Max Planck: Resistance of the Human Mind

According to this Wall Street Journal article, there's been a recurring theme of Warren Buffett and Charlie Munger at the latest Berkshire Hathaway meeting.

What's the theme?

...their complete disdain for modern portfolio theory and the use of higher-order mathematics in finance.

Buffett and Munger: Stay Away From Complex Math, Theories

In the same article, Buffett refers to something Max Planck once said:*

Mr. Buffett on the persistence of bad ideas in finance: "The famous physicist Max Planck was talking about the resistance of the human mind, even the bright human mind, to new ideas.... And he said science advances one funeral at a time, and I think there's a lot of truth to that and it's certainly been true in finance."

This is sort of along the same lines of this older Munger comment at the 2007 Berkshire Hathaway meeting:

"We'd argue that what's taught is at least 50% twaddle, but these people have high IQs. We recognized early on that very smart people do very dumb things, and we wanted to know why and who, so we could avoid them."

They are certainly no fan of the way finance and investing is taught in academia.


* "A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it." - Max Planck
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Max Planck: Resistance of the Human Mind
Max Planck: Resistance of the Human Mind
Reviewed by jembe
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