“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
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)