10 Lessons from Charlie Munger
Charlie Thomas Munger is an American Investor, businessman, author and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett. Many refer to him as the right hand man to Warren Buffet, but his rise to being the right hand man, many considered the world’s greatest investor started from Law to self-educating himself about investing. Her are 10 Lessons to take away from this great investor.
1. Understand Everything about your Investment before Investing
Alongside Warren Buffett, both strive to know all they can about that particular investment prior to investing by looking through the company’s financials, visiting manufacturing plant, offices, seeing the culture at work etc. He carries out due diligence before investing.
2. Always keep learning
From learning business strategies, keeping up with the latest in the market, knowing which markets are hot etc. Always keep a mind-set to learn new things.
3. Have a checklist for Everything
“I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important.” (Charlie Munger)
4. Delay Gratification
To achieve to the level of freedom or success Charlie speaks highly about putting of gratification until a later time. He believes in deferred gratification, he most obvious sign someone is not deferring gratification is debt. Spending more than you earn is a direct result of satisfying lusts without proper thought.
5. Think of Industries as Ecosystems
“I find it quite useful to think of a free-market economy – or partly free market economy – as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well.” (Charlie Munger)
6. Avoid “man with a hammer” tendency
“You must know the big ideas in the big disciplines and use them routinely – all of them, not just a few. Most people are trained in one model – economics, for example – and try to solve all problems in one way. You know the saying: ‘To the man with a hammer, the world looks like a nail.’ This is a dumb way of handling problems.” (Charlie Munger)
7. Don’t Sell Anything you wouldn’t buy
“If we don’t like, understand, or believe in a product, we are going to be a disaster when we try to sell it. Great salespeople believe in their products. That is one of the secrets of their success.” (Charlie Munger)
8. Form the simple habit of reading
“If you want wisdom, you’ll get it sitting on your a*s” Charlie accredits much of his wisdom to spending time reading books.
9. Avoid Making Close Minded Judgements about People
Instead of sticking to what is familiar amongst people, he challenges professionals to keep an open mind to someone you dislike.
10. Spend each day trying to be a little wiser than you were when you woke up.
Charlie implemented a self-education regime for one hour a day to learn such things as real estate development and stock investing,” Charlie has often said that he is a much better investor at 90 than he was at 50, a fact he attributes to the compounding effect of knowledge stated David Clarke in his book “The Tao of Charlie Munger”