📖Charlie Munger

Consistency and Commitment Tendency

🌿 Intermediate★★★★☆

Once committed to a position, the brain resists changing it — even when evidence demands it.

💬

The brain of man conserves programming space by being reluctant to change.

— Psychology of Human Misjudgment，1995

🏠 Everyday Analogy

Just as a driver who takes a wrong turn, some stubbornly continue down the road to save face, only to end up further off course. A wise driver, however, will promptly turn around—even if they were just insisting the route was correct. The same applies to investing: clinging stubbornly to one’s views often leads to devastating losses.

📖 Core Interpretation

Once people make a commitment or take a stance, they tend to remain consistent with it, even when evidence suggests they should change.
💎 Key Insight：Consistency bias makes changing your mind feel uncomfortable, even painful. After publicly declaring a stock is great, admitting you were wrong feels humiliating. Munger fights this by celebrating changed minds — each revision based on new evidence is a sign of rationality, not weakness. The best investors update their views constantly as new data arrives.

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❓ Why It Matters

Consistency is the foundation of social trust, yet in investing it may lead to stubbornness.

🎯 How to Practice

Be willing to publicly change one's stance and cultivate an attitude of "strong opinions, weakly held."

🎙️ Master's Voice

People calculate too much and think too little.
Munger prefers qualitative thinking to excessive quantification. Understanding the business matters more than precise calculations.

⚔️ Practical Guide

✅ Decision Checklist

  • Am I over-relying on calculations?
  • Do I understand the business qualitatively?
  • Am I thinking, not just calculating?

📋 Action Steps

  1. Think about the business first
  2. Use calculations to support, not replace, thinking
  3. Value judgment over precision

🚨 Warning Signs

  • Spreadsheet-driven investing
  • False precision
  • No qualitative understanding

⚠️ Common Pitfalls

✕A complete lack of consistency is also problematic.
✕The key is to distinguish between principles and tactics.

📚 Case Studies

1
Dot-com Bubble Momentum (1999)
Investors kept buying unprofitable internet stocks because they’d already committed capital and public predictions to “new economy” winners.
✨ Outcome：Many held through clear overvaluation; when the bubble burst in 2000–2002, NASDAQ fell ~78%, wiping out large portions of committed investors’ capital.
2
Lehman Brothers Equity Holders (2008)
Shareholders and executives, anchored to past success and years of bullish views, continued backing Lehman despite mounting leverage, toxic assets, and clear warning signs.
✨ Outcome：Consistency with earlier optimism led many to hold or add shares; Lehman collapsed in September 2008, equity went to zero.

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