Friday, October 26, 2012


There is a lot to learn from reading books... Charlie Munger finds it difficult to learn from other people through conversations when compared to reading what they write.
Imagine, if you had the chance to learn from somebody who has lived a long life and that too, an exemplary one. Now imagine, if there were 2 of them.
Buffett and Munger. There is a lot to learn through what they write and say and through the books and people that have influenced them.

There was a guy named David Sokol who was considered by many as CEO designate of Berkshire Hathaway and boom! He bought some Lubrizol shares before he pitched the idea to Berkshire, and subsequently, Berkshire bought Lubrizol. Odds are that Sokol didn't mean to front-run because he made an estimated USD 3 Mn on them, which, for sure was not that much for him; odds are that he didn't think much about his purchases before pitching the idea.

Not a shred of reputation will be tarnished. Not a shred. And hence, Sokol had to leave Berkshire. WB must have been more unhappy than other shareholders, but something that is mildly wrong is still wrong.

Never do anything - anything that can ruin your reputation or keep you up at night. That's it. And you live a wonderful life.

A similar thing seems to have happened to Rajat Gupta; based on the overwhelming praise he has received from outstanding global personalities and also based on what the judge said - Rajat seems to have done a lot of good stuff. But he bragged - may be unmindfully... there was precious little for him to have earned by talking to Rajaratnam or whoever, but he made a mistake.
And the US is brilliant at setting standards. Nobody is above the law. We like you, you are a good guy, but you did a wrong thing - behind bars you go.

It makes me think of the fragility of life and how much we take for granted. We lie at times without thinking much about it, we evade taxes, we bribe, because it's a way of life, but is it?

I just went through 2 official documents about Sokol, Lubrizol and Buffett. Here and Here.
There is nothing 'financial' about this, hence this post is on the Khadda.
I like what Munger said:

"Charlie Munger: I think it's generally a mistake to assume that rationality is going to
be perfect even in very able people. We prove that pretty well regularly.
WARREN BUFFETT: Do you have any explanation for the irrational?
CHARLIE MUNGER: Yeah. I think hubris contributes to it."

It's amazing - the kind of things that lead people astray; is it really worth it?

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