Source: Shaoshu Pai Investment
1
During an interview with investment writer William Green, Indian investor Pabrai mentioned that Charlie Munger had once given him a piece of advice years ago: it is very important to have someone to talk to in the investment business. (In the investing business, it’s really important to have somebody to talk to.)
However, be mindful that the person you choose should not be someone who reports to you (the person shouldn’t be someone who reports to you); they must have an equal relationship with you.
Pabrai asked, 'Do you mean like how you have Warren?'
Munger replied, 'Not always Warren, but I will talk to someone.'
Then, mentor Munger offered more specific guidance: I hope that you and Li Lu can have lunch together once a month.
Pabrai responded, 'Wow, if Li Lu doesn’t mind wasting an afternoon each month, I would be more than happy to do so.'
Pabrai said that he and Li Lu maintained a monthly lunch routine for a period of time, initially meeting at Din Tai Fung, and later at Li Lu's apartment, through which they became close friends.
During these gatherings, Li Lu recommended a South Korean cosmetics company to Pabrai, which later increased by XX times; subsequently, he also recommended a premium Chinese liquor company to Pabrai, which was none other than Moutai, the most famous stock in the A-share market.
2
Having someone to talk to about investments is crucial—this is a viewpoint that both Munger and Buffett would strongly endorse.
Buffett once said, 'What humans are best at is interpreting all new information in a way that keeps their original views intact... Everyone seems to excel at this. How can we avoid making this mistake?'
His answer was: 'Find a partner who won't flatter you and whose thinking is highly logical... This is probably the best mechanism you can have.'
Clearly, Munger is the ideal person for this role because he has refuted Buffett’s investment ideas on multiple occasions, which is why Buffett called him 'an annoying guy who always says no.' Munger points out that one essential benefit of having a discussion partner is that it obliges you to organize your thoughts to make a persuasive case.
Here’s a little story.
When Pabrai introduced his partner Guy to Munger, he said to Munger, 'Charlie, this person always refutes every idea I propose.'
Guy jokingly said that he was too stupid, and Pabrai spoke to him as if speaking to a monkey.
Munger immediately responded, 'A monkey is not a good partner.' He was very serious, like Moses delivering the fourth commandment.
The monkey would not work because Mohnish would know it’s a monkey.
The monkey would not work because Mohnish would know it’s a monkey.
Note: This excerpt is taken from the book 'Richer, Wiser, Happier,' which I am willing to recommend an infinite number of times.
3
If we connect the two stories mentioned above, we will discover a key point often overlooked by fans of Ba and Mang: while investing is indeed a game of independent thinking, it is also crucial to have someone with whom you can have a meaningful conversation.
By 'conversation,' we do not mean boasting about how great you are or engaging in arguments to defend your viewpoints. Instead, it refers to honestly exchanging ideas with someone you trust to examine your own thoughts — this is not an easy task, but it helps us make more rational decisions.
Why do we need to talk to someone? The reasons may be as follows.
First, because outputting knowledge is an intensive form of secondary learning.
Explaining or writing down our thoughts helps us reorganize information and test logic, much like many people experience: 'After talking, my thoughts become clearer' or 'After writing, I feel I understand better.'
In fact, even if the other person provides no feedback, simply the act of serious output can lead to many new insights.
This is what Munger meant when he said such exchanges 'force you to organize your thoughts.'
Second, because humans easily fall into certain cognitive biases.
Obviously, the human brain is an imprecise and unstable information-processing machine, which occasionally falls prey to strange cognitive biases. More problematically, when you are trapped in a cognitive bias, you often do not realize it.
If you have fallen into a psychological pit, most of the time you will find it difficult to climb out on your own (because you haven't noticed), and at this point, a brave and outspoken friend can lend a hand: 'Hold on, calm down first; things are not as good/bad as they seem.'
Of course, the speed at which he pulls you out of the pit depends on how open your mindset is.
Third, because people are prone to making logical errors.
In daily life, most people have very low self-expectations for 'logical rigor'—this isn't a problem in everyday situations; after all, casual talk is just casual talk, and what does it matter? Being happy is what counts.
The issue, however, is that many people bring these flawed thinking habits into the investment field, leading to arguments that often appear plausible but are riddled with logical fallacies in certain areas, unable to withstand strict scrutiny.
In many cases, you don’t even need to verify financial statements or check calculations. A few logic puzzles can be enough to 'use their own矛 against their own盾,' dismantling their investment rationale.
Ultimately, for humans, maintaining highly rigorous logical thinking is an exhausting task.
Therefore, no matter how careful we are, we may still make some logical mistakes, which are difficult to detect ourselves—just as one cannot easily spot typos or awkward sentences in their own writing.
At this point, having a meticulous, logically rigorous friend is undoubtedly like equipping yourself with an ultra-powerful error-correction machine—and they can stop you before you jump into the pit.
This is what Buffett meant when he said, 'This is probably the best mechanism you can have.'
4
Although communication plays a crucial role in investing, most such exchanges in reality devolve into inefficient or ineffective discussions, often causing more fatigue, errors, and irrationality.
To avoid these issues, I believe there are three principles that are very important.
1. There should be no conflict of interest between the parties;
2. Neither party should provide specific action recommendations;
3. Both parties should be open and honest with each other, without needing to protect their own dignity or maintain the other's face.
First, 'no conflict of interest' means:
(1) You cannot have a hierarchical relationship, meaning what Munger referred to as not being in a 'reports to you' relationship.
If you control the other person’s salary, year-end bonus, or job position, they are likely to intentionally cater to you to gain favor—believe me, few people in leadership positions genuinely welcome harsh truths.
In fact, even if you claim to appreciate opposing opinions, a single display of disapproval, such as frowning at dissenting views, will teach most subordinates to remain silent. After all, no one wants to risk their livelihood.
(2) You cannot have a business relationship.
If adopting the other person’s viewpoint would help them achieve their KPI, earn monetary rewards, or receive some psychological incentive (e.g., vanity or reputation), this creates an inherent conflict.
In doing so, he may unconsciously distort his own thinking in pursuit of these incentives: overstating confidence from a 7-out-of-10 certainty to a 9-out-of-10; knowingly glossing over risks hidden in certain areas.
And all of this may occur as an unconscious process.
Second, the principle of 'not providing specific action advice' aims to: make the other party take responsibility for themselves.
Much of what people call investment communication merely involves soliciting or giving stock codes—a low-quality exchange and a game with highly unequal rights and responsibilities that can easily lead to financial and interpersonal complications.
A more appropriate approach is to share information, logic, and thought processes, but avoid giving (especially exclusively giving) such action-oriented advice as: 'Just buy it,' 'Buying it guarantees profit,' 'Buy without hesitation,' 'I bought it, so you can follow,' or 'Just follow my lead.'
Often, the other party seeks specific action advice out of fear of future accountability, hoping you will help alleviate some psychological pressure. However, this is an immature approach—do not engage in lengthy discussions about it.
A person unable to take responsibility for their actions is not an adult, but a child.
Do not discuss stocks with children.
Third, the concept of 'frank disclosure' means: communicating sincerely without lying.
Too many people are adept at 'worldly sophistication,' excessively embellishing their words like contemporary art while taking pride in it. However, in investment, the rarest and most valuable qualities are sincerity and honesty.
If you are looking for someone to discuss investments with, it is best to find someone who speaks the truth and has a sincere attitude. If everyone can approach the conversation with sincerity, it will be easier to let down psychological defenses — when we no longer have to fight for self-esteem or appearances, the exchange becomes much more efficient and meaningful.
Of course, a sincere person is not a fool; unless you are truly open to opposing viewpoints, even the most sincere individuals will exit the conversation.
Try flipping the table once during a discussion — I guarantee that afterward, no one will tell you the truth anymore.
Speaking of this, I cannot help but reflect on the numerous investment tragedies I’ve seen on Snowball, where the mistakes were glaringly obvious in hindsight, even to outsiders.
If someone had bravely told him the truth at the outset, delivering a kind of 'wake-up call,' perhaps those tragic stories could have been avoided.
But perhaps someone did warn him, and he arrogantly ignored it.
Who knows?
Note 1: The above three principles are not 100% original but rather a combination of Guy’s advice from his book 'The Education of a Value Investor,' content from Mohnish Pabrai’s public speeches, and some of my personal reflections.
Note 2: By the way, the simplified Chinese title of 'The Education of a Value Investor' is 'The 5 Truths I Realized While Having Lunch with Buffett,' while the traditional Chinese version is titled 'The Wolf of Wall Street Repents' — I wrote this note mainly to express dissatisfaction with these translations, which I find quite poor.
Ending
While writing this article, I repeatedly noticed that although the advice given by Buffett and Munger — to talk to someone — pertains to investing, it actually applies to all complex decision-making processes involving significant choices.
If the problem you are facing has the following characteristics:
It involves multiple complex variables;
It is highly susceptible to psychological factors;
It requires your utmost rationality;
And the consequences of the decision are significant,
—then you should seriously consider Munger’s advice: find the right person, adopt the right approach, and have a meaningful conversation.
In real life, apart from investment, this principle also applies to doing business, choosing a career, or making major life decisions.
This makes me reflect that it once again validates Munger’s perspective: all wisdom is interconnected, and everything is interrelated.
Finally, when I refer to the 'right person,' my emphasis is on sincerity and truthfulness. However, one important point should not be overlooked: you can only choose someone you trust. If you do not believe in him, then no matter how knowledgeable or truthful he may be, he might still not be a good choice for you.
After all, you wouldn’t want to turn it into a one-on-one psychological battle—that would be far too uninteresting.
Therefore, cherish the people you trust and those who trust you.
Wishing you pleasant conversations.
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Editor /rice