2019: What have Buffett and Munger learned about human nature?

AUDIENCE MEMBER: Good morning Mr. Buffett, Mr. Munger. My name is JC. (PH) I am 11 years old, and I came from China. This is my second year at the meeting.

Mr. Munger, it’s great to see you again after the Daily Journal meeting in February.

Mr. Buffett, you mentioned that the older you get, the more you understood about human nature. Could you elaborate more about what you’ve learned, and how can the differences of human nature help you make a better investment? I would also like Mr. Munger to comment on that, please. Thank you very much. (Applause)

WARREN BUFFETT: You should wait for Charlie’s answer, because he’s even older. (Laughter)

He can tell you more about being old than I can even.

It’s absolutely true that virtually any yardstick you use, I’m going downhill. And, you know, if I would take an SAT test now, and you could compare it to a score of what I was in my early 20s, I think it’d be quite embarrassing. (Laughs)

And Charlie and I can give you a lot of examples, and there’s others we won’t tell you about how things decline as you get older.

But I would say this. It’s absolutely true in my view that you can and should understand human behavior better as you do get older. You just have more experience with it. And I don’t think you can read — Charlie and I read every book we could on every subject we were interested in, you know, when we were very young. And we learned an enormous amount just from studying the lives of other people.

And — but I don’t think you can get to be an expert on human behavior at all by reading books, no matter what your I.Q. is, no matter who the teacher is. And I think that you really do learn a lot about human behavior. Sometimes you have to learn it by having multiple experiences.

I actually think I, despite all the other shortcomings — and I can’t do mental arithmetic as fast as I used to, and I can’t read as fast as I used to.

But I do think that I know a lot more about human behavior than I did when I was 25 or 30 —

CHARLIE MUNGER: I’ll give you — do you want one mantra? It comes from a Chinese gentleman who just died, Lee Kuan Yew, who was the greatest nation builder probably that ever lived in the history of the world.

And he said one thing over and over and over again all his life. “Figure out what works, and do it.” If you just go at life with that simple philosophy from your own national group, you will find it works wonderfully well. Figure out what works, and do it.

WARREN BUFFETT: And figuring out what works means figuring out how other people —

CHARLIE MUNGER: Of course.

WARREN BUFFETT: — behave.

CHARLIE MUNGER: Of course.

WARREN BUFFETT: And Charlie and I have seen the extremes in human behavior, in so many unexpected ways.

CHARLIE MUNGER: Now we get it every night, extremes in human behavior. All you got to do is turn on the television.

WARREN BUFFETT: Yeah. I’m glad he used that example. (Laughter)