The Value of Repetition

Reinforcing timeless principles while avoiding blind ideology

“It’s not supposed to be easy. Anyone who finds it easy is stupid.”

— Charlie Munger

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My guess is that at least half of you have read this zinger from Charlie Munger before, and that might be a low estimate. We can laugh, but there’s an obvious underlying truth: Earning above-average returns is difficult because investing is a competitive field full of highly intelligent and extremely motivated people. Why should it be easy to earn extraordinary returns? Isn’t it stupid to think that it should be easy?

The origin of this quote is from a conversation between Charlie Munger and Howard Marks many years ago which Mr. Marks has described on several occasions, most recently in his latest memo, I Beg to Differ:

“This all leads me back to something Charlie Munger told me around the time The Most Important Thing was published: ‘It’s not supposed to be easy.  Anyone who finds it easy is stupid.’  Anyone who thinks there’s a formula for investing that guarantees success (and that they can possess it) clearly doesn’t understand the complex, dynamic, and competitive nature of the investing process.  The prize for superior investing can amount to a lot of money.  In the highly competitive investment arena, it simply can’t be easy to be the one who pockets the extra dollars.”

Whenever I receive a memo from Howard Marks, I read it immediately because he routinely delivers great insights. After reading the latest memo, I posted the above excerpt on Twitter and was surprised to receive a response from someone who wondered how many times Mr. Marks would repeat the same Charlie Munger quote.¹

As I reflected on that response, it occurred to me that many of these memos are repetitive. It is not an invalid observation. The same themes are discussed again and again, often with new examples based on recent market developments, but always returning to the same timeless principles.

In 2011, I had an opportunity to listen to Howard Marks deliver a presentation at an investor conference. The presentation was a prelude to his book, The Most Important Thing, which was published a couple of months later. As I read the article that I wrote soon after the presentation, it is obvious that many of the same themes that came up in the latest memo were discussed in that presentation, as well as in Mastering the Market Cycle which I reviewed when it was released a few years later.

Howard Marks is not the only famous investor who repeats himself again and again. The same is true when we listen to Warren Buffett and Charlie Munger at Berkshire Hathaway’s annual meetings. How many times have we listened to Mr. Buffett provide similar answers on a wide range of topics? If you have been to more than a few Berkshire Hathaway annual meetings, many of the responses might seem repetitive, but I would argue that this is a feature rather than a bug: the insights are timeless, and we can always use another reminder.

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Why do many religious people read the Bible on a daily basis and go to church every Sunday? If you are already familiar with the principles of your religion, it is not to get new information, but to reinforce what you already know and believe, often with sermons that relate to how to apply religious teachings to current events. In addition, there is value in being part of a community and this can strengthen the faith.

I do not mean to trivialize religion by comparing it to investing, but I do think that we can draw some lessons from the value of consistent reinforcement.

Although investing principles should always be subject to scrutiny based on evidence of long-term performance, there is value in revisiting these principles on a regular basis, especially during times when the principles might not be working so well.

For some reason, few investors today seem to recall the market downturn of mid-2011, but I remember it well. Perhaps the collective amnesia has to do with the fact that the downturn just barely avoided designation as an “official” bear market. However, I remember that quasi bear market all too vividly. It was just two years after the market crash of 2008-09. Berkshire Hathaway’s stock, my largest investment then and now, was still trading stubbornly below its levels prior to the financial crisis and was close to book value. The European debt crisis seemed intractable. There was talk of an impending recession.

I keep a log of my reading, and sure enough The Most Important Thing was one of the titles I read during those dark days of 2011. I read it again in 2016 and will probably read it again in the future. The same is true for many other investing classics. Going back to the same books is not repetitive because we bring new experiences to each reading and consequently are able to learn new lessons. I am not the same person today that I was in 2016 or 2011. I should be able to learn new things from re-reading the same book based on my new experiences.

When Howard Marks seems to repeat himself in his memos, I suspect it is by design. He is sending a message that there are basic investing principles that we should return to again and again, applying them to current circumstances in intelligent ways. At the same time, Mr. Marks is not rigid in his thinking and has been open to considering new ideas, most notably in his January 2021 memo, Something of Value, in which he described discussions about value vs. growth investing with his son, a professional investor who seems to tilt more toward the growth camp.

I would be remiss to not mention that there are risks associated with repeatedly reinforcing a specific set of beliefs. So I will conclude with Charlie Munger’s warning against extreme political ideology. What is true for politics can also be true for investing. We should not be so rigid as to discount the possibility that the world has changed, and we must always keep an open mind. There must be a balance between reinforcing beliefs and being able to adjust your beliefs as the evidence changes.

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1. I boycotted Twitter for two months after being “shadow banned” but recently returned after the shadow ban was lifted. It’s perhaps a testament to Twitter’s moat that I am drawn into participating in a social media platform that, in many ways, I continue to dislike.