Eddie Lampert. Eddie first lifted bats for the Chicago White Sox, and the White Sox went to the World Series that year. Later he switched to another team, and that team, too, won the title. And so on—wherever Eddie went, lady luck followed. While fame and fortune followed Eddie, Eddie didn’t believe in his special powers. According to Buffett, “Eddie understood that how he lugged bats was unimportant; what counted instead was hooking up with the cream of those on the playing field. I’ve learned from Eddie. At Berkshire, I regularly hand bats to many of the heaviest hitters in American business [emphasis added].”3
We all can learn a deep lesson here: to be a winner, work with winners.
One of Berkshire’s biggest strengths has been the group of managers running its subsidiaries and hitting home runs in the form of profitable growth with high rates of return. Many names come to mind: Ajit Jain, Greg Abel, Rose Blumkin, Gene Abegg, Tony Nicely, Ralph Schey, Chuck Huggins, and Stan Lipsey. Buffett and Charlie Munger’s brilliance was to let managers of high caliber and integrity run their own businesses and then to stay out of their way. Both Buffett and Munger often joke that they delegate at Berkshire almost to the point of abdication.
Nothing, nothing at all, matters as much as bringing the right people into your life. They will teach you everything you need to know.
—Guy Spier
Surrounding yourself with smarter and better people provides a great education. You gain firsthand experience of their thought processes, how they prioritize (if you want to know someone’s priorities in life, observe what they do between Friday evening and Monday morning), their value system, how they live each day, how they handle success and failure, and many other important things that textbooks cannot teach you. You get to experience a gravitational pull toward higher qualities.
It is better to be an average guy on a star team than a star on an average team. The former will be better for you in the long term; the latter is just an ego trip. For most of my professional and personal life, superior individuals made me feel uncomfortable. And so I would seek out people who made me feel like I fit in. This was clearly a wrong strategy. If you are the smartest person in the room, you are in the wrong room. It is wiser to be with better people and to be uncomfortable than to limit yourself to a mediocre circle just to feel comfortable. For instance, if it were not for the generous help and guidance of my smart investor friends and colleagues, then my personal portfolio would never have been able to perform as well as it did during the 2018–19 bear market in India. I give them a large part of the credit for my healthy portfolio returns to date and I hope to always keep learning from them throughout life. The people closest to you play an outsize role in your level of success or failure—so choose wisely. You are, after all, the average of the five people you associate with the most in your life.
Deserved Trust Is Earned
Of all forms of pride, perhaps the most desirable is a justified pride in being trustworthy.
—Charlie Munger
Trust lies at the heart of any relationship. In answer to the question “What is trust?” Jack Welch, the former chief of General Electric replied, “You know it when you feel it.”4 It is one of the simplest and best definitions of trust. We experience an echoing, anxious feeling when trust is not present. In such cases, we hesitate to take the next step. Conversely, when trust is present, we experience an open, connected feeling. Trust creates the foundation of all relationships, societies, organizations, nations, and our entire civilization. It is the oil that lubricates our entire economic and business system. Trust drives risk-taking, which leads to innovation and progress.
We build trust by being honest in our communications. By being authentic and sincere in both words and actions. By being transparent and admitting mistakes and sharing what we learn. By being reliable and fair in our dealings with others. Over time, as you build your network, put in your best efforts to constantly add value to others in your relationships and to build a seamless web of deserved trust (figure 5.1).
FIGURE 5.1 Being trustworthy.
Source: Behavior Gap.
In his speeches, Munger often lists reliability as one of the essential traits for success. He explains that, although not many people can learn something like quantum mechanics, anyone can learn reliability. If you dedicate yourself to being reliable, that alone can overcome many failings or disadvantages you may have. Munger often applauds McDonald’s for teaching millions of teenagers the importance of reliably showing up for work.
Woody Allen said that 80 percent of success in life is just showing up. Always reliably show up for the task entrusted to you. Never overpromise and underdeliver. Being unreliable will impair your career and friendships. If anything, underpromise and overdeliver. Trust is earned when actions meet words.
In his book, Pebbles of Perception, Laurence Endersen writes, “Our ability to choose is one of life’s great gifts. We are the product of our choices. Good choices come from good character, and a few good choices make all the difference.”5
Being reliable and trustworthy is one such choice.
HUMILITY IS THE GATEWAY TO ATTAINING WISDOM
Acknowledging what you don’t know is the dawning of wisdom.
—Charlie Munger
According to Confucius, real knowledge is knowing the extent of one’s ignorance, and this sentiment has been expressed by many philosophers, in one form or another. Socrates, for example, put it quite bluntly when he said, “The only true wisdom is in knowing you know nothing.” Only if we approach learning with an open mind can we truly educate ourselves.
The wiser we become, the more we realize how little we know. A lesser-known (and one of my all-time favorite) equation from Albert Einstein rings true: “Ego = 1 / Knowledge. More the knowledge lesser the ego, lesser the knowledge more the ego.” The deeper one dives into any field, the more humble one generally becomes (also known as the Dunning-Kruger effect). By demonstrating intellectual humility and acknowledging what we don’t know, we place ourselves into a beneficial position to learn more—thus, the dawning of wisdom. True expert knowledge in life and investing does not exist, only varying degrees of ignorance. This is not a problem to solve; it is simply how the world works. We cannot know everything, but we can work hard to become just about smart enough to make above-average decisions over time. That is the key to successful compounding. Ralph Waldo Emerson said, “Every man I meet is my master in some point, and in that I learn of him.” Learning and accepting help from others creates value far beyond our individual capabilities. Look at every interaction as an opportunity to learn from the people you meet. You will be amazed at how quickly you grow and how much better you become, both as a professional and, more important, as a human being. A tree that wants to touch the sky must extend its roots into the earth. The more it wants to rise upward, the more it has to grow downward. Similarly, to rise in life, we need to be down to earth and humble.
I was born not knowing and have had only a little time to change that here and there.
—Richard Feynman
Always question what you think you know, and remember that every subject probably is more complex than we currently
