacking, its just taking a idea and making it better. So much to learn so little time!
The irony here is that it argues both sides. Often the reason people don’t like new ideas is because they have been given some belief or model and assume it is the Word of God. The difference is between a groove and a rut. We want that smooth grove to take us where we think we need to go, but then don’t pay attention and it becomes a rut that we can’t afford to get out of, when we were not looking.
Personally I’ve come up with three diverse ideas and when I mention them, people figuratively run away.
One is that we look at time backwards, that it isn’t the point of the present moving from past to future, but change turning future into past. Which makes it an effect of action and more like temperature, than space. Time is to temperature, what frequency is to amplitude. suffice to say this is a lead balloon in physics discussions, yet their models have them off in multiworlds.
The next is that the absolute is basis, not apex, so a spiritual absolute would be the essence of being from which we rise, not an ideal of knowledge and judgement from which we fell. I literally had a Catholic priest(and future in-law) cross himself and walk away, when I made that point.
The third is that money is a contract, not a commodity. As a contract, it is the proverbial groove and as a commodity, it becomes the rut…. Just ask the Fed how it is going to stop QE.
Well said. Looking at both (or many) sides of any argument or point of view is another part of the process. Having an open mind is a prerequisite to learning the right way.
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