An Homage to Charlie Munger on his 100th Birthday!
An Homage to Charlie Munger on his 100th Birthday!
Charlie Munger would’ve turned 100 years old today.
Unfortunately, he is no longer with us to celebrate that special day.
But as he influenced me, probably many of you and millions out there, let’s revisit some of his timeless principles.
When I think about Charlie Munger, some things instantly cross my mind:
Psychology and Mental Models
Avoiding Stupidity
Concentrated Investments
Wit
To save you some time, I won’t copy it all in here or rewrite it a little.
Instead, here are the links to many of the things I already wrote. See what you find the most interesting:
1. Psychology and Mental Models
“What you need is a latticework of mental models in your head. And, with that system, things gradually get to fit together in a way that enhances cognition.”
- Charlie Munger
Charlie Munger is famous for his Mental Model Approach. I wrote about it intensively in the past.
10 Mental Models of Charlie Munger:
The Transcript of his Legendary Harvard Speech “The Psychology of Human Misjudgment”:
Charlie Munger’s Investing Checklist:
“No wise pilot, no matter how great his talent and experience, fails to use a checklist.” - Charlie Munger
Charlie Munger loves to use checklists. This one was originally published in the book “Poor Charlie’s Almanack.” It’s not your typical checklist, but still a very valuable insight:
New Year Sale:
I’ve received some messages asking if I could make a small New Year sale so that more of you can get a headstart at crushing your Education-Related New Year Resolutions.
Since I don’t want to be responsible for you failing your New Year Resolutions, here’s a 20% Discount on the Annual Plans (valid for the first January week):
https://www.danielmnke.com/9c80d375
Note: This will be the last discount for the coming months. That’s only fair to existing members of the community.
Happy New Year!
2. Avoiding Stupidity
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
- Charlie Munger
This principle of Charlie Munger touches on a key aspect of value investing - compounding. Munger was always focused on compounding capital. To do that, he had to be downside-focused.
There’s nothing worse than permanently losing money and hurting the compounding process.
On my Investing Resources Page (where all the linked articles here are from), I have a 7-page paper from Charles D. Ellis called “The Loser’s Game.”
It covers the best analogy of avoiding standard stupidities that I’ve yet read. It’s about the difference between professional tennis and amateur tennis.
In professional tennis, 80% of the points are won by extraordinary plays. In amateur tennis, 80% of points are lost due to stupid mistakes. I highly recommend the short read:
3. Concentrated Portfolios
“A lot of people think that if they have a hundred stocks, they’re investing more professionally than they are if they have four or five. I regard this as insanity.”
- Charlie Munger
Charlie Munger coined the term “diworsification” based on the term diversification, which describes the strategy of mixing a wide variety of investments within a portfolio to reduce portfolio risk.
Charlie Munger thought about it differently: Why should I put money into my 10th best idea?
He preferred to hold 3-5 stocks. At some point in his life, all his money was in a single company. Buffett and many other famous investors did the same when they managed their own money.
4. Wit
Last but not least, everyone who watched the Berkshire Shareholder Meetings, or any Munger interviews for that matter, knew Munger for his wit and wisdom. His short, well-considered, and funny answers.
Here is one of my favorite compilations:
Here’s the link to the New Years Discount again:
https://www.danielmnke.com/9c80d375
My Investing Checklist System (Free for Paid Members):
https://danielmnkeproducts.com/
My Portfolio:
Latest Research:
