Charlie Munger on the power of consistently not being stupid

Charlie Munger remains a stranger to most people and that’s a shame because he has much of great value to share, especially when explaining the “secrets” to his success in the business world but, of even greater interest, his success as a human being.

For example: “It is remarkable how much long-term advantage people like us [i.e. those who earned a personal net worth of several billion dollars] have gotten by trying to be consistently not stupid, instead of trying to be intelligent.”

Here are additional Munger insights from Chapter Eight of William Green’s recently published book, Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and in Life (Scribner, April 2021):

o “Munger’s approach of solving problems backward was influenced by Carl Gustav Jacobi, a nineteenth century algebraist, who famously said, “Invert, always invert.'” That is, think of everything you could do to guarantee failure and then reverse it, do the opposite. Yes, it’s counterintuitive but it really helps you to reverse the given issues and actions. It’s a more complete way of thinking a problem through.

o Munger actively collects detailed accounts of others’ foolish behavior, information is an invaluable antidote to idiocy. As he explains, “I like people  admitting that they were complete stupid horses’ asses. I know I’ll perform better if I run my nose in my own stupid mistakes. This is a wonderful trick to learn.”

o William Green: “Munger compiled a list of twenty-five ‘psychological tendencies’ that cause our minds to malfunction, giving them evocative names such as Excessive Self-Regard Tendency, Twaddle Tendency, and Simple, Pain-Avoiding Psychological Denial.

o Munger: “When one sperm gets into a human egg, there’s an automatic shut-off device that bars any other sperm from getting in. The human mind tends strongly toward the same sort of result.”

o He urged his business partner, Warren Buffett, “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” Munger has shot down so many of Buffett’s investment ideas that Buffett refers to him as “The Abominable No-Man.”

o “What you don’t want to believe in is luck,” Munger suggests. “You want to believe in odds. If the odds are against me, I just don’t play.” His theory of life is “win-win.” As for his personal life, he insists, “if you want a good spouse, deserve one.” And that also applies to friends and neighbors as well as to business associates.

o One last insight from this unique thought leader: “The idea that life is a series of adversities and each one is an opportunity to behave well instead of badly is  a very, very good idea.”

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Charles Thomas Munger is an American billionaire investor, businessman, former real estate attorney, architectural designer, and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett has described Munger as his closest partner and right-hand man.

I highly recommend Poor Charlie’s Almanac: The Wit and Wisdom of Charles T. Munger.

To learn more about him, please click here..

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