Charlie Munger is one of the best thinkers in the world.
Here are my 9 key takeaways from “The Worldly Wisdom of Charlie Munger”:
1 – Don’t fool yourself
When it comes to investing, we are often our own worst enemy.
Rather than trying to be smart, reduce your capacity for foolish thinking. You are the easiest person to fool.
2 – Inversion
Always solve problems backward.
Ask yourself “Is this going to be a disaster?” before asking “Is this going to be wonderful?”
Focus on what NOT to do first.
“A lot of people are so interested in reaching for the prize that they don’t even think about the stupidities that might prevent them from getting it.” — Charlie Munger
3 – Understand probability
Nobody knows for sure what is the future.
(And anyone who claims to know the future is lying).
But we can estimate the outcomes based on probability.
4 – Destroy your best-loved idea
Social media be an echo chamber that traps us in a one-sided view.
We need to be open to re-examining our views and changing our minds.
Recognize reality even when you don’t like it.
“Any year that passes in which you don’t destroy one of your best-loved ideas is a wasted year.” — Charlie Munger
5 – Life philosophies
Life is much more than growing a vast amount of wealth.
Live within your means, and avoid debt as much as possible.
6 – Career advice
Play in a game where you have an unusual advantage.
If you are 5’1, you don’t want to play basketball against someone who is 8’3.
You must also be deeply interested in playing this game.
7 – Surround yourself with people you admire
Quality relationships with good trustworthy people make life special.
If you want to have a good partner, friend, and spouse, then you need to be a good one in return
8 – Focus on quality business
A great amount of Munger’s family fortune is based on 3 stocks – $BRK, $COST, and a handful of companies selected by Li Lu.
Few companies can survive over decades.
Look for companies with moats that are expanding each year.
9 – Look for no-brainer decisions
“We don’t leap seven-foot fences. Instead, we look for one-foot fences with big rewards on the other side.” So we’ve succeeded by making the world easy for ourselves, not by solving hard problems.” — Charlie Munger
Bonus quote from Charlie Munger
“Life and its various passages can be hard, brutally hard. The three things I have found helpful in coping with its challenges are: 1. Have low expectations. 2. Have a sense of humor. 3. Surround yourself with the love of friends and family.” — Charlie Munger
Additional Links:
Listen to TIP Podcast episode and transcript here.
Original Twitter thread here.
