Richer Wiser Happier Quotes

Who you spend your time with is probably the most important thing in life,

There are four things that we know improve brain health and brain function,” says Shubin Stein. “Meditation, exercise, sleep, and nutrition.

Devil’s advocate reviews. Premortems. Conversations with a skeptical discussion partner. A cognitive checklist that reminds us of our biggest biases and our past mistakes.

You get a lot of A’s and B’s in school. In the stock market, you get a lot of F’s. And if you’re right six or seven times out of ten, you’re very good.

All of humanity’s problems stem from man’s inability to sit quietly in a room alone.

If all you succeed in doing in life is getting rich by buying little pieces of paper, it’s a failed life. Life is more than being shrewd in wealth accumulation. —Charlie Munger

Inspired in part by Steinhardt, Nygren conducts a “devil’s advocate review” before buying any stock. One analyst on his team presents the bullish case. Another is tasked with “putting together the strongest bearish case.… By better understanding what we’re betting against, we’re more likely to make the right decision.

Buffett charged no annual management fee but collected a performance fee of 25 percent of any profits over an annual “hurdle” of 6 percent. If he made a return of 6 percent or less, he didn’t get paid a dime.

If you’re going to be in this game for the long pull, which is the way to do it, you better be able to handle a fifty percent decline without fussing too much about it. And so my lesson to all of you is, conduct your life so that you can handle the fifty percent decline with aplomb and grace. Don’t try to avoid it. It will come. In fact, I would say if it doesn’t come, you’re not being aggressive enough.

I could lose all my money, and I could still go to these files and say, ‘Well, it’s not like I lived my life for nothing. Look at the people whose lives I’ve changed.’ ” Van Den Berg points to his trove of letters and says, “That’s my bank account.

It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what’s going on.

Munger has also learned to control certain toxic emotions that would corrode his enjoyment of life. “Crazy anger. Crazy resentment. Avoid all that stuff,” he tells me. “I don’t let it run. I don’t let it start.” The same goes for envy, which he considers the dumbest of the seven deadly sins because it’s not even fun. He also disdains the tendency to view oneself as a victim, and he has no patience for whining. When I ask if he has a mental process that helps him to defuse self-defeating emotions, he replies, “I know that anger is stupid. I know that resentment is stupid. I know self-pity is stupid. So I don’t do them.… I’m trying not to be stupid every day, all day.

I don’t have any wonderful insights that other people don’t have. I just have slightly more consistently than others avoided idiocy. Other people are trying to be smart. All I’m trying to be is non-idiotic. I find that all you have to do to get ahead in life is to be non-idiotic and live a long time. It’s harder to be non-idiotic than most people think.

how to prepare for the future instead of fooling ourselves into believing we can predict it.

If you just go around and identify all of the disasters and say, ‘What caused that?’ and try to avoid it, it turns out to be a very simple way to find opportunities and avoid troubles.

Instead of trotting out the usual bland platitudes about the secrets of success and happiness, he provided an inspired illustration of how to apply the principle of inversion. He gave the students a series of “prescriptions for guaranteed misery in life,” recommending that they should be unreliable, avoid compromise, harbor resentments, seek revenge, indulge in envy, “ingest chemicals,” become addicted to alcohol, neglect to “learn vicariously from the good and bad experience of others,” cling defiantly to their existing beliefs, and “stay down” when struck by the “first, second, or third severe reverse in the battle of life.

Another common mistake that tilts the odds against many unsuspecting investors is to pay lavish fees to mediocre fund managers, stockbrokers, and financial advisers whose performance doesn’t justify the expense.

Do we still expect spouses to exert a moral influence upon each other? The notion that husband and wife should make each other better people does not resonate with the most visible goals of contemporary American society. How many young people marry with the conscious expectation that they will become kinder and wiser by virtue of choosing a decent, generous mate? Happier, richer, more successful. Yes! But better human beings?

A partner who is not subservient and who himself is extremely logical . . . is probably the best mechanism you can have.” Munger, the ideal foil, has shot down so many investment ideas that Buffett refers to him as “The Abominable No-Man.

Take up one idea. Make that one idea your life. Think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea and just leave every other idea alone. This is the way to success.”XI

Once he felt “completely secure” about his financial future, no amount of money he could earn would make any difference to him. “I’m the richest guy in the world because I’m content with what I have,” says Van Den Berg. “I feel wealthier not because I have more money but because I’ve got health, good friendships, I’ve got a great family. Prosperity takes all of these things into consideration: health, wealth, happiness, peace of mind. That’s what a prosperous person is, not just a lot of money. That doesn’t mean anything.

Kahn’s answer: “Investing is about preserving more than anything. That must be your first thought, not looking for large gains. If you achieve only reasonable returns and suffer minimal losses, you will become a wealthy man and will surpass any gambler friends you may have. This is also a good way to cure your sleeping problems.

Similarly, if you’re looking to make a thoughtful investment in a well-managed fund, you might start by asking, “How can I invest blindly in a lousy fund that’s a disaster waiting to happen?” That question would lead you to list all of the pitfalls that investors routinely overlook—for example, outrageous fees, dangerous exposure to the most popular and priciest sectors of the market, and a recent streak of head-spinning returns that will almost surely prove unsustainable

The Art of Subtraction If there is one habit that all of the investors in this chapter have in common, it’s this: They focus almost exclusively on what they’re best at and what matters most to them. Their success derives from this fierce insistence on concentrating deeply in a relatively narrow area while disregarding countless distractions that could interfere with their pursuit of excellence. Jason Zweig, an old friend who is a personal finance columnist at the Wall Street Journal and the editor of a revised edition of The Intelligent Investor, once wrote to me, “Think of Munger and Miller and Buffett: guys who just won’t spend a minute of time or an iota of mental energy doing or thinking about anything that doesn’t make them better. . . . Their skill is self-honesty. They don’t lie to themselves about what they are and aren’t good at. Being honest with yourself like that has to be part of the secret. It’s so hard and so painful to do, but so important.

among the young, a portent of the world’s future. Hate crimes, violence against women, and the victimization of children are all in long-term decline, as is the exploitation of children for their labor. As people are getting healthier, richer, safer, and freer, they are also becoming more literate, knowledgeable, and smarter. Early in the 19th century, 12 percent of the world could read and write; today 83 percent can. Literacy and the education it enables will soon be universal, for girls as well as boys. The schooling, together with health and wealth, are literally making us smarter—by thirty IQ points, or two standard deviations above our ancestors. People are putting their longer, healthier, safer, freer, richer, and wiser lives to good use. Americans work 22 fewer hours a week than they used to, have three weeks of paid vacation, lose 43 fewer hours to housework, and spend just a third of their paycheck on necessities rather than five-eighths. They are using their leisure and disposable income to travel, spend time with their children, connect with loved ones, and sample the world’s cuisine, knowledge, and culture. As a result of these gifts, people worldwide have become happier. Even Americans, who take their good fortune for granted, are “pretty happy” or happier, and the younger generations are becoming less unhappy, lonely, depressed, drug-addicted, and suicidal. As societies have become healthier, wealthier, freer, happier, and better educated, they have set their sights on the most pressing global challenges. They have emitted fewer pollutants, cleared fewer forests, spilled less oil,

There is no God, and man is his prophet," replied Niels bitterly and rather sadly. "Exactly," scoffed Hjerrild. "After all, atheism is unspeakably tame. Its end and aim is nothing but a disillusioned humanity. The belief in a God who rules everything and judges everything is humanity's last great illusion, and when that is gone, what then? Then you are wiser; but richer, happier? I can't see it." "But don't you see," exclaimed Niels Lyhne, "that on the day when men are free to exult and say: 'There is no God!' on that day a new heaven and a new earth will be created as if by magic. Then and not till then will heaven be a free infinite space instead of a spying, threatening eye. Then the earth will be ours and we the earth's, when the dim world of bliss or damnation beyond has burst like a bubble. The earth will be our true mother country, the home of our hearts, where we dwell, not as strangers and wayfarers a short time, but all our time. Think what intensity it will give to life, when everything must be concentrated within it and nothing left for a hereafter. The immense stream of love that is now rising up to the God of men's faith will bend to earth again and flow lovingly among all those beautiful human virtues with which we have endowed and embellished the godhead in order to make it worthy of our love. Goodness, justice, wisdom--who can name them all? Don't you see what nobility it will give men when they are free to live their life and die their death, without fear of hell or hope of heaven, but fearing themselves, hoping for themselves? How their consciences will grow, and what a strength it will give them when inactive repentance and humility cannot atone any more, when no forgiveness is possible except to redeem with good what they sinned with evil.

Buffett himself is a grand master of simplification. Writing to his shareholders in 1977, he laid out his four criteria for selecting any stock: “We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price.” These may not strike you as earth-shattering secrets. But it’s hard to beat this distillation of eternal truths about what makes a stock desirable.

The key, then, is to identify situations in which there’s a particularly large spread between the price and the value of the business. That spread gives you a margin of safety, which Greenblatt (like Graham and Buffett) regards as the single most important concept in investing.

Despite his inexperience, he understood enough about economic history, financial markets, and human nature to recognize that overwhelming pessimism would eventually give way to unbridled optimism. Even in the darkest of times, he never forgot that the sun also rises.

Blaise Pascal: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.

First of all, said Templeton, beware of emotion: “Most people get led astray by emotions in investing. They get led astray by being excessively careless and optimistic when they have big profits, and by getting excessively pessimistic and too cautious when they have big losses.

He noted in one of his earliest memos that the average annual return for stocks from 1926 to 1987 was 9.44 percent, but “if you had gone to cash and missed the best 50 of those 744 months, you have would have missed all of the return. This tells me that attempts at market timing are a source of risk, not protection.”*

He strives consistently to reduce his capacity for “foolish thinking,” “idiotic behavior,” “unoriginal error,” and “standard stupidities.

Second, said Templeton, beware of your own ignorance, which is “probably an even bigger problem than emotion.… So many people buy something with the tiniest amount of information. They don’t really understand what it is that they’re buying.

Third, there is the realization that one particular business model—scale economies shared—creates a virtuous cycle that can generate sustainable wealth over long periods.

Fifth, in a world that’s increasingly geared toward short-termism and instant gratification, a tremendous advantage can be gained by those who move consistently in the opposite direction

One practical trick, says Sleep, is to “reward yourself in the short term” by relishing the prospect of all the wonderful benefits you will enjoy because you chose to override your desire for instant gratification. That way, deferral becomes associated with pleasure and “you’re much more likely to embrace it.” Indeed, says Sleep, “I quite like the overriding because you just know that it’s going to make your life better.

Nomad’s appetite for reasonable businesses selling at unreasonably low prices made sense, given the opportunities available at the time. But this strategy had one drawback. When stocks like these rebounded and were no longer that cheap, they had to sell them and hunt for new bargains. But what if nothing particularly attractive was on sale when they sought to redeploy those winnings? An obvious solution to this reinvestment risk was to buy and hold higher-quality businesses that were more likely to continue compounding for many years.

Second, there is the idea of focusing on whatever has the longest shelf life, while always downplaying the ephemeral.

Asked about China, he marvels at its economic transformation, but laments that too many Chinese “like to gamble, and they actually believe in luck. Now, that is stupid. What you don’t want to believe in is luck. You want to believe in odds.

Asked about the crash of 1973–74, when his investment partnership lost more than 50 percent, he notes that Berkshire’s stock price has also halved on three occasions: “If you’re going to be in this game for the long pull, which is the way to do it, you better be able to handle a fifty percent decline without fussing too much about it. And so my lesson to all of you is, conduct your life so that you can handle the fifty percent decline with aplomb and grace. Don’t try to avoid it. It will come. In fact, I would say if it doesn’t come, you’re not being aggressive enough.

It’s simple. If your life is more important than your principles, you sacrifice your principles. If your principles are more important than your life, you sacrifice your life.

His psychiatrist told him that he had triumphed back then by adopting mental strategies that professional athletes used routinely—setting clearly defined goals, visualizing themselves performing flawlessly, and repeating affirmations that crowded out all doubts and fears until they were replaced with unshakable self-belief.

Hang out with people who are better than you and you cannot help but improve.” Pabrai acts on this advice to a degree that would horrify many people. “When I meet someone for the first time, I evaluate them afterwards and say, ‘Will it make me better or worse to have a relationship with this person?’” If the answer is worse, he says, “I’ll cut him out.

As Kahn put it, the secret of investing could be expressed in one word: “safety.” And the key to making intelligent investment decisions was always to begin by asking, “How much can I lose?

Consider the brutal mathematics of financial loss: if you lose 50 percent on an ill-considered bet, you’ll need a 100 percent gain just to get back to where you started.

The future is so “intrinsically uncertain” that investors should focus heavily on avoiding permanent losses and building “a portfolio that can endure various states of the world.

Fourth, beware of overconfidence and complacency. Aristotle observed, “The character which results from wealth is that of a prosperous fool.

Munger particularly admires their unflinching determination to seek out “disconfirming evidence” that might disprove even their most cherished beliefs. This mental habit, which takes many different forms, is our fifth defense against idiocy.

The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.

That means adopting “a mindset of falsification,” always striving to “disprove” your hypothesis, and seeing “if it stands up to the assault.” One of Shubin Stein’s favorite questions is, “Why might I be wrong?

The scientific literature shows that hunger, anger, loneliness, tiredness, pain, and stress are common “preconditions for poor decision making.” So Shubin Stein uses an acronym, HALT-PS, as a reminder to pause when those factors might be impairing his judgment and postpone important decisions until he’s in a state in which his brain is more likely to function well.* This is our seventh technique for reducing avoidable stupidity.

There are four things that we know improve brain health and brain function,” says Shubin Stein. “Meditation, exercise, sleep, and nutrition.

wrote: Rule 1: Clone like crazy. Rule 2: Hang out with people who are better than you. Rule 3: Treat life as a game, not as a survival contest or a battle to the death. Rule 4: Be in alignment with who you are; don’t do what you don’t want to do or what’s not right for you. Rule 5: Live by an inner scorecard; don’t worry about what others think of you; don’t be defined by external validation.

One of his favorite quotes is from the philosopher Blaise Pascal: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.

Senator William J. Fulbright’s book, The Arrogance of Power. He writes: The question that I find intriguing . . . is whether a nation so extraordinarily endowed as the United States can overcome that arrogance of power, which has afflicted, weakened, and in some cases destroyed great nations in the past . . . Power tends to confuse itself with virtue, and a great nation is peculiarly susceptible to the idea that its power is a sign of God’s favor, conferring upon it a special responsibility for other nations—to make them richer and happier and wiser, to remake them, that is, in its own shining image.

How can I make smart decisions about the future if the future is unknowable?

Just because a lot of people say something is true, that doesn’t carry any particular weight with me,” said Thorp. “You need to do some independent thinking, especially about the important things, and try to work them out for yourself. Check the evidence. Check the basis of conventional beliefs.

They sought to answer such questions as What is the intended destination for this business in ten or twenty years? What must management be doing today to raise the probability of arriving at that destination? And what could prevent this company from reaching such a favorable destination?

Is the CEO allocating capital in a rational way that will enhance the company’s long-term value? Is the company underpaying its employees, mistreating its suppliers, violating its customers’ trust, or engaging in any other shortsighted behavior that could jeopardize its eventual greatness?

Munger describes himself as a collector of “absurdities,” “asininities,” and “inanities.” His daughter Molly recalls listening in her youth to his many cautionary tales “about people doing stupid things,” which often included “a tinge of ingratitude and poor moral judgment.” A typical story would feature the cosseted heir to a fortune who turned with bitter resentment against his father.

This habit of actively collecting examples of other people’s foolish behavior is an invaluable antidote to idiocy. In fact, it’s the second great anti-stupidity technique we should learn from Munger.

the human brain is ill-equipped to make rational decisions. Our judgment is frequently torpedoed by emotions such as fear, greed, jealousy, and impatience; by prejudices that distort our perception of reality;

Stocks are ownership shares of businesses,” which “you’re valuing and trying to buy at a discount.” The key, then, is to identify situations in which there’s a particularly large spread between the price and the value of the business. That spread gives you a margin of safety, which Greenblatt (like Graham and Buffett) regards as the single most important concept in investing.

Asked about the crash of 1973–74, when his investment partnership lost more than 50 percent, he notes that Berkshire’s stock price has also halved on three occasions: “If you’re going to be in this game for the long pull, which is the way to do it, you better be able to handle a fifty percent decline without fussing too much about it. And so my lesson to all of you is, conduct your life so that you can handle the fifty percent decline with aplomb and grace. Don’t try to avoid it. It will come. In fact, I would say if it doesn’t come, you’re not being aggressive enough.

A television reporter once asked Bob Marley, “Are you a rich man?” The musician replied warily, “What you mean rich?” The reporter clarified his question: “You have a lot of possessions? A lot of money in the bank?” Marley responded with a question of his own: “Possessions make you rich? I don’t have that type of richness. My richness is life, forever.

But in financial markets, as in martial arts, victory doesn’t depend on dazzling displays of esoteric techniques. It depends on a firm grasp of the principles of the game and a deep mastery of basic skills.

As Buffett has said, “Business schools reward difficult, complex behavior more than simple behavior. But simple behavior is more effective.” Buffett

If you want to become “a stock market master,” he explained, “stick to buying good companies (ones that have a high return on capital) and to buying those companies only at bargain prices (at prices that give you a high earnings yield).

I compensate for the lack of intellect with more discipline and steadiness and persistence.

I think that people underestimate—until they get older—they underestimate just how important habits are, and how difficult they are to change when you’re forty-five or fifty, and how important it is that you form the right ones when you’re young. —Warren Buffett

the ideal amount to give your kids is enough so they can do anything, but not so much that they can do nothing.

Be patient and selective, saying no to almost everything. Exploit the market’s bipolar mood swings. Buy stocks at a big discount to their underlying value. Stay within your circle of competence. Avoid anything too hard. Make a small number of mispriced bets with minimal downside and significant upside.

Like Buffett and Munger, Pabrai spends most of the day reading.

Is originality overrated? Instead of struggling to innovate, should most of us focus our energy on replicating what smarter and wiser people have already figured out?

Blaise Pascal: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.

Rule 1: Clone like crazy. Rule 2: Hang out with people who are better than you. Rule 3: Treat life as a game, not as a survival contest or a battle to the death. Rule 4: Be in alignment with who you are; don’t do what you don’t want to do or what’s not right for you. Rule 5: Live by an inner scorecard; don’t worry about what others think of you; don’t be defined by external validation.

In World Without Mind: The Existential Threat of Big Tech, Franklin Foer warns, “We’re being dinged, notified, and click-baited, which interrupts any sort of possibility for contemplation. To me, the destruction of contemplation is the existential threat to our humanity.

Instead, he focuses narrowly on owning a few well-run businesses that earn attractive returns on capital and have the ability to keep reinvesting their free cash flow at high rates of return. And then he has the restraint to “leave things well alone.” He has held Markel for twenty-seven years and made more than one hundred times his money. He has owned Berkshire Hathaway for forty-two years. His largest holding, American Tower Corporation, has risen from seventy-nine cents per share to about $260 since 2002. By constructing an unhurried life in a tranquil place, Akre can “shelter” himself from the influence of other investors’ “brilliant ideas” and “stay focused completely on the things that work for us.” In essence, he’s discovered one well-stocked pond, and he’s content to fish there for the rest of his days. Or, as Akre puts it, “We can’t dance with all the ladies.” All

My favorite story about Danoff’s intensity comes from Bill Miller, who recalls being introduced to him at an investment conference in Phoenix about thirty years ago: “I stuck out my hand and I said, ‘Nice to meet you, Will.’ And he didn’t hold his hand out. He just looked at me and said, ‘I’m gonna beat you, man. I’m gonna beat you.