Q: How much time do you spend reading in a typical day?
Charlie: Oh, it’s huge. I read myself to sleep every night. I read enormously. I like doing it. Not only that, what I found very early in life was that once I learned to read and handle elementary math, I really didn’t need professors or anything. I could figure out almost anything I wanted better from the written material than from having some professor tell it to me, because he’d be going too fast or too slow or telling me something I already knew or didn’t want to know. And so of course I like doing it by reading.
You look at [Andrew] Carnegie and [Benjamin] Franklin, they had a few years of primary school, they learned everything by themselves by reading. Whatever they needed, they just learned. It’s not that hard. Imagine educating yourself by firelight, no lamps, no electricity, after a day’s brutal work. Our ancestors had it tough.
Part of the reason I’ve been a little more successful than most people is I’m good at destroying my own best-loved ideas. I knew early in life that that would be a useful knack and I’ve honed it all these years, so I’m pleased when I can destroy an idea that I’ve worked very hard on over a long period of time. And most people aren’t.
Q: Most people hate that.
Charlie: Yes. But actually, I know how much power and wealth is in it, so I like it. Plus that’s enlightenment. Power, wealth and enlightenment. Not a bad combination.
Q: Why is it so hard to overturn entrenched ideas?
Charlie: It’s insane. I’m fixing a lot of insanity. But that’s my standard thing. I don’t know how to do anything complicated. I know how to avoid insanity, even if it’s conventional. That’s all I know. I don’t even try to be smart. I just try and be not insane and pay no attention to the traditions.
What most people don’t understand, and this is from a lifetime of experience, and Warren and I have reached exactly the same conclusion: At the top, you need a certain kind of a mind that automatically makes sense about investments and money. Warren calls it the money sense. “The money mind,” he calls it. And what I have discovered in a long lifetime is that people have it or they don’t, and if they don’t have it, you can’t create it. It can’t be just taught to somebody. You just have it. You either have it or you don’t. And one of our secrets [at Berkshire Hathaway] has been that we try and throw the power to people who have it. It’s almost an inherited knack. It’s like a gift. You just automatically generate it.
But, you know, once you realize that some people have the knack and other people don’t and that people with very high IQs, many of them lack the knack —so you can’t solve your problem if you want correct thinking by just hiring the bright people, because they do many dumb things.
Once you’ve got that insight, which is a big one, something follows. And that is that if you’re not a prodigy but just have this knack, and if you use the knack to avoid all the big standard asininities of life, just invert the normal thinking problems, I’m just going to, over a broad range of disciplines, I’m just going to avoid all the asininities and I’m going to do that better than other people, then you can become enormously powerful.
Q: Someone once asked you what accounts for your investing success, expecting a long complex answer, and you famously replied, “I’m rational.” So how do you define rationality?
Charlie: People who say they are rational [should] know how things work, what works and what doesn’t, and why. That’s rationality. It doesn’t help if you just know what’s worked before, because if you know why, then you’ll be better at it. So rationality is: Across a broad range of disciplines, you know what works and what doesn’t and why.
Q: But why isn’t Berkshire easier to emulate?
Charlie: We’re talking about very simple ideas of just figuring out the standard stupidities and avoiding them. And I actually collect them!
Some people collect stamps. I collect insanities and absurdities. And then I avoid them, and it’s amazing how well it works, because I’ve gone by [the examples of] all these people that are more talented than I am…
Charliend it’s a way for mediocre people to get ahead and it’s, it’s not much of a secret either. Just avoid all the standard stupidities. There are so many of them, and so many brilliant people do it.
Being a prodigy is hard. I’m not trying to be a prodigy, I’m just trying to avoid the inanities, including the inanities of the prodigies!
….That enables a man of moderate abilities and moderate work habits to get so much more than his logical deserts. Think of the talent it takes to make a lot of money.
Q: I wouldn’t ask most people this, but I’m sure you won’t mind. What would you want the first paragraph of your obituary to say?
Charlie: Both Warren and I feel it’s our moral duty to be as rational as we can possibly be. A lot of people who are brilliant in some ways tend to make these utterly asinine decisions in other ways. We both tend to collect the asininities of the world in a kind of checklist. And we try to avoid everything on the checklist.