158 The Business of Value Investing- The Munger/Buffett relationship is an unusual one. Both men are
fi ercely independent thinkers, and both prefer working alone. When
Buffett has an investment idea, after it makes it through his fi lter, he
usually runs it past Munger. Munger then applies his broad lattice-
work of mental models to fi nd faults with Buffett’s ideas, and shoots
most of them down. It is the rare idea that makes it past Buffett, and
it has to be a total brain tease to make it past both of them.
The Buffett/Munger approach of multi-year periods of inactivity
contrasts starkly with the frenzied activity that takes place daily at the
major exchanges.^2
Ignorance Can Be Bliss
Our daily lives are comprised of a series of decisions. What we do
with those decisions and the choices we make shape the life we
lead. As a toddler, your parents forced you to do things you hated,
like eating your vegetables. The vegetables taste bad, but your par-
ents love you and know that you must eat your vegetables to get
your vitamins. At the same time, your parents will refrain from giv-
ing you candy and soda, even though they know how much you
would enjoy the joy gained from the sugary sensation. They know
that sometimes the things that seem good for you actually aren ’ t
and those things that seem bad for you can actually be benefi cial.
Investors would be well advised to take this dose of wisdom
along with them during their investing careers. What are often per-
ceived as stock market advantages can turn out to be the root cause
of many investment mistakes for those individuals who fail to real-
ize it. The market ’ s dangers are fi rmly rooted in human nature —
specifi cally, our ability to feel the pain of loss more acutely than the
pleasure of gain. Too many bad losses can rob us of our investing
discipline. Eager to recoup losses in the shortest amount of time,(Continued )CH008.indd 158CH008.indd 158 9/2/09 11:48:57 AM9/2/09 11:48:57 AM