Finding your Charlie Munger may boost your bottom line

In his book The Checklist Manifesto, Atul Gawande writes about how checklists are used in complex construction projects. One type of checklist that is used is a Gantt chart that lays out in infinite detail every step of a project.

Builders have found that this type of checklist alone is not enough. In the real world, there are inevitable clashes where one subsystem – a steel beam, for example – clashes with another subsystem – the placement of an HVAC duct. In such cases, experience has taught builders that the best way to manage these types of issues is to have all those affected come together and work out a solution. The inherent complexity involved requires human interaction and input from experts in various disciplines. This gives birth to a second checklist which is used to track and make sure that those conversations actually take place and the issues resolved.

In learning about this use of checklists to ensure dialog among experts, I could not help thinking about Warren Buffett and Charlie Munger. Here is Buffett – one of the best investors of all time – and over his career he has found great value in picking up the phone and discussing his investment theses with Charlie. Of course, Buffett is more than capable of making his own investment decisions, but he knows that Charlie may point something out to him that he missed.

I think all investors could benefit from having a Charlie Munger to speak with. Here is a list of what to look for:

Intelligence (although genius is not required)

Wisdom

Patience

Business acumen (actual experience a plus)

Understanding of value investing

Healthy skepticism

Broadly read

Not a “yes man” or “people pleaser”

Not prone to spouting Chauffeur knowledge

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