We attended the Daily Journal (NYSE:DJCO) 2016 Annual General Meeting in Los Angeles where Daily Journal Chairman, Charlie Munger took questions on a broad range of topics. We took away four key thoughts. This is the first.
Block Off Some Uninterrupted Time to Read and Think
When asked about good daily habits and how one can reduce errors when investing, Munger opined: “Warren [Buffett] and I and Guerin [DJCO director J.P.] do two things. One, we spend a lot of time thinking. Our schedules are not crowded, and we look like academics more than businessmen. It is a soft life waiting for a few opportunities, and we seize them and are ok with waiting for a while and nothing happens. Warren is sitting on an empire, and all he has on his schedule is a haircut this week. He has plenty of time to think. Second, multitasking is not the highest quality of thought man is capable of, unless you’re the head nurse of a hospital. If not, be satisfied with life in the shallows. I didn’t have a #2 plan; I wasn’t going to dance the lead in the Bolshoi Ballet or stand on the mound in Yankee Stadium. The constant search for wisdom or opportunity is important.”
This seems like old fashioned advice and out of step with the modern world, but the truth is that the human mind does not function well at tasks that need to be studied in depth like investing when it is constantly interrupted. Because the brain cannot fully focus when multitasking, people take longer to complete tasks and are far more likely to make mistakes than if they were done sequentially. This is largely because the brain is compelled to restart and refocus. Obsessively reviewing emails, compulsively checking social media updates and scheduling questionable meetings make it difficult to truly focus on the task at hand. The constant stream of easily accessible “news”, opinions and minute-by-minute stock quotes from the online information fire hose is a recipe for reactive rather than thoughtful decision making. Buffett has said that reading is the most important part of his job and he conscientiously guards his time so he can focus on that activity. The mental image of a “haircut day” on an otherwise empty weekly calendar of one of the most accomplished and sought after businessmen in the world is both amusing and counterintuitive, but it serves as a vivid reminder of the importance of blocking off uninterrupted time to read and think. Although Buffett’s time management discipline is admittedly extreme, a lot can be accomplished with smaller allotments of focused “think” time. When Munger was younger and part of a busy law practice, he decided to “sell” an hour of the day to his most important client – himself. And through those intense sessions, he got himself into real estate, built some apartments and expanded his wealth creating activities.
Part 2 – Specialization vs. a Multi-disciplinary Approach
Part 3 – Be Rational
Part 4 – The Future is Unknowable – Stay the Course with Good Businesses
Felix Narhi, 24 February 2016