QOTD: Charlie Munger on Ideology

"Another thing I think should be avoided is extremely intense ideology because it cabbages up one’s mind. ... When you’re young it’s easy to drift into loyalties and when you announce that you’re a loyal member and you start shouting the orthodox ideology out, what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind."



Charlie Munger - USC Law Commencement Speech, May 2007

The mark of a successful investor, or at least one of the marks, is the ability to maintain two opposing thoughts in one’s head – especially these days. But if you’ve already decided what you think about every issue based purely on what your preexisting ideology demands of you, how can you possibly do that?

You can’t.

The more rigid your ideology, the more of a pretzel you’ll be forced to twist your mind into as new information confronts the stronghold of your belief system. Some very well-known investors and pundits have blown themselves up during this cycle due to exactly what Charlie is cautioning us about in the quote above. He tends to skew slightly right-of-center whereas his partner, Warren Buffett tacks left. Fortunately, they tend not to allow those leanings to dictate the allocation of capital.

Had Buffett and Munger been running Berkshire or directing its investments with a hardcore ideological bent in either direction over the last few decades, you can be sure that their record would have been worse off for it, not better.

 

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