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If you know Berkshire Hathaway (NYSE: BRK-B ) , then you probably know its vice chairman, Charlie Munger -- Buffett's right-hand man. Munger's book Poor Charlie's Almanack collects his speeches and musings, including his intriguing thoughts on the 25 tendencies that lead us humans to make really bad decisions. For your benefit and mine, this series will review each of those ill-fated impulses, the errors they create, and the antidotes that can help make us better investors.
Today, we're on to tendency No. 6: Curiosity Tendency.
Curiosity is a good thing. It's funny -- as a kid, I can remember being so curious about everything. The way things worked; what we were learning in school and why. I'm not as curious by nature now as an adult, but I still am to a degree. Now I see it in my two daughters, always asking the same questions. And of course, the most popular one is, "Why?"
Curiosity has grown and evolved with man. Munger makes the point of looking first at Athens and its developments in math and science, which all came from its citizens' curious nature. Fast-forward to the Romans -- while they contributed relatively little in the way of math and science per se, they used knowledge in their development of roads, aqueducts, and other forms of engineering. So the curiosity of their predecessors enhanced the ability of their inquisitive nature, which ultimately resulted in progress. And so it goes.
Do we need to be curious in investing? Well, I believe that in order to be a successful investor over the long haul, curiosity is essential. Digging into companies, understanding competitive advantages, valuations, market conditions, trends and progress -- this all requires a curious nature to uncover. Otherwise, you're just throwing darts.
Curiosity by nature seems like it serves tech companies rather well. I mean, their curiosity to constantly make something better shows in the devices, search engines, and software we use today. In a sector with such rapidly evolving products, companies that don't have the curiosity to continue innovating get left behind rather quickly. When I look at where things stood when I was just a five-year old compared to where we are today, it makes my head spin. And I don't think it's any accident that on the list of the top five most powerful brands in the world today, four are tech companies:
- Apple (Nasdaq: AAPL )
- Google (Nasdaq: GOOG )
- IBM (NYSE: IBM )
- McDonald's (NYSE: MCD )
- Microsoft (Nasdaq: MSFT )
The Mungerish bottom line
Ultimately, the more we learn, the more useful our curious nature becomes. Even better, it can help us overcome any shortcomings or crises that may arise from any of the other psychological tendencies that may pop up. So what's the moral of the story? Stay curious, Fools!
Read the other installments so far in this series:
Charlie Munger and the Psychology of Human Misjudgment
Charlie Munger and the Psychology of Human Misjudgment, Continued
Why Charlie Munger Thinks Hate Creates Opportunity
Another Lesson Courtesy of Charlie Munger
Charlie Munger and Bad Habits