April 29, 2025 • 12 mins
Charlie Munger wasn’t just Warren Buffett’s right-hand man — he was a builder of mental systems, a student of history, and a principled real estate investor.
In this episode of The Timeless Investor Show, we explore the timeless lessons Munger left behind:
- The power of multidisciplinary thinking
- The “mental models” Munger used to filter reality
- The principle of inversion — and why solving for failure matters
- How the Lollapalooza Effect explains bubbles, pandemics, and real estate mania
- Why Munger loved real estate — and how he approached investing in it
We also talk about how modern tools like AI (when used wisely) can help investors today think more clearly — and how timeless principles still matter more than ever.
If you're trying to become a better investor, thinker, or leader — this one’s for you.
📚 Book referenced: Poor Charlie’s Almanack
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Think Well. Act Wisely. Build Something Timeless.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
Charlie Munger once said, a lot of people with high
IQs are terrible investorsbecause they've got terrible
temperaments.
You need to keep raw emotionsunder control.
But what made Munger trulypowerful wasn't just his
temperament.
It was his ability to borrowfrom every field of human
knowledge.
Biology, psychology, math,history, philosophy.
(00:22):
so many that he took care of, hebuilt a mental library of models
or filters that influenced howhe saw the world and allowed him
to cut through the noise andmake much better decisions as an
investor.
The key takeaway here is greatinvestors don't just find deals,
they know how to think, theyknow how to think through their
emotions, and they know how tothink through processes and
(00:43):
what's happening around them tofilter and make better
decisions.
Welcome to the Timeless InvestorShow, where we explore timeless
principles for life andinvesting.
I'm Ari Van Gemeren, real estateinvestor, fund manager, student
of history.
So who is Charlie Munger?
Many of you probably know of himin some way, shape, or form.
(01:07):
Charlie Munger was the vicechairman of Berkshire Hathaway,
who recently passed away after avery long and robust life as an
investor, including being a verysuccessful real estate investor.
He was Warren Buffett'sright-hand man, main partner.
I would say sort of the lesswell-sung hero of the Berkshire
(01:28):
Hathaway saga that we're allaware of and all glorify Buffett
a lot for it.
But Munger had a huge part toplay in this.
One of the best books I'veprobably ever read and
recommended to many people in mynetwork is...
Charlie's Almanac.
(02:11):
Oftentimes, we're pigeonholedinto what we understand.
You studied finance.
You see the world in a financeperspective.
You studied history.
You see the world throughhistory.
But the key thing is you have toutilize many different models to
view the world.
You have to utilize manydifferent practices and
philosophies and academicstudies to better understand the
(02:33):
world and better build mentalmodels for how you analyze risk,
how you analyze investmentopportunity, how you analyze if
a deal makes sense or not.
Thank you so much.
(03:07):
No one model solves everything.
And by the way, philosophershave been looking for like the
one key to all reality.
But the reality is, I think,that, you know, no single model
has perfect explanatory power.
And that's the thing we canreally take away from Munger.
So if you can see the worldthrough multiple different
(03:28):
models, you know, he, I mean,Munger was, the reason he wrote
Poor Charlie's Almanac isbecause It is a direct
descendant of Poor Richard'sAlmanac, which was Benjamin
Franklin's book that he wrote.
And Benjamin Franklin was awell-known polymath.
He was a learned expert in manydifferent disciplines.
And Munger really tried toemphasize the same approach.
(03:48):
And I think investors of allstripes would benefit.
Not just investors, by the way.
This is like life wisdom.
Everybody would benefit fromtaking the approach of, let
me...
absorb many differentphilosophies and build a
synthesis view of how realityoperates, how the world
operates, and be open todifferent perspectives and
different things.
So three to four models thatMunger really loved and I want
(04:13):
to share with you.
So A, opportunity cost.
What's the next best use of yourcapital?
If you're locking your capitalinto a low-yield deal, you're
foregoing the better the betterreturns that could have been
gotten elsewhere.
And so sometimes we get verymyopic in our approach, and we
like what we're doing, and westay the course of what we're
(04:34):
doing.
And maybe you're missing out onopportunity cost, but you could
have done something betterelsewhere.
The second philosophy that hetook, which I think is amazing,
is called inversion.
invert the way you're looking atit.
So instead of asking on a dealor in anything, how can I
succeed?
Ask, how can I fail?
(04:56):
And then map a way to not fail,right?
And it's kind ofcounterintuitive because in this
world, we have a lot of beliefand visualization and positive
thinking and optimistic outlookkind of engineering.
But if you look at it from thelens of like, if I wanted to
fail, how could I fail?
It's a completely novel way oflooking at a situation.
(05:17):
How could I fail if I wanted toengineer failure and then solve
for that?
Don't fail because you engineerout how you would fail and then
you solve that issue.
The third is margin of safety.
This is not so much of amultidisciplinary approach, but
it's a really important concept.
Margin of Safety was popularizedby Benjamin Graham, who's the
(05:40):
father of fundamental investing,in two of his books, Security
Analysis and The IntelligentInvestor.
Both fantastic reads, especiallyif you're a stock market person,
but good anyways forestablishing a systematic
approach to determining value,to understanding that whatever
you're investing in, you'rereally investing in the
underlying business, whether itbe a piece of property or a
(06:00):
stock.
And Margin of Safety is thenotion that you understand the
intrinsic value of the asset.
And then you want to get abetter price than the intrinsic
value.
You're disregarding the dailytemperament of Mr.
Market, which is anotherBenjamin Graham saying.
You're disregarding what themarket gives you on a given day.
(06:21):
You're disregarding what realestate pricing is giving you on
a given day.
And you're trying to understandwhat is this thing really worth
and how do I build in safety sothat if something goes wrong,
you have a buffer to protectyourself.
The last one I want to talkabout is awesome.
It's called the LollapaloozaEffect.
It's a fascinating thing, butbasically the premise is that
(06:44):
when multiple different modelscollide and conspire together to
push things in a certaindirection, you can have an
exacerbated irrational effect.
So I'm going to talk about thisin a moment, but it's like the
dot-com...
bubble.
You had multiple differentmodels colliding.
(07:04):
You had a low interest ratemodel.
You had a technological changemodel colliding.
You had an understanding ofhuman emotion and sentiment and
FOMO and all the things that gointo that.
All of those collided togetherto create this exaggerated
effect.
Or you look at the lead up to2008.
It's sort of a similar storywith real estate.
And if you really try to breakit into what's happening,
(07:26):
there's multiple differentphilosophies, if you will,
working together, conspiringtogether to create a really
negative effect for everybody.
But if you can see that and youcan see the various models
coming together, then you canunderstand the Lollapalooza
effect, which is something youreally need to see.
So I think a real world exampleof this is what we just went
(07:50):
through with COVID-19.
You had a couple of differentthings, right?
So let's just talk about COVID.
So a quick reading of of theeffect of major pandemics or
plagues on human civilization,of which there's been many, will
yield some interesting insights.
They usually spark societalunrest.
There's a whole bunch of thingsthat come into it, but the one
(08:12):
commonality of all them is thatthey end, right?
So the effect of it doeseventually come to a conclusion.
But if you go back throughhistory, and by the way, COVID
was a plague of sorts.
It was a pandemic, covered theentire globe.
But in history, We have hadsubstantially more devastating
plagues that have affected ourcivilization.
(08:33):
The Antonine Plague killed like20% of the Roman population.
The Spanish flu was a massiveplague.
I mean, does some say that HarryTruman and negotiating the
aftermath of World War I and alot of the things that actually
caused the start of World WarII, excuse me, not Harry Truman,
Woodrow Wilson, excuse me,Woodrow Wilson had had the
(08:55):
Spanish flu and there'sspeculation that There's a
great, great book on this thatI'll drop in the show notes as
well that's really worthreading.
I believe it's called The GreatInfluenza.
He had flu brain.
It's fascinating.
He had flu brain, so he wasn'tnegotiating at the top of his
game, and he wasn't thinking atthe top of his game.
He was adamant that Germanyshould not be punished so
(09:15):
harshly, but because of theeffects of the plague, he didn't
actually stand up for and defendthe rights of the losers of that
war, which in many ways helpedspark World War II.
Accursory looking at the historyof plagues and pandemics yields
some insights, right?
You also had record low interestrates.
(09:36):
You had a sentiment model wherepolitics got really volatile
during this period.
But you can look at pandemics inhistory and understand that that
happens.
That's something that happensevery time.
So you had a Lollapaloozaeffect.
And in line with my thinking andfirmly stated many, many times,
(09:56):
I believe this drove SunbeltReal Estate pricing to
unrealistic levels, right?
And there was a lot of emotionbehind it and a lot of hype and
excitement and record lowinterest rates and so many
different factors that cametogether to form this.
And we looked at deals.
We looked at deals in Austin.
(10:17):
We looked at different markets.
And I just thought the pricingwas out of whack.
But like, If you're caught up inthat, and it's not anyone's
fault.
People get caught up in thesethings.
It's a real thing.
I've certainly gotten caught upin things in my life, and it
happens.
You get sucked into thesethings, but that is the
Lollapalooza effect in action.
The older I get and the moretenured I get in this business,
(10:38):
the more I realize investing isnot just what you know, although
it's really, really important.
It's also about how clearly youthink.
how clearly you think throughthe issues, and how clearly you
assess your own models of howyou see the world.
Are they good?
Are they bad?
Not all models are good.
You have to really assess that.
Honestly, at the end of the day,I look back and I say, real
(11:01):
estate investors, in particular,should really pursue a
multidisciplinary approachbecause our industry, just like
the stock market in many ways,but our industry is hyperlocal,
so you have to understand what'sgoing on locally, but you have
to understand the bigger trends.
You have to know many differentfields and disciplines to be an
operator at the bleeding edge ofproductivity and efficiency.
(11:23):
You don't need to knoweverything and no one can know
everything.
Although with AI, we're gettingpretty close.
I mean, I heard something theother day about IQ doesn't
matter anymore, which is aninteresting perspective because
we have access to endlessinformation and a guide that can
help us in so many ways.
So AI is a huge force multiplierand And it is a huge equalizer
because it's cheap and we haveaccess to it and it can give you
(11:46):
models.
It can help you think throughthings a lot more clearly.
I would challenge anyone to gointo their AI model when they're
looking at a deal and be like,analyze this from a Charlie
Munger approach.
Tell me what I'm missing.
What thematics am I missinghere?
What are the big trends that aredriving things right now?
Grok is really great for thisright now.
Grok is up to the date today andhas great insights.
(12:07):
I think it's one of the bestmodels I've been using.
So Munger wasn't just smart.
He was principled.
He understood these things.
It's a reason he became assuccessful as he was.
And he was a great real estateinvestor, by the way.
It's like not often realizedbecause we think of Berkshire
Hathaway and this incredibleholding company that's had
unbelievable results.
(12:27):
And he did that.
But in alignment with hisreputation as a renowned
polymath, as a guy thatunderstood so many different
things, he was a great, greatreal estate investor.
So let's take this.
I highly encourage you to readthe book.
Let's proceed forward.
And remember, think well, actwisely.
Let's build something timelesstogether.
(12:48):
Thank you.
Charlie Munger once said, a lot of people with high
IQs are terrible investorsbecause they've got terrible
temperaments.
You need to keep raw emotionsunder control.
But what made Munger trulypowerful wasn't just his
temperament.
It was his ability to borrowfrom every field of human
knowledge.
Biology, psychology, math,history, philosophy.
(00:22):
so many that he took care of, hebuilt a mental library of models
or filters that influenced howhe saw the world and allowed him
to cut through the noise andmake much better decisions as an
investor.
The key takeaway here is greatinvestors don't just find deals,
they know how to think, theyknow how to think through their
emotions, and they know how tothink through processes and
(00:43):
what's happening around them tofilter and make better
decisions.
Welcome to the Timeless InvestorShow, where we explore timeless
principles for life andinvesting.
I'm Ari Van Gemeren, real estateinvestor, fund manager, student
of history.
So who is Charlie Munger?
Many of you probably know of himin some way, shape, or form.
(01:07):
Charlie Munger was the vicechairman of Berkshire Hathaway,
who recently passed away after avery long and robust life as an
investor, including being a verysuccessful real estate investor.
He was Warren Buffett'sright-hand man, main partner.
I would say sort of the lesswell-sung hero of the Berkshire
(01:28):
Hathaway saga that we're allaware of and all glorify Buffett
a lot for it.
But Munger had a huge part toplay in this.
One of the best books I'veprobably ever read and
recommended to many people in mynetwork is...
Charlie's Almanac.
(02:11):
Oftentimes, we're pigeonholedinto what we understand.
You studied finance.
You see the world in a financeperspective.
You studied history.
You see the world throughhistory.
But the key thing is you have toutilize many different models to
view the world.
You have to utilize manydifferent practices and
philosophies and academicstudies to better understand the
(02:33):
world and better build mentalmodels for how you analyze risk,
how you analyze investmentopportunity, how you analyze if
a deal makes sense or not.
Thank you so much.
(03:07):
No one model solves everything.
And by the way, philosophershave been looking for like the
one key to all reality.
But the reality is, I think,that, you know, no single model
has perfect explanatory power.
And that's the thing we canreally take away from Munger.
So if you can see the worldthrough multiple different
(03:28):
models, you know, he, I mean,Munger was, the reason he wrote
Poor Charlie's Almanac isbecause It is a direct
descendant of Poor Richard'sAlmanac, which was Benjamin
Franklin's book that he wrote.
And Benjamin Franklin was awell-known polymath.
He was a learned expert in manydifferent disciplines.
And Munger really tried toemphasize the same approach.
(03:48):
And I think investors of allstripes would benefit.
Not just investors, by the way.
This is like life wisdom.
Everybody would benefit fromtaking the approach of, let
me...
absorb many differentphilosophies and build a
synthesis view of how realityoperates, how the world
operates, and be open todifferent perspectives and
different things.
So three to four models thatMunger really loved and I want
(04:13):
to share with you.
So A, opportunity cost.
What's the next best use of yourcapital?
If you're locking your capitalinto a low-yield deal, you're
foregoing the better the betterreturns that could have been
gotten elsewhere.
And so sometimes we get verymyopic in our approach, and we
like what we're doing, and westay the course of what we're
(04:34):
doing.
And maybe you're missing out onopportunity cost, but you could
have done something betterelsewhere.
The second philosophy that hetook, which I think is amazing,
is called inversion.
invert the way you're looking atit.
So instead of asking on a dealor in anything, how can I
succeed?
Ask, how can I fail?
(04:56):
And then map a way to not fail,right?
And it's kind ofcounterintuitive because in this
world, we have a lot of beliefand visualization and positive
thinking and optimistic outlookkind of engineering.
But if you look at it from thelens of like, if I wanted to
fail, how could I fail?
It's a completely novel way oflooking at a situation.
(05:17):
How could I fail if I wanted toengineer failure and then solve
for that?
Don't fail because you engineerout how you would fail and then
you solve that issue.
The third is margin of safety.
This is not so much of amultidisciplinary approach, but
it's a really important concept.
Margin of Safety was popularizedby Benjamin Graham, who's the
(05:40):
father of fundamental investing,in two of his books, Security
Analysis and The IntelligentInvestor.
Both fantastic reads, especiallyif you're a stock market person,
but good anyways forestablishing a systematic
approach to determining value,to understanding that whatever
you're investing in, you'rereally investing in the
underlying business, whether itbe a piece of property or a
(06:00):
stock.
And Margin of Safety is thenotion that you understand the
intrinsic value of the asset.
And then you want to get abetter price than the intrinsic
value.
You're disregarding the dailytemperament of Mr.
Market, which is anotherBenjamin Graham saying.
You're disregarding what themarket gives you on a given day.
(06:21):
You're disregarding what realestate pricing is giving you on
a given day.
And you're trying to understandwhat is this thing really worth
and how do I build in safety sothat if something goes wrong,
you have a buffer to protectyourself.
The last one I want to talkabout is awesome.
It's called the LollapaloozaEffect.
It's a fascinating thing, butbasically the premise is that
(06:44):
when multiple different modelscollide and conspire together to
push things in a certaindirection, you can have an
exacerbated irrational effect.
So I'm going to talk about thisin a moment, but it's like the
dot-com...
bubble.
You had multiple differentmodels colliding.
(07:04):
You had a low interest ratemodel.
You had a technological changemodel colliding.
You had an understanding ofhuman emotion and sentiment and
FOMO and all the things that gointo that.
All of those collided togetherto create this exaggerated
effect.
Or you look at the lead up to2008.
It's sort of a similar storywith real estate.
And if you really try to breakit into what's happening,
(07:26):
there's multiple differentphilosophies, if you will,
working together, conspiringtogether to create a really
negative effect for everybody.
But if you can see that and youcan see the various models
coming together, then you canunderstand the Lollapalooza
effect, which is something youreally need to see.
So I think a real world exampleof this is what we just went
(07:50):
through with COVID-19.
You had a couple of differentthings, right?
So let's just talk about COVID.
So a quick reading of of theeffect of major pandemics or
plagues on human civilization,of which there's been many, will
yield some interesting insights.
They usually spark societalunrest.
There's a whole bunch of thingsthat come into it, but the one
(08:12):
commonality of all them is thatthey end, right?
So the effect of it doeseventually come to a conclusion.
But if you go back throughhistory, and by the way, COVID
was a plague of sorts.
It was a pandemic, covered theentire globe.
But in history, We have hadsubstantially more devastating
plagues that have affected ourcivilization.
(08:33):
The Antonine Plague killed like20% of the Roman population.
The Spanish flu was a massiveplague.
I mean, does some say that HarryTruman and negotiating the
aftermath of World War I and alot of the things that actually
caused the start of World WarII, excuse me, not Harry Truman,
Woodrow Wilson, excuse me,Woodrow Wilson had had the
(08:55):
Spanish flu and there'sspeculation that There's a
great, great book on this thatI'll drop in the show notes as
well that's really worthreading.
I believe it's called The GreatInfluenza.
He had flu brain.
It's fascinating.
He had flu brain, so he wasn'tnegotiating at the top of his
game, and he wasn't thinking atthe top of his game.
He was adamant that Germanyshould not be punished so
(09:15):
harshly, but because of theeffects of the plague, he didn't
actually stand up for and defendthe rights of the losers of that
war, which in many ways helpedspark World War II.
Accursory looking at the historyof plagues and pandemics yields
some insights, right?
You also had record low interestrates.
(09:36):
You had a sentiment model wherepolitics got really volatile
during this period.
But you can look at pandemics inhistory and understand that that
happens.
That's something that happensevery time.
So you had a Lollapaloozaeffect.
And in line with my thinking andfirmly stated many, many times,
(09:56):
I believe this drove SunbeltReal Estate pricing to
unrealistic levels, right?
And there was a lot of emotionbehind it and a lot of hype and
excitement and record lowinterest rates and so many
different factors that cametogether to form this.
And we looked at deals.
We looked at deals in Austin.
(10:17):
We looked at different markets.
And I just thought the pricingwas out of whack.
But like, If you're caught up inthat, and it's not anyone's
fault.
People get caught up in thesethings.
It's a real thing.
I've certainly gotten caught upin things in my life, and it
happens.
You get sucked into thesethings, but that is the
Lollapalooza effect in action.
The older I get and the moretenured I get in this business,
(10:38):
the more I realize investing isnot just what you know, although
it's really, really important.
It's also about how clearly youthink.
how clearly you think throughthe issues, and how clearly you
assess your own models of howyou see the world.
Are they good?
Are they bad?
Not all models are good.
You have to really assess that.
Honestly, at the end of the day,I look back and I say, real
(11:01):
estate investors, in particular,should really pursue a
multidisciplinary approachbecause our industry, just like
the stock market in many ways,but our industry is hyperlocal,
so you have to understand what'sgoing on locally, but you have
to understand the bigger trends.
You have to know many differentfields and disciplines to be an
operator at the bleeding edge ofproductivity and efficiency.
(11:23):
You don't need to knoweverything and no one can know
everything.
Although with AI, we're gettingpretty close.
I mean, I heard something theother day about IQ doesn't
matter anymore, which is aninteresting perspective because
we have access to endlessinformation and a guide that can
help us in so many ways.
So AI is a huge force multiplierand And it is a huge equalizer
because it's cheap and we haveaccess to it and it can give you
(11:46):
models.
It can help you think throughthings a lot more clearly.
I would challenge anyone to gointo their AI model when they're
looking at a deal and be like,analyze this from a Charlie
Munger approach.
Tell me what I'm missing.
What thematics am I missinghere?
What are the big trends that aredriving things right now?
Grok is really great for thisright now.
Grok is up to the date today andhas great insights.
(12:07):
I think it's one of the bestmodels I've been using.
So Munger wasn't just smart.
He was principled.
He understood these things.
It's a reason he became assuccessful as he was.
And he was a great real estateinvestor, by the way.
It's like not often realizedbecause we think of Berkshire
Hathaway and this incredibleholding company that's had
unbelievable results.
(12:27):
And he did that.
But in alignment with hisreputation as a renowned
polymath, as a guy thatunderstood so many different
things, he was a great, greatreal estate investor.
So let's take this.
I highly encourage you to readthe book.
Let's proceed forward.
And remember, think well, actwisely.
Let's build something timelesstogether.
(12:48):
Thank you.
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