Distrust is Default Attitude for Munger
CEO, Value Research of the new wealth has gone to people who either own a casino or are playing in a casino. And I don’t think the exaltation of that group has been good for life generally.”
“I’m always afraid I’ll be a terrible example for the youth who want to make a lot of money with and not do much for anybody else and who just want to be shrewd about buying little pieces of paper. Even if you do that very honestly, I don’t consider it much of a life. Just being shrewd about buying little pieces of paper, shrewder than other people, is not an adequate life. I’'s not a good example for other people. ... Large amounts of money make people behave badly. That’s Munger’s rule.”
That’s an amazing tirade, especially coming from a man who is a part of this very world. Even though Buffett and Munger’s Berkshire Hathway is far from being the archetypal unscrupulous Wall Street firm, their work does boil down to buying and selling little pieces of paper. Of course, when Munger lays down the rule that large amounts of money make people behave badly, the amount itself is relative. In Munger’s world, it might mean a few billions, while in the context in which we operate, it might be a lot less. When he says that large amounts of money make people behave badly, it’s clear that he means those handling and investing other people’s money. In a business career that has lasted almost three quarters of a century (he is 92 and still working) he has seen that finance is a profession that is amenable to wrongdoing. The practitioners of this fine art specialise in staying inside the legal line while still being able to work their magic. Learning from Munger, we can conclude that while dealing with anything in finance, the default attitude must be of distrust, until there is strong evidence to the contrary.
When Munger says large amounts of money make people behave badly, it’s clear he means those handling other people’s money