Richer, Wiser, Happier

William Green
2021

Highlights

• “You cannot control the outcome,” says Gayner. “You can only control the effort and the dedication and the giving of one hundred percent of yourself to the task at hand. And then whatever happens, happens.”
  —Richer, Wiser, Happier by William Green


• Once again, it’s all about the cumulative effect of many minuscule advantages, which add up miraculously over years: the one extra company that Lynch bothered to visit; the one empty time slot that Danoff insisted on filling;
  —Richer, Wiser, Happier by William Green


• high returns on invested capital, and (most critical) strong balance sheets.
  —Richer, Wiser, Happier by William Green


• Investing the Templeton Way, which I’ve read many times.
  —Richer, Wiser, Happier by William Green


• If there is one habit that all of the investors in this chapter have in common, it’s this: They focus almost exclusively on what they’re best at and what matters most to them. Their success derives from this fierce insistence on concentrating deeply in a relatively narrow area while disregarding countless distractions that could interfere with their pursuit of excellence.
  —Richer, Wiser, Happier by William Green


• “To attain knowledge, add things every day. To attain wisdom, subtract things every day.”
  —Richer, Wiser, Happier by William Green


• The art of subtraction is incalculably important, particularly in an age of information overload when our minds can so easily become scattered. If you expose yourself to it, there’s a deafening din of discordant political news, social media notifications, robocalls, and other disruptive noise. In World Without Mind: The Existential Threat of Big Tech, Franklin Foer warns, “We’re being dinged, notified, and clickbaited, which interrupts any sort of possibility for contemplation. To me, the destruction of contemplation is the existential threat to our humanity.”
  —Richer, Wiser, Happier by William Green


• First, to be successful and fulfilled, we need to decide what we care about most and be honest with ourselves about what we do best. Second, we need to adopt daily habits that enable us to improve continuously where it truly counts—and to subtract habits that divert us. It’s worth writing down a list of beneficial habits that should be part of our daily routine. But it’s equally valuable to compile a Do Not Do list, reminding us of all the ingenious ways in which we habitually distract or undermine ourselves.
  —Richer, Wiser, Happier by William Green


• Munger likes to quote the ancient Greek orator Demosthenes, who observed, “Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true.”
  —Richer, Wiser, Happier by William Green


• “The investor’s chief problem—and even his worst enemy—is likely to be himself.”
  —Richer, Wiser, Happier by William Green


• That’s partly because of the endowment effect—a cognitive bias that makes us value what we own more highly than what we don’t, whether it’s a stock or a beer mug. One way that Nygren counteracts this bias is by also performing devil’s advocate reviews for each of his biggest holdings. At least once a year, a team member reassesses the stock in question and “is given the responsibility of arguing why it should be sold.”
  —Richer, Wiser, Happier by William Green


• Another psychologically astute strategy is to perform a “premortem” before making any significant investment decision. That’s to say, you project into the future and ask yourself a hypothetical question: “Why did this decision prove to be such a disaster?” The notion of a premortem was devised by an applied psychologist, Gary Klein, to identify problems in advance and reduce the risk of overconfidence. For investors, it’s a valuable safeguard because it forces us to dwell on unfavorable facts and latent threats as a formal step in the decision-making process.
  —Richer, Wiser, Happier by William Green


• CIA veteran who wrote a classic book titled Psychology of Intelligence Analysis. Shubin Stein told his students that they must never forget Heuer’s insight that “a single piece of evidence can support more than one hypothesis.”
  —Richer, Wiser, Happier by William Green


• The scientific literature shows that hunger, anger, loneliness, tiredness, pain, and stress are common “preconditions for poor decision making.” So Shubin Stein uses an acronym, HALT-PS, as a reminder to pause when those factors might be impairing his judgment and postpone important decisions until he’s in a state in which his brain is more likely to function well.IV This is our seventh technique for reducing avoidable stupidity.
  —Richer, Wiser, Happier by William Green


• Munger embodies an enlightened form of capitalism that is infused with old-fashioned values. For example, he disapproves of mean-spirited tactics such as “brutalizing” suppliers by paying them late. “My theory of life is win-win,” he says. “I want suppliers that trust me and I trust them. And I don’t want to screw the suppliers as hard as I can.”
  —Richer, Wiser, Happier by William Green