This is a long read, and I skimmed it, but I can hazard a guess that a lot of comments are <i>not</i> about the article, but simply about the headline and early premise. Surprisingly (perhaps), the intention of the overall article is more about the state of academic education and behavioral psychology.<p>> In short, academic psychology departments are immensely more important and useful than other academic departments think. And, at the same time, the psychology departments are immensely worse than more of their inhabitants think.<p>In effect, much of the story is merely to illustrate that we're bad at learning from history, because we aren't very good at understanding <i>how</i> we think about things.
Interestingly based on this you would have $500B simply by investing the money in the S&P500 and holding it for 140 years. If we move the date back to 1874 then after 150 years you'd have $1T:<p><a href="https://www.officialdata.org/us/stocks/s-p-500/1884?amount=2000000&endYear=2023" rel="nofollow noreferrer">https://www.officialdata.org/us/stocks/s-p-500/1884?amount=2...</a><p>In other words the whole game of corporate planning is fairly pointless imho and merely a shell game around market growth.
"If you can know the future while pretending to not know the future, you will be reach"<p>There's <i>so</i> much in the article that fundamentally <i>knows</i> what the future is. The most egregious point for me was disussing Pavlov in an 1884 context. (His discovery of classical conditionings dates to 1890 and later)<p>Assuming a four cent profit requires assuming large inflation over the intervening time span. (It's been ~3000%). Inflation in 1884 was barely understood, and mostly treated as a devaluation of currency, not an increase in price.<p>Population growth to 8 billion people required modern medicine and modern agriculture at the least. (World population less than doubled over the 19th century - assuming it'd quadruple again, especially given that the Malthusian trap was a prevailing thought concept, would be an extremely bold assumption)<p>And so the entire pretext that you could've predicted this path kind of falls apart. We can retcon an explanation, but we can retcon an explanation for any success easily. So easily, we have a picture of a bullet-riddled plane to handily explain it.
For passive investments, it’s partly the Law of Large Numbers at work.<p>The key to exploiting LLN is to avoid “game over” scenarios. You have to survive and stay in the game in order for LLN to converge.<p>If let’s say your expectation of winning in the long run is 0.7, you’ll only achieve this if you don’t get wiped out anywhere in the process (if you do your expectation drops to 0 immediately).
Maybe the years and amounts were chosen this way but at 7% you double your money every 10 years (for those who don't know too, percentages are reversible so at 10% you double your money every 7 years...)<p>You have 15 doubles between 1884 and 2034.<p>So you get 2^10 * 2,000,000 or 2,048,000,000 - just over 2 trillion dollars.<p>I read through parts of the article - I have no idea what point is attempting to be made. It all rambles quite a bit.
I love Munger, but I guess his freshman survey courses didn't cover pharmacology.<p><pre><code> Glotz wants to use a name that has somehow charmed him: Coca-Cola.
</code></pre>
Just why was Glotz charmed by that name?<p><pre><code> Ctrl-F "cocaine" - 0 hits
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Oh. Charlie is telling a just so story that doesn't comport with the facts.
It probably helps that 2 M USD in 1884 money is worth like 63 M today. /s<p>Yes, in general, we are not great at learning from history. How does blending academic psychology with other departments change that? Like how will that information disseminate *through/permeate society?
This is the money quote, imho:<p>“This brings me, at last, to the main purpose of my talk. Large educational implications exist, if my answer to Glotz’s problem is roughly right and you make one more assumption I believe true – that most Ph.D. educators, even psychology professors and business school deans, would not have given the same simple answer I did. And, if I am right in these two ways, this would indicate that our civilization now keeps in place a great many educators who can’t satisfactorily explain Coca-Cola, even in retrospect, and even after watching it closely all their lives. This is not a satisfactory state of affairs.”
Several times in my life, years of difficult and inexplicable behavior by someone important to me (or myself), has benefited from an awareness of a neurotype, learning style, thinking practice, personality disorder, trauma pattern, etc.<p>It's important not to "diagnose" people. But these patterns are real and shed light on logics we operate with.<p>A little understanding goes a long way.<p>It makes sense that our brain, like any device class, has common patterns of high/low performance and failure.<p><i>I don't know where in education exposure to practical psychology makes sense. But a formal psychology class is too late, too narrow, too short, and too segregated a context: as the article points out.</i><p>We don't want to interrupt children's development with psychological concepts they are not ready for. But it would be nice to understand each other better, earlier.<p>That is an interesting education problem.<p>--<p>A related thought. There are so many areas of vitally useful knowledge, but turning each area into a formal subject isn't possible or necessary.<p>All that is needed for many great ideas is exposure.<p>Many geniuses' benefited as children from frequent informal discussions with knowledgable curious persons.<p>Perhaps a daily open discussion lunch hour could provide that exposure. Where all manner of subjects are discussed, and all kinds of questions are welcome.<p>It could be the easiest most impactful class of the day.
This analysis, like many from Charlie Munger, is worth considering carefully but misses two curious aspects of the Coca-Cola story.<p>First, the price of a 6.5 fl. oz. bottle of Coca-Cola was set at 5¢ in the 1880s and remained 5¢ through the 1890s, the 1900s, the 1910s, the 1920s … all the way until the 1950s when the price was finally raised. The dynamics that led to this remarkable phenomenon is described in a <i>Planet Money</i> podcast [1] and on Wikipedia [2].<p>Second, “starting in Atlanta, then succeeding in the rest of the United States, then rapidly succeeding with our new beverage all over the world” is much easier said than done. Coca-Cola somehow hit this jackpot, but Munger himself would cite See’s Candies as a counterexample of a brand that, for whatever reason, does not travel as successfully from its place of origin.<p>[1]: <a href="https://www.npr.org/transcripts/456410327" rel="nofollow noreferrer">https://www.npr.org/transcripts/456410327</a><p>[2]: <a href="https://en.wikipedia.org/wiki/Fixed_price_of_Coca-Cola_from_1886_to_1959" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Fixed_price_of_Coca-Cola_from_...</a>
>The academically correct reaction to this immense and well-publicized fiasco would have been the sort of reaction Boeing would display if three of its new airplanes crashed in a single week. After all, product integrity is involved in each case, and the plain educational failure was immense.<p>Irony.
Hard eyeroll. How many proprietary soft drinks did different pharmacies and restaurants provide across the nation in 1886? The concept of the soft drink business is so pervasive that in the US, the lemonade stand is the most basic business we teach kids. So a lot, probably. Somehow common sense logic and business basics should have turned any of them into a $2Tn empire, 150 years later (oh and $66mm in seed money in today's terms with no time restriction from the investor). I haven't seen hindsight applied with such conviction since I hung out with the last super successful investor who fell pray to applying his expertise in one domain to another where it doesn't belong. Whatever Mr Munger did for Mr Buffet, writing insights of this type was not it.
Folks,
a) every town had a soda fountain, and a local favorite in 1880's.
b) Every town has 3 social media apps, but smart college students in 1999.
c) every town has 5 new LLM model companies, in 2023<p>Charles Munger is such a smart man in many ways, and it is sad to see his thinking get muddy in his old age. I am surprised he falls for 'Survivorship Bias` in his own thinking.