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Charlie Munger on Patterned Irrationality - 24 Standard Causes of of Human Misjudgement
As user BHAfool1, I peruse and post on some of the message boards of The Motley Fool UK. I intend to keep this website simple, and I'll organise it better as an when I put more stuff on it.
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I can be emailed at BHAfool1@hotmail.com (no mailto link to avoid spam robots harvesting my details, so copy & paste my address).
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For download times on this site, I'm assuming that you're able to get about the best from a 56 kbps modem, which typically means downloading at 48 kbps and requires a pretty noise-free phone line to your local telephone exchange. If you're on a poor line or far from the exchange, you might only get 24 kbps, which means you have to double the download times, and if the internet route taken by your data is busy, it may take longer anyway. If you have some form of broadband connection you may well be able to download it much quicker.
The vice-chairman of Berkshire Hathaway gave a speech at Harvard Law School in around July 1995 outlining his thoughts on the Psychology of Human Misjudgement.
Motley Fool USA (fool.com) columnist Whitney Tilson, a money manager, wrote about it in his Fool On The Hill article and provides a good transcript of the recording at:
http://www.tilsonfunds.com/mungerpsych.html (100 kB page load = 17 sec download at 48 kbps)
Whitney also links to the original 79 min, 40 sec audio file, and an alternative, transcription at:
http://www.aquamarinefund.com/public/reports/charliemungerfriends.htm
However that audio file is a whopping great 37 megabyte download (80 minutes of 64 kbps bitrate Windows Media Audio = 1hr 47 min download time at 48 kbps!!).
So, I've carefully transcoded it to a smaller, more efficiently-compressed file, which is a 6 megabyte download (17-18 minute download at 48 kbps on a 56k modem). This much smaller file is still fully intelligible (like decent MW/LW radio reception) and averages out at only 10.5 kbps.
I'm providing below a short 25-second excerpt from the speech, short_sample.ogg, so you can check that your audio player supports the Ogg Vorbis format I used.
short_sample.ogg (36 kB, 6 sec download at 48 kbps, Ogg Vorbis format)
In the short sample you should hear Charlie Munger saying, "I have never seen a management-consultant's report, in my long life, that didn't end with the following paragraph: 'What this situation really needs is more management consultancy.' [laughter] Never once! I always turn to the last page! Of course, Berkshire Hathaway doesn't hire them, so I only do this on sort of a voyeuristic basis. Sometimes I'm in a non-profit where some idiot hires one."
If that sample didn't play, click here to sort things out.
If it worked, you're ready to download the whole speech and you can right-click the link to the file CharlieMungerHarvardLaw.ogg and use Save As... to download the whole speech permanently to your hard disk and play it from there on demand, even when you're offline. In my opinion it's worth listening to more than once, and you can't access anything on the net without downloading it at least temporarily, so you might as well keep it:
Charlie frequently mentions the book Influence by Robert Cialdini as an excellent source on the psychological roots of human misjudgement and why many of the tactics of compliance practitioners work.
An interesting piece on this subject is an eight part series of articles by Kelton Rhoads and Robert Cialdini, entitled The Business of Influence: Principles that lead to success in commercial settings. It's available from the Inside Influence website (see below for direct links to all eight parts), and having read it you may wish to take a brief test of your Influence Quotient on Cialdini's Influence At Work website, which demonstrates how well you've understood and can apply the principles.
You can either download each part from the group of links below (or here, as a single ZIP archive - 840 kB download, 2½ min at 48 kbps - I'm sure you'll find its content compelling enough to visit their website and take that test), or start at part 8 of the article and click on the hotlinks to previous parts within each PDF file (Adobe Acrobat format)
Eight part series: The Business of Influence
Part One - Introduction (PDF, 2 pages, 98 kB)
Part Two - Reciprocity (PDF, 5 pages, 100 kB)
Part Three - Scarcity (PDF, 5 pages, 105 kB)
Part Four - Authority (PDF, 6 pages, 107 kB)
Part Five - Commitment & Consistency (PDF, 8 pages, 134 kB)
Part Six - Social Validation (PDF, 4 pages, 108 kB)
Part Seven - Liking (PDF, 3 pages, 101 kB)
Part Eight - Conclusion and References (PDF, 13 pages, 152 kB)
At around 100 kB, each file will take about 17 seconds to download at 48 kbps.
Best regards,
BHA.
Technical details:
To achieve high quality and small file size, Charlie Munger's speech is encoded in the relatively recent Ogg Vorbis audio format (which is open-source and open-platform).
Ogg Vorbis files can be played natively using widespread freeware players such as WinAmp Standard or Full installation from version 2.8 onward or by using a Vorbis Input Plugin in earlier versions or "Lite" versions. For version 3, see http://www.winamp.com.
See http://www.vorbis.com/download.psp for plugins and links to other Vorbis-compatible software on a variety of platforms such as Apple Macintosh, Linux and Unix).
Most of the freeware players are no more than about a 1 megabyte download and are usually very easy on your processor and unlikely to ever cause system hangs (unlike certain bloatware jukeboxes and players I could mention).
Quicktime users on Mac and Windows may wish to download a Quicktime Ogg Vorbis extension from http://sourceforge.net/project/showfiles.php?group_id=41359, which seems to have to go in the same folder as the Quicktime program file.
Windows Media Player can use Direct Show filters to support Ogg Vorbis playback, though I've noticed a interruptions to playback on some recordings on my PC.
Specifically, I downsampled & downmixed the original audio to 8000 Hz mono then encoded it with Vorbis q=-1.00 setting. This was chosen after auditioning numerous low-bitrate speech and general audio codecs and settings to find the one with the smallest filesize without creating robot-like speech or ruining intelligibility or likely to cause listener fatigue.
I used VorbisCut through the Musicutter interface to isolate the 25 second test excerpt from the full-length audio file without re-encoding. I also enabled ReplayGain tagging for the benefit of users who choose to use volume equalization or clipping prevention.
Most soundcards don't optimally filter their output below CD quality and you may improve audio smoothness in WinAmp using a good Sample Rate Convertor output plugin.
I suspect that the source audio for the recording was an 80-minute CD that itself was made from an analogue or DAT taped original (you can hear a certain amount of motor whirr if you turn it up during quiet audience questions near the end). The room acoustics and microphones/loudspeakers at the time of the recording slightly colour the sound and add some reverberation while attenuating high-frequencies from the original (which I'd have filtered out anyway when downsampling), but the recording is still very listenable and, in my opinion, the content is compelling enough that the audio quality is forgotten.
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