RS Weekly Update - Munger, Senescence & More
Picking up where we left off last week, here is tendency #21 in Charlie Munger’s take on the psychology of human misjudgment from Poor Charlie’s Almanack.
Tendency #21 – Senescence-Misinfluence Tendency
Senescence is defined as the condition or process of deterioration with age so it’s no wonder that Charlie mentions this as one of those items that can affect our judgment. The fact is that the older we get, we lose some of what we’ve got.
I always jump back to golf because it’s one of those things that’s easy for me to reference. At 38 years old I still feel like I’ve my best golf in front of me. I also feel like I’ve my best investing days in front of me too. Maybe I’m delusional, but I don’t think so…at least not yet. My father is a physician who has practiced medicine all his adult life. He also plays golf, invests and does a ton of other things which lead me to call him a real “renaissance man.” But at the age of 69 I swear he seems like he’s just getting started. Granted he has a great attitude towards life and takes care of himself, but I think one of the main reasons he stays so mentally fit is because he keeps himself so busy with the things that he loves to do. It keeps his body and his brain working which makes a big difference. Just like any muscle in the body the brain will atrophy when not used, so use it!
Munger makes the observation too that many older folks actually get pretty good at disguising age-related deterioration. Something as simple as the way one dresses may cause us to look past any age-related issues they may have. As investors, knowing your investments, who leads the companies, succession plans (if needed), etc. is crucial. The easiest example here can be seen in Berkshire Hathaway as Buffett and Munger continue to creep up in years. It doesn’t seem like much of a concern right now. But it will be and it’s not wise to kick the can down the road until it becomes a material issue. That’s why we continue to see so much emphasis on this in regard to Berkshire. Much (if not all) of the company’s success is based primarily on its leadership. Can it be as successful with someone else at the helm? Only time will tell.
The best thing we can do is to continue learning, studying and thinking all throughout our lives. It keeps the brain active and challenges us to see things from multiple perspectives. One of the older gentlemen I knew at a country club where I worked years ago made it a point to do the New York Times crossword puzzle every day. I would highly recommend that as a way to get some “mental exercise” even in the younger years. No doubt you’ll learn something new every day from a good crossword puzzle.
An 11 O’Clock Stock Revisited
It’s been close to a year, so I thought I’d check in on my 11 O’Clock Stock: http://bit.ly/nALqxA
When you buy stock in a company you buy into its leadership and I like where Howard Schultz is coming from. DC needs to get it together and he’s another strong voice calling them out: http://bit.ly/nm3FAA
I knew last week was going to hurt and I was right. Overall returns for the Motley portfolio dropped to 3.99% as of market close on 8/11/2011. (Hey, at least it’s still positive returns right?) The good news is that the market got hit harder and I gained a little more ground, so now I’m beating the market by 4.34% versus 3.99% last week. Hey, in times like these I’m gonna take what I can get!
Hello CNBC Asia
Last week was a busy one with the press considering the market’s yo-yo action. I had a couple of spots on CNBC Asia to chime in on market volatility and how we Fools try to deal with it: http://bit.ly/pD6EHq and http://bit.ly/oLAlw9
Straight from the Onion
I knew it!: http://onion.com/mT66wy
Jason owns shares of Berkshire Hathaway