He Lost His 9-Year-Old Son To Cancer, Went Blind In One Eye, Was Left With Nothing After A Divorce And Still Managed To Become One Of The Most Successful Billionaire Investors Ever.
That’s Charles Thomas Munger a.k.a. Charlie Munger for you.
Even though he was a celebrated investor, he was mostly known across circles for his worldly wisdom.
Here are 5 pieces of his wisdom that apply to investing and life:
1. Clone great ideas
There is no harm and no shame in copying ideas that have been successful in the past. If you find titans in your industry that you wish to emulate, do not hesitate in shamelessly copying what worked for them. Similarly in investing, do not hesitate to copy the picks and research of other investors, but build your own conviction.
2. Don’t super-specialize
Charlie loved investing because he could draw mental models from history, psychology, biology, engineering, economics and many others to apply them to investing. His personal life story lives up to it. He studied mathematics in undergraduate, but left to serve in the U.S. Army Air Corps, where he became a second lieutenant. Later he studied meteorology at Caltech only to be admitted in the most prestigious Law school at Harvard graduating magna cum laude with a J.D. Charlie was a specialized generalist.
3. Invert, always invert
“All I Want To Know Is Where I’m Going To Die So I’ll Never Go There”
The key to good decisions is trying to be consistently not stupid, instead of trying to be very intelligent.
Avoid all the greasy and ultra processed food in your diet, you will have good health. Avoid all toxic people in your relationships, you will have mental peace. Avoid all high debt, very expensive, no growth stocks, and you will avoid financial disasters.
4. People who multitask pay a considerable price
Many people believe that when they multitask, they are super-productive. Charlie found that if you don’t have time to think about something genuinely, you are giving your competitors, who are thinking deeply, a significant advantage. It’s not your ability to do multiple things at once that takes you places, it’s your ability to do one thing very well that does. Don’t be a scalper, options trader, technical analyst and quant investor all at once.
5. Knowing what you don’t know is more useful than being brilliant
You don’t need to have an opinion on everything. Not every economic policy needs your say, not every political movement needs your opinion and not every stock needs your buy/sell/hold stance. Knowing what you don’t know helps you avoid mistakes you unintentionally might end up doing.
Charlie was a hero investors needed, but not the one they deserved. Investors will continue to commit mistakes that harm themselves, but it is only after Charlie’s wisdom do they stand a fair chance to play the crooked game we call investing and life.