5 Smart Money Lessons From the Investing Life of Charlie Munger

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e else. You begin to follow the crowd. And when you begin to follow the crowd, you start losing.</p><p id="dd59">There are 3 hedges in investing to stand out. You either be first, be best, or be different. Hedge funds invest millions of dollars into being first. They want the fastest tech so that when something starts moving, they can jump in first. If you are not on that level, you can’t be first. Just forget it.</p><p id="11f4">The second is to be best, which is mostly based on track record. Very few people can boast of that. And of course, Berkshire Hathaway, which Charlie Munger was second in command was considered the best in the last few decades. But before then, they were different.</p><p id="3d0f">Their investing strategy was to buy good companies that would stand the test of time and never sell. They stuck to that strategy and it made them super-rich. Maybe the long-term view also gave them a long life.</p><p id="7862">The lesson here is not to copy their investing strategy but to have your strategy and stick to it. Sit down to craft a strategy that will work for the long term and stick to it.</p><h2 id="6a14">2. Understand What You Are Investing In</h2><p id="42f8">Berkshire Hathaway buys businesses. I like how they don’t call them “companies” or “startups”. They didn’t invest in Apple (for example) until they understood the business. Many would say that they were late on that. But I

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think they got in at the right time.</p><p id="5fcf">Today, there are people investing in REITs, crypto, ETFs, and so on, who don’t know what they are buying. They don’t understand what they are investing in. There are people who own bonds and don’t understand how the bond market works.</p><p id="04d4">Many people don’t know that bonds are paid with taxes. So if you own a lot of bonds and you are against the government boosting their revenue through taxes, you are contradicting your finances. Yes, it is possible to boost government revenue without taxes, but the world has gone too far in the opposite direction.</p><p id="583a">Know what you are buying. Know what you are selling. Charlie Munger knew what he was buying. And he rarely bought anything to sell it.</p><h2 id="b51f">3. Don’t Copy Others</h2><p id="473f">There will always be a new thing. There will always be a new trend. There will always be the latest shiny object making millions for investors. If you don’t have a process or strategy for dealing with such things, you will lose money.</p><p id="e610">Charlie Munger was known to always bash Bitcoin.</p><blockquote id="d518"><p>P.S. Continue reading to Part 2 of this article here — <a href="https://www.richculture.co/p/5-smart-money-lessons-investing-life-charlie-munger">https://www.richculture.co/p/5-smart-money-lessons-investing-life-charlie-munger</a></p></blockquote></article></body>

Strategic insights

Last month, the great investor, Charlie Munger, who is a long-time partner of Warren Buffett died at the age of 99. The first thing you must have noticed is that he lived long. And if you are familiar with him, you’ll notice that it isn’t just because he had money for the best healthcare. He was a very practical and cheerful soul. He and Buffett were good at cracking jokes and laughing their brains out.

There were a few things that made him a legendary investor that we can all learn from. Here are 5 of them:

1. Have a Strategy and Stick to It

Mike Tyson has a famous saying that everybody has a plan until they get punched in the face. The discipline to stick with your strategy when everybody is making more money. That is very rare in today’s investing world.

The big problem of investing without a strategy is that when things go south, you panic like everyone else. You begin to follow the crowd. And when you begin to follow the crowd, you start losing.

There are 3 hedges in investing to stand out. You either be first, be best, or be different. Hedge funds invest millions of dollars into being first. They want the fastest tech so that when something starts moving, they can jump in first. If you are not on that level, you can’t be first. Just forget it.

The second is to be best, which is mostly based on track record. Very few people can boast of that. And of course, Berkshire Hathaway, which Charlie Munger was second in command was considered the best in the last few decades. But before then, they were different.

Their investing strategy was to buy good companies that would stand the test of time and never sell. They stuck to that strategy and it made them super-rich. Maybe the long-term view also gave them a long life.

The lesson here is not to copy their investing strategy but to have your strategy and stick to it. Sit down to craft a strategy that will work for the long term and stick to it.

2. Understand What You Are Investing In

Berkshire Hathaway buys businesses. I like how they don’t call them “companies” or “startups”. They didn’t invest in Apple (for example) until they understood the business. Many would say that they were late on that. But I think they got in at the right time.

Today, there are people investing in REITs, crypto, ETFs, and so on, who don’t know what they are buying. They don’t understand what they are investing in. There are people who own bonds and don’t understand how the bond market works.

Many people don’t know that bonds are paid with taxes. So if you own a lot of bonds and you are against the government boosting their revenue through taxes, you are contradicting your finances. Yes, it is possible to boost government revenue without taxes, but the world has gone too far in the opposite direction.

Know what you are buying. Know what you are selling. Charlie Munger knew what he was buying. And he rarely bought anything to sell it.

3. Don’t Copy Others

There will always be a new thing. There will always be a new trend. There will always be the latest shiny object making millions for investors. If you don’t have a process or strategy for dealing with such things, you will lose money.

Charlie Munger was known to always bash Bitcoin.