It’s the most wonderful time of the year!

Usually this phrase is attributed to Christmas. Not for me.

Today, Berkshire Hathaway’s annual report, written by Warren Buffett, will be published! (Full disclosure: I own Berkshire Hathaway both for clients and myself)

I know what you must be thinking, “here’s five dollars, go out and buy yourself a life!”

But really, I look forward to this time of year like no other. Every year at this time, I get to sit at the feet of the master and find out what he’s thinking. Every year, he explains things in a way that greatly improves my understanding of business, economics, people and investing.

I am quite literally giddy with anticipation, like I am every year. In fact, I’m writing this blog much like a child tries to focus on something other than Christmas morning and all the presents that brings–I’m trying to distract myself.

At 2:30 Mountain Standard time it will be available…what will I do until then…

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

Charlie Munger’s latest commencement address

For those of you who don’t know, Charlie Munger is Vice Chairman of Berkshire Hathaway and a hero of mine. Together, Munger and Warren Buffett run what I consider to be the best company in the world.

Munger recently gave a commencement address at USC Law School and someone present (Joe Koster) was kind enough to scribble notes of what was said. The speech is classic Munger: all over the place, thought provoking, no punches pulled.

Munger’s first comment was that the safest way to get what you want is to deliver to the world what you would buy if you were on the other end.

Next, he emphasizes how important it is to always be learning. Never accept where you are, be a learning machine.

He says a multi-disciplinary approach is a great aid to success. Venture outside your field, understand the most important ideas in as many fields as you can grasp.

He also mentions how useful it is to invert problems you are trying to solve. Instead of wondering what you need to do to succeed, consider what will certainly lead to failure–sloth and unreliability.

He suggests that you avoid extremely intense ideology. He warns that such an approach can lead to closed mindedness where new information isn’t honestly considered.

Don’t spend more than you make, he says. His example is Mozart, who was brilliant but miserable because he spent more than he made.

He says to avoid perverse incentives and associates. Both will lead you to do things you’ll later regret.

He suggest that you maintain objectivity by looking for disconfirming evidence like Darwin did. Most people only seek out confirming evidence, which can lead to confirmation bias.

With regards to people, he says you should pick the right people to be in important positions. Who are the right people? The learning machines with the aptitude and desire to never stop learning.

To be any good at something, you have to have an intense interest in it. This may seem obvious, but how many people chose to be doctors or lawyers because of the money instead of their interests?

Munger has a little fun with words when he says that assiduity is another key to success. Sit down on your ass until you do it. In other words, go to work until you get a thing done. Don’t make excuses, don’t whine, just do it.

Munger says not to suffer from self-pity. Things go wrong in life, and how you react to those things, whether fair or unfair, determines your success and happiness.

Munger suggests that he has done quite well in life anticipating trouble. It didn’t make him unhappy, and it made him ready to perform if trouble came.

His final idea is that a civilization built on trust (the kind you receive by earning it, not the kind you expect because you want it). Be the type of person who deserves trust, and you will benefit immensely.

Smart words from a very successful man. Thank you Mr. Munger, and Joe Koster.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.