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DIY Investing
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In October of 2019, I read and reviewed Charlie Munger's book Poor Charlie's Almanack, where I enumerated my "take-aways." The tenth take-away was about Money Managers and Accountants:
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Money Managers and Accountants. Charlie has nothing nice to say about money managers. He calls them "croupiers" and "febezzlers." He thinks they're parasites who rob investors of three to five points of ROI, who should quit and find something better to do with their time and talents. As a former lawyer, he seems to have the same attitude about lawyers, and about most of the accounting profession. He takes a very dim view of how accountants handle squishy assets and liabilities like goodwill and stock options; he says optimism has no place in the accounting profession. He praises double entry bookkeeping and cash registers . . . anything with built in checks and balances that keep people honest and encourage virtuous behavior. He goes so far as to praise the invention of the cash register as a saintly deed, since before its invention, employee theft was so widespread that it destroyed many businesses, lives, and fortunes.
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I've been mulling this ever since. Now, in August of 2026, I have my own observations to share about conventional financial planning and wealth management:
- % of AUM fee structure. The fee structure - a percentage of Assets Under Management (AUM) - is parasitic. It discourages planners from helping people who need help (if architects worked the same way, they'd expect you to build your house before they'd draw you a blueprint; as Charlie would say, the situation is "inane" and bass-ackwards). It only encourages them to help the rich get richer, and leaves ordinary people out in the cold.
- Single Digit ROI Expectations. They set return on investment (ROI) expectations at single digits. (In my world, double digit returns are average.)
- Fake Plans. What they call "plans", aren't. They're really point-in-time probability assessments, using Monte Carlo Simulations, that you have adequate assets now to afford your stated goals. They're silent about what to do next week, next year, next decade. It's all about whether you're ready now. The output of such plans is a number, a percentage probability that your assets are sufficient. It's of no help to people with little or no assets and big goals; and it's of little help to people with big assets and big goals, because it's silent about the future. It only assesses how you're doing now, in the present.
- Perks. Since they share all of the above three traits in common, they need something more to set themselves apart from their competition. With Bernie Madoff it was ethnic affinity. With Jeffrey Epstein, it was his island. It might be a weekend on a private yacht or plane, golf, or some kind of excursion, sport, or hobby that is elite, exclusive, fun, and somehow makes the client feel special. (It might even take the form of virtue signaling in a feigned passion for nonprofit organizations and charitable activities! It can be quite subtle.)
The Monte Carlo Simulation originated in Nuclear Physics in 1946. It was used in the Manhattan Project to invent the atom bomb. The name derives from gambling in Monaco. It's about working with randomness and uncertainty - as in, what happens when you split an atom? What might the collateral damage be?
Later, the financial planning community "borrowed" it to deal with unpredictable return and inflation fluctuations.
My view: we're dealing with people's lives here. We're not building a bomb or gambling. We're navigating toward a destination.
Most of the time, most people, when they go on a journey, reach their destination. The underlying presupposition is not uncertainty or randomness, as might be the case in gambling or atom-splitting. It's certainty: I want to reach this destination, and I shall. Here is the route. Here is where I will go, and when.
Indeed: it's more like winning a war than playing a game. This is no game. It's very real.
It's more like military backward planning, like what General Eisenhower and his staff used in 1944 for Operation Overlord, the invasion of Normandy. "D-Day" got its name from the plan. Within D-Day, there was also H-Hour, the planned hour of the landing. They had everything planned out from D-Day and H-Hour, backward. Initial planning and preparation began in 1942 and intensified beginning in January 1944, six months before the invasion, when General Eisenhower was designated Supreme Allied Commander.
That's real planning: being definite about future outcomes, even if you're starting out with your back against the wall. Starting with the goal, and working backward to the present.
In his book Zero to One, Peter Thiel also addresses this when he distinguishes between Definite and Indefinite Optimism. Usage of the Monte Carlo Simulation presupposes what's Indefinite. Military backward planning, as well as the achievements of the Greatest Generation building national infrastructure post-war, presupposes what's Definite.
That, I would say, is the difference between a fake plan and a real one. The fake plan is indefinite or silent about what to do in the future. The real plan is definite about future outcomes and the preparation and progress toward them, even if you're starting from zero or negative.
A Word About Religious Clients. Religious clients - people of any faith - have a unique twist. They like money, but they don't want to be greedy. (Come to think of it, I suppose there are a lot of decent atheists who don't want to be greedy, either.)
For example, Christians are mindful of Matthew 19:24, Mark 10:25, and Luke 18:25, where Jesus says it's easier for a camel to pass through the eye of a needle than it is for a rich man to go to Heaven.
They like money, but they like Heaven, too; even more, since it's eternal.
What to do?
Outsource. Get yourself a guy or gal who "handles all that stuff" so you don't have to think about it or be tempted by greed, so you can focus on being "spiritual."
As it turns out, this is a very expensive decision. It's also sloppy stewardship.
Proverbs 27:23-27 also says, "Know well the condition of your flocks, and pay attention to your herds . . . ."
So, know. Pay attention. Don't play the ostrich, stick your head in the sand, and let someone else worry about it.
And as for getting to Heaven? I'll let you know when I get there. Meanwhile I'm pretty sure nobody gets to Heaven by avoiding conscientious stewardship. Among other things, I'm pretty sure it's about honesty and care.
So What?
If you're going to listen to Charlie Munger (and maybe me), what to do?
Look at this chart and ask yourself, "In which column do I want to live?" Bear in mind, again, the single digit expectations set by the "experts." Ponder the opportunity cost of living in the 6% or 8% columns, versus the others to their right.
The difference is what Charlie calls "febezzlement."
Learn to DIY. It isn't that hard. Do a little research. Be interested. Pay attention.
I make it easier by freely sharing my annual investment research. For example, here are my 2026 findings.
Managing a portfolio, trading investments, is as easy as buying or selling stuff on Amazon or E-Bay. Morningstar is a great resource for doing research and tracking portfolios.
For more help with this, reach out.
Look at this chart and ask yourself, "In which column do I want to live?" Bear in mind, again, the single digit expectations set by the "experts." Ponder the opportunity cost of living in the 6% or 8% columns, versus the others to their right.
The difference is what Charlie calls "febezzlement."
Learn to DIY. It isn't that hard. Do a little research. Be interested. Pay attention.
I make it easier by freely sharing my annual investment research. For example, here are my 2026 findings.
Managing a portfolio, trading investments, is as easy as buying or selling stuff on Amazon or E-Bay. Morningstar is a great resource for doing research and tracking portfolios.
For more help with this, reach out.
