In his legendary 1995 Harvard speech, “The Psychology of Human Misjudgment,” superinvestor Charlie Munger described no less than twenty-five evolution-driven cognitive distorting powers to which our species is irrepressibly subject. If you have never heard it or read it in any of its many incarnations, it’s an intellectual tour de force that will expand your thinking forever.
Most of Charlie’s list of twenty-five is derived from social psychology. But the single greatest insight is, to my knowledge, a Charlie Munger original. Charlie calls it the “Lollapalooza,” an antique term for something great and extraordinary. “Lollapalooza” was used as a “challenge word” during World War 2 by American troops to tell friend from foe, as it is very hard for a non-English speaker to pronounce Lollapalooza correctly.
Charlie's Lollapalooza occurs when several cognitive distorting powers act in concert to produce an extreme outcome. Think critical mass in physics, compound interest over decades, or the rapid spread of viral infection in biology or on the internet. In finance, think of any Ponzi scheme, open outcry auctions (eBay is the online equivalent), the dotcom boom, the real estate boom that cratered just ten years ago and, perhaps, the now-fading bitcoin frenzy. Lollapalooza effects occur in complex adaptive systems where the whole proves far greater than the parts.
But for our purposes, let’s consider a delightful, singular and adorable Lollapalooza that, remarkably, is also a financial one: the phenomenal, enduring popularity and multimillion-dollar annual posthumous income of Marilyn Monroe.
How has this remarkable woman and icon of the 1950s cast a worldwide spell that is still undiminished more than fifty years after her tragic death? Her image and persona earned a reported $27 million in 2011 (according to Forbes), just behind Elvis Presley and Michael Jackson. While Elvis and Michael primarily market lucrative recordings, Marilyn earns millions with nothing but an image, a voice and a singular human presence in a small ouevre of movies, newsreels and television appearances.
Could she be a Lollapalooza? Yes! Witness six of Charlie’s cognitive distorting powers that combine to help Marilyn cast her delightful spell:
The Power of Incentive: Marilyn offers the untroubled love of a spectacular beauty to all who behold her, young or old, never rejects and never hurts.
The Power of Social Proof: Who would not be swept up in the adoring crowds, both male and female, who flocked to Marilyn’s film and public appearances?
The Power of Availability: In the 1950s Marilyn was everywhere: film, ads, photos, books, magazines, public, radio and TV appearances, and her famous USO tour.
The Power of Liking/Loving and Reciprocation Tendency: Most professional beauties seem elite and untouchable. But Marilyn seemed more like a deity who loves us all. Who would not love her back?
The Power of Pavlovian Association: Marilyn is pictured with all things good: beaches and pools, Coca-Cola, public events and celebrations, jewelry, gowns, new cars, vacations, and other celebrities basking in her glow.
The Power of Excessive Self-Regard: Marilyn appeals to the narcissism of every man who thinks he could win her, and inflates his ego with an illusory near-miss. Still he does not envy the high status males who did win her; they are his proxies. Women have often admired her without envy, devoted fans who may even see a bit of themselves in her, and her in them. Indeed a new book by Michelle Morgan, The Girl, notes that Marilyn was a businesswoman, and "an unlikely feminist."
Each of these six of Charlie’s powers, together with Marilyn’s extraordinary beauty, talent, intelligence, courage, fierce ambition and hard work, combined to make her a singular superstar, and to remain one to this day. And despite Hollywood’s formidable ability to concoct stars using plastic surgery, artifice, dress and makeup, lighting, writing, directing and cutting, there have never been any that reach the iconic status of Marilyn Monroe. Even those the studios promoted as “the next Marilyn Monroe.”
As Charlie Munger has noted, unmasking these cognitive distorting powers does not diminish their efficacy. No one can halt a Lollapalooza. Take a look for yourself at Marilyn in her glory: romancing the hopelessly unlovable pennypincher, Jack Benny (see powers 1, 4 & 6 above) in a dream sequence on his 1953 TV program.
Or entertaining spellbound and delighted US troops in Korea in 1954 (see powers 1,2,4 and 6 above)
Certainly Charlie’s right: in this case, the whole has proven far greater than the parts — and longer-lasting as well.