In his recent 2021 Daily Journal Annual Meeting, Charlie Munger discussed his thoughts on ordinary people becoming great investors. Here’s an excerpt from the meeting:
Question: I enjoyed your Caltech interview and wanted you to elaborate and provide more insights on your point of great investors and great chess players. How are they similar or different? Have you seen the television show Queen’s Gambit on Netflix?
Charlie Munger: I have seen an episode or two of the Queen’s Gambit.
What I think is interesting about chess is, to some extent, you can’t learn it unless you have a certain natural gift. And even if you have a natural gift, you can’t be good at it unless you start playing at a very young age and get huge experience. So, it’s a very interesting competitive field.
I think people have the theory that any intelligent hardworking person can get to be a great investor. I think any intelligent person can get to be pretty good as an investor and avoid certain obvious traps. But I don’t think everybody can be a great investor or a great chess player.
I knew a man once, Henry Singleton, who was not a chess champion. But he could play chess blindfolded at just below the Grandmaster level. But Henry was a genius. And there aren’t many people that can do that. And if you can’t do that, you’re not gonna win the great chess championships of the world and you’re not gonna do as well in business as Henry Singleton did.
I think some of these things are very difficult and I think, by and large, it’s a mistake to hire investment management—to hire armies of people to make conclusions. You’re better off concentrating your decision power on one person the way the Li Lu partnership does and then choose the right person.
I don’t think it’s easy for ordinary people to become great investors.
You can read the full transcript of the meeting here:
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