He’s been Warren Buffett’s right-hand man for over 45 years:
Charlie Munger.
And together these investment legends built a $704 billion dynasty.
Munger attributes their success to a few simple ideas.
Here are 10 of them:
Charlie Munger.
And together these investment legends built a $704 billion dynasty.
Munger attributes their success to a few simple ideas.
Here are 10 of them:
1. Opportunity cost
“Proper allocation of capital is an investor’s number 1 job.”
You must be opportunity driven.
Avoid falling in love with investments and always be open to exiting positions.
“Good ideas are rare – when the odds are in your favor, bet heavily.”
“Proper allocation of capital is an investor’s number 1 job.”
You must be opportunity driven.
Avoid falling in love with investments and always be open to exiting positions.
“Good ideas are rare – when the odds are in your favor, bet heavily.”
2. Why you lose money
Munger's 5 reasons investors lose money:
- Risk > Reward
- They’re misled
- No margin of safety
-They’re okay with losing money
- Inflation & interest rates are high
If you can address each of these areas, your chances of losing money drop dramatically.
Munger's 5 reasons investors lose money:
- Risk > Reward
- They’re misled
- No margin of safety
-They’re okay with losing money
- Inflation & interest rates are high
If you can address each of these areas, your chances of losing money drop dramatically.
3. Decisiveness
Luck is when preparation meets opportunity.
But opportunities don’t happen often.
So when they do occur, you must capitalize on them.
This means being greedy when others are fearful and fearful when clothes are greedy.
Luck is when preparation meets opportunity.
But opportunities don’t happen often.
So when they do occur, you must capitalize on them.
This means being greedy when others are fearful and fearful when clothes are greedy.
4. Priorities
Life is full of new investment “opportunities."
Munger says to ignore the noise.
- Stick to what works
- Pay attention to detail
- Focus on the information in front of you
“A majority of life's errors are caused by forgetting what one is really trying to do.”
Life is full of new investment “opportunities."
Munger says to ignore the noise.
- Stick to what works
- Pay attention to detail
- Focus on the information in front of you
“A majority of life's errors are caused by forgetting what one is really trying to do.”
5. Flexibility
“Recognize and adapt to the true nature of the world around you; don’t expect it to adapt to you.”
Even if you think you’re right, there’s still the possibility that you’re wrong.
Just because you don’t like the facts doesn’t mean they’re false.
“Recognize and adapt to the true nature of the world around you; don’t expect it to adapt to you.”
Even if you think you’re right, there’s still the possibility that you’re wrong.
Just because you don’t like the facts doesn’t mean they’re false.
6. Patience
Focus on the process because “the process is where you live.”
And patience allows you to enjoy the journey (and reap its rewards).
“Compound interest is the 8th wonder of the world; never interrupt it unnecessarily.”
Focus on the process because “the process is where you live.”
And patience allows you to enjoy the journey (and reap its rewards).
“Compound interest is the 8th wonder of the world; never interrupt it unnecessarily.”
7. Humility
You don’t know everything.
So Munger says to:
- Resist false certainty
- Stick to what you know
- Pay attention to disconfirming evidence
“Knowing what you don’t know is more useful than being brilliant.”
You don’t know everything.
So Munger says to:
- Resist false certainty
- Stick to what you know
- Pay attention to disconfirming evidence
“Knowing what you don’t know is more useful than being brilliant.”
8. Always be learning
“If you want to get smart, the question you have to keep asking is ‘why, why, why?’”
Ask questions, then answer them with:
- Blogs
- Books
- Courses
- Podcasts
- YouTube videos
- Higher education
Do whatever it takes to learn something new every day.
“If you want to get smart, the question you have to keep asking is ‘why, why, why?’”
Ask questions, then answer them with:
- Blogs
- Books
- Courses
- Podcasts
- YouTube videos
- Higher education
Do whatever it takes to learn something new every day.
9. Risk management
Your plan to minimize mistakes should include:
- Value > Price
- Wealth > Size
- Progress > Activity
- Forward-thinking, not backward
- Studying companies, not markets
And do this for every investment you make.
Your plan to minimize mistakes should include:
- Value > Price
- Wealth > Size
- Progress > Activity
- Forward-thinking, not backward
- Studying companies, not markets
And do this for every investment you make.
10. Independence
Investors lose money because they follow the herd.
“Mimicking the herd invites regression to the mean.”
To get above-average results, your actions need to be above-average too.
This means carving your own path.
Investors lose money because they follow the herd.
“Mimicking the herd invites regression to the mean.”
To get above-average results, your actions need to be above-average too.
This means carving your own path.
TL;DR:
1. Opportunity cost
2. Why you lose money
3. Decisiveness
4. Priorities
5. Flexibility
6. Patience
7. Humility
8. Always be learning
9. Risk management
10. Independence
1. Opportunity cost
2. Why you lose money
3. Decisiveness
4. Priorities
5. Flexibility
6. Patience
7. Humility
8. Always be learning
9. Risk management
10. Independence
Thank you for reading!
If you enjoyed this thread, follow me
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for more.
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