Li Lu: Charlie Munger’s enduring legacy

November 28th 2024 marks the first anniversary of Charlie Munger’s death. With the collaboration of Munger Institute and CITIC Publishing Group, Li Lu, Asset manager of the Munger family and founder of Himalaya Capital, accepted an online interview with Zhenghe Island on the same day.

This is the first interview Li has accepted with domestic media after four years. In the interview, he recalled his mentor Munger, summarized his spiritual legacy, and pointed out that it was Munger who made value investing possible in the global practice.

Here are the key takeaways:

• Charlie Munger’s Enduring Legacy: Munger’s life exemplified the pursuit of universal wisdom, rationality, and the unity of knowledge and action. He was a role model who consistently inspired those around him through his integrity, intellectual rigor, and commitment to improving society. His influence extended beyond investing to leave a profound spiritual and intellectual legacy.

• Evolution of Value Investing: Munger expanded Benjamin Graham’s foundational value investing principles by emphasizing the importance of buying great companies at reasonable prices and holding them long-term. He also advocated “fishing where there are fish,” meaning focusing on areas where one’s circle of competence aligns with opportunities. This approach enabled the global application of value investing practices.

• Rationality as a Multi-Layered Concept: Munger’s concept of rationality encompassed four levels: deriving universal wisdom from real-world principles, applying multidisciplinary thinking, avoiding systemic irrationalities (e.g., behavioral biases), and respecting common sense. His framework for rationality is central to his decision-making philosophy.

• Global Value Investment and Modernization: Li Lu emphasized the global applicability of value investing in diverse economic environments, including emerging markets. He highlighted its relevance in the ongoing modernization process, which he described as an unstoppable shift in civilization paradigms akin to the agricultural revolution.

• AI as Opportunity and Existential Risk: Li Lu discussed the transformative potential of AI, likening its significance to landmark inventions like fire and electricity. While AI offers immense opportunities for advancing human capabilities, it also poses existential risks if it surpasses human intelligence and becomes uncontrollable. He stressed the need for global cooperation to ensure AI development remains safe and aligned with human interests. These insights underscore Charlie Munger’s profound influence on investing, rational thinking, and navigating complex global challenges.

Original Chinese text can be found here: https://mp.weixin.qq.com/s/bxYnXKRTduh_jm-L8DrQ_g