20 Principles from Charlie Munger’s Playbook

In the world of investing, Charlie Munger’s insights stand as timeless beacons of wisdom. Here are some of my favorite lessons from the legendary investor:

1. Investing Simplicity: “Investing is where you find a few great companies and then sit on your ass.”
2. The Quest for Independence: “Like Warren, I had a considerable passion to get rich, not because I wanted Ferrari’s — I wanted the independence.”
3. Wisdom Trumps Brilliance: “You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.”
4. The Virtue of Simplicity: “One of the greatest ways to avoid trouble is to keep it simple… the system often goes out of control.”
5. Temperament Over IQ: “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.”
6. The Power of Humility: “Knowing what you don’t know is more useful than being brilliant.”
7. Long-Term Vision: “If a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result.”
8. Quality Over Price: “A great business at a fair price is superior to a fair business at a great price.”
9. Constant Learning: “You’d be amazed at how much Warren reads — at how much I read. They think I’m a book with a couple of legs sticking out.”
10. Sharing Knowledge: “The best thing a human can do is to help another human being know more.”
11. Deserving Success: “To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people.”
12. Daily Improvement: “Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”
13. Choosing a Spouse: “How to find a good spouse? The best single way is to deserve a good spouse.”
14. Three Baskets for Investing: “We have three baskets for investing: yes, no, and too tough to understand.”
15. Inversion Technique: “Invert, always invert: Turn a situation or problem upside down. Look at it backward.”
16. 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 intelligent.”
17. Excellence in the Present: “It’s the work on your desk. Do well with what you already have and more will come in.”
18. Against Herd Mentality: “Mimicking the herd invites regression to the mean.”
19. The High Road: “Always take the high road, it’s far less crowded.”
20. EBITDA Reality Check: “Every time you hear EBITDA, just substitute it with bullshit.”