Dis­trust is De­fault At­ti­tude for Munger

The Economic Times - - Commodities Plus - Dhiren­dra Kumar

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

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