This blog was written by a friend. He is a huge fan of Charlie Munger and from the blog you will gather that he has read almost everything that either Munger has said. After reading it, you may also agree that is not just another post on Munger, but more from a loving student to his late teacher. Hope you enjoy reading it as much as I did.

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Charlie Munger passed away a few days ago and many people have mourned his passing, rightfully acknowledging the effect he had on shaping their lives. Many posts have been written on him and a cursory Google search will throw up a handful. That begets the question – Why yet another Munger post?

Well, if in some cataclysm, all of Munger’s quotes were to be destroyed and only one sentence passed on to the next generations of people, what statement would contain the most wisdom in the fewest words? I believe it is the ‘pragmatic’ hypothesis (or the ‘pragmatism’ fact, or whatever you wish to call it). Readers familiar with Feynman lectures on physics will note the last sentence and wonder what’s the fuss about. The post builds on the one under-quoted gem that Munger spat forth to the question asked at an annual meeting of Berkshire Hathaway – ‘What is the fundamental algorithm of life?’ The answer –

‘Pragmatism. Repeat what works. Do what suits your temperament. Do what works with experience. Do what works and keep doing it. That’s the fundamental algorithm of life. Repeat what works.’

In that one sentence, you will see, there is an enormous amount of information about the world, if just a little imagination and thinking are applied. Munger’s emphasis was on figuring out what works and doing it. Also, figuring out what does not work and avoiding it. He mapped these experiences on a theoretical framework, also known as latticework of mental models. Armed with this toolkit of mental models, you, the reader, will be able to look at almost anything and use the author’s favorite punchline – ‘I have seen this movie before, and I know how it ends.’

Say, you’re newly married. You have been staying at your parents’ place all your life. Now, with your newly wedded wife, should you continue to stay at parents’ place, or should you move out? Adopting the Munger-ian emphasis on pragmatism, you should move out. Here’s why – You have heard of umpteen cases of Saas-Bahu fights, and you hope yours will be different? Triumph of hope over experience? Your wife would want to invite her parents home, or have friends stay over for dinner. With you staying with your aged parents, neither of the two are possible.

Now that you are married, you find yourself getting invitations from extended families for their life events. Which ones should you attend? The answer is none! Each such invitation is a tax on your time and if you set the precedent, that you will attend none, like the author, you will have ample amounts of time to think about larger things in life. Each such invitation entails time commitment which you cannot afford given your hectic pace of life.

You come across the news of DDA announcing flats for sale. You recall the last time when such an announcement came, 50 lakh applications were put in for 500 flats. Massive applications and miniscule allotments. Should you bid? If you think a little more like Munger, you will rule it out. Why? You will see the DDA had a monopoly of building residences in Delhi. So, the pecking order went as bureaucrats, judges, lawyers, journalists etc. Only at the very bottom were units available as HIG, MIG, LIG. Like any monopoly, the construction was shoddy with thin walls and water seepages etc. No wonder, DDA saw many allottees surrendering the flats. At the last count, close to 40,000 flats were vacant. If the flats are small, the locality far from metro station etc., why would you still buy such a flat?

You decide to buy an apartment from a listed builder and find yourself coming across a news article about a home buyer initiating court proceedings against the builder citing a signature forgery in another project. Should you buy the apartment? Well, how likely is it that the court dismisses the case? After all, what incentive does a builder have to forge just one signature and invite the legal wrath? And if you see only one home buyer initiating the case and no other home buyers, what is the court objectively likely to do?

You scout for another apartment and find yourself in one where most of the owners are Jains. You eat meat once a day and yet your gentry abhors meat. Should you buy this apartment? Well, the answer is no because the majority gentry can force you to change your habits. After all, they can vote away garbage collection from your house if they find meat pieces in your trash.

You meet your childhood friend after years and within a few hours of meeting, he asks you for a loan. Or suggests you become his ‘partner’ in a multi-level marketing scheme. What should you do? Munger would advise you to cut the ties right away! Why? Firstly, he’s no longer treating you as a friend but a prospect. If he’s asking you for a loan, he’s been refused previously by his relatives, friends, and acquaintances. If they are not lending money, why should you? Secondly, Munger would cite the example of USSR approaching Singapore for $50 Million loan in 1990. The Singapore Premier, Lee Kuan Yew, rightly refused to lend citing the very thought outlined in previous sentence. If the previous lenders are refusing to lend, why should you?

Your friend tells you about this amazing F&O trader who shares trade screenshots on social media and is conducting classes too. Should you enroll and start trading? Munger would admonish you! He would point you to SEBI statistics of 90% of F&O traders losing money. He would remind you that F&O trades are decked against you even in the tax structure. Why would you still ‘gamble’ in F&O?

You have been tracking stock markets and are excited about an IPO. Should you invest? Well, Munger would point out that track record of investing in IPOs has been poor. The company coming for IPO is probably dressing up the accounts to ensure record subscription. In short, Munger would ask you to avoid investing in IPOs.

Because you have been tracking companies, you suddenly see a company releasing a press brief about hosting an investor meet. Should you invest? Munger would ask you to think a little more. How likely is the company to report improved earnings? If it had bad news to share, would it host an investor meet at all?

You have become a father and have hired a nanny. She engages the kid with playful activities, but you also see visible signs of unreliability such as not turning up at the designated hour or taking time off without prior notice. Should you keep her or fire her? Munger would advise you to fire her because unreliable people forge their own chains of destiny. They are excluded from the finest human contribution because nobody can trust them to show up on time and do their job, day after day, year after year.

Elections are around and you wonder if your vote counts? All your life you have voted party B and all your life, from your constituency, party C has come to power, by a margin of thousands. Clearly, your vote does not count!

You see videos of food vloggers giving a thumbs up to street food. Should you give it a shot and go for a quick snack? The answer is emphatically no! Well, if the person manning the cart has been at it for hours together, you must ask how strong his sense of hygiene is. Where does he go for bio-breaks?!

Okay, you have avoided meat all your life and you now hear of this wonderful non-veg restaurant that serves fabulous veg food. Should you go for a meal? Again, the answer is no. How likely is the place keeping separate utensils for veg and non-veg dishes? During the rush hour, how likely is that spoons and cutlery are accidentally swapped within the kitchen and swapped back without you noticing it because you were at the table outside?

You have decided to switch jobs and have landed two job offers – one from a start up and one from an established behemoth. Which one should you accept? The answer is a little nuanced because your daily conversations are with the team and not with the company. So, the questions you must ask your friend who referred you – Who is the smartest in your team and is he approachable easily? Do you have somebody unreliable in your team that you avoid working with? How frequently do you get calls from colleagues on weekends? Does your boss micro-manage your daily activities? Or do you provide weekly updates to him? Who do you reach out to when you are stuck with a technical problem?

I hope you, the reader, has gotten a flavor of Munger’s multi-disciplinary approach to life from which no one willingly returns. A return would be like cutting off one’s hands.