Charlie Munger Investing Strategy: An Essential Investment Mantra

• 5 June 2020 | 1982 Views | By Mint2Save

Talk about some of the most renowned personalities in the field of investments, and you surely cannot miss the magnate Charlie Munger! You may recognize him as the vice-chairman of the very renowned Berkshire Hathaway, alongside Warren Buffet. 

But apart from this he also has served as the Chairman of Daily journal and the director at Costco wholesale. He is described as Warren Buffet’s right hand. Not only has he earned the role of a successful investor in the United States, he, like Buffet, but is also an active philanthropist and has contributed millions to the welfare of various sectors. 

With such high recognition and status symbols, we surely have a lot to follow and learn from this experienced chap.

Charlie Munger has addressed a gigantic crowd on several occasions, has also given lessons and written some of the most popular words of wisdom. His words and actions are highly appreciable in the world of investments. People do not blindly admire this man, after all!

Why is Charlie Munger worth so much less than Buffett?

Charlie had tried his luck before being associated with Warren Buffet. The investor first had attempted to establish a firm named Wheeler, Munger and Company in partnership with Jack Wheeler. The company shut down after gaining loss of almost 32% and 31% in two consecutive years.

What stocks does Charlie Munger own?

Today, Charlie owns just three investments, namely Costco, Berkshire Hathaway and an investment that is in partnership with Li Lu. He has set his foot in a lot of domains and hence the investment he has made in, the companies range from a lot of varied sectors.

Today, we have formulated some of the chosen words of wisdom by him. The Investment Mantra by Charlie Munger is a perfect treat to all those who wish to learn and invest in any business. Because the experience and his billionaire status surely is no secret to the globe.

Investment Mantras 

His own system of Human Psychology 

When one talks about Charlie Munger, the very next second, you are bound to remember his so-called alter ego Warren Buffet. With both the individuals having many similarities and differences, they always compliment each other. Warren buffet has considered him to be his right hand.

Read about Warren Buffett’s Top Investment Advises

They may not always agree over some facts and ideas, but still, they walk parallel with unmatchable rapport in their work. 

For instance, Buffet is a purely dedicated soul to investment and philanthropy. As for Munger, he likes to jump in matters concerning science, psychology, philanthropy, architecture all with equal interest as in finances and business.

He thoroughly takes an interest in psychology to the extent that without taking much interest in academic textbooks, he developed his psychology system. He has a keen interest in these matters and is curious to point out different and unique ideologies such as finding the similarity in humans and ants!

What are the Best Investment Strategies?

When in doubt, do not opt-out

When a person is willing to invest, any promising option will appeal to him to be the right choice for him. The pros and cons are often neglected in that. We all wish to eliminate the annoying, painful process to screen through every minute aspect of the business you want to invest.

According to Munger, it is essential and utmost important you clear all the doubts and uncertainties that an individual might have before investing and regretting later. The solution to any problem exists, and we must get to the solution and find the answer by ourselves.

When one invests his money, certain aspects are put into that rented sphere. To ensure safety, you must be clear and concise about the minute functionality of that business. That means you should circumspect the industry and have as many doubts and clear them.

The most dangerous of all the seven sins

These tycoons of investors say that it is often the envy that drives the world. While we may be working well, the moment we see someone making a penny more than us, all our efforts are brought to vain. We think to follow their footsteps and later end up criticizing what we have already come through.

Greed is often caused due to envy.

While as an investor, these types of acts can drag you to the extreme bottom. It is imperative to carry your mind and logic wherever you try to lead, for envy and greed will not fill up your pockets or build your reputation.

Both the personalities surely do agree affirmatively on this point. Often these factors may put us down, and investors suffer a significant loss in the hope of earning an inch extra profit then they’d been receiving. With the only reason as to compete and get the same results as that of their fellow mates or any of their competitors.

Use and abuse of the incentives 

One of the most dangerous things an investor will be dealing with is the incentives. When you wish to invest in a business, there are many factors to look at. The temptations of people and motives of the company, only after proper investigation and assurance it is recommended to invest in any sort of industry.

The incentives are a boon or a curse to your investment, and only the proper use of them will lead you to profit. Else, the loss scenario will not be very far for you because it is the incentives that will stick to the labor associated with the project.

The time to change the deep-rooted beliefs

We often let emotions dominate practical decisions. They say when you are willing to invest in an organization, you should take the other way around. Gather facts and data that will prove the organization’s terrible to invest your money in.

Even if after putting all the bars, you still feel the organization’s good enough. There may be a possibility of setting your thought in this investment you wish to join. When we let go of the beliefs, we always have stuck to, and we’ll open the plethora of opportunities that might be awaited.

Charlie has very rightly put this idea of changing the old beliefs concerning time. The idea that worked in the past may not work today. Thus sticking to old thoughts in new times will not lead you to any profitable business.

Charlie Munger is not only well known for his fantastic net worth. Further, his great wisdom and wise financial lectures have helped a lot of people. They find it efficient and easy to abide by the great ideas this man has to offer them.

What is the Best Investment Strategy for 2020?

The year 2020 has brought a tremendous change worldwide, and business and investments have also not been able to hide from its targets. While such situations do exist, Charlie has even got some words of wisdom for such a crisis.

He says that the idea that worked ten years back doesn’t need to work today. You must always break the plan and check on every possibility of it working in the present situation. Also, the rapidly changing world demands you take into consideration all the arguments.

A hurry is never a wise option for an investor. It would be best if you never jumped to conclusions without a proper investigation. However, it is also expected to act quickly whenever required. There are many opportunities, and it is guaranteed you’ll get yours. Act rapidly in that time to grab it.

It is of utmost importance to know when you are wrong and to avoid further losses, sell the investment, and quit. He has rightly quoted that even 90% loss is better than 100% loss. A losing position shall be exited before it’s too late.

Conclusion

Charlie Munger is one of the most renowned billionaires in the United States that is a famous investor and philanthropist. His lessons have helped a lot of people to invest with more decision making and later, which results in higher profit.

He is quoted as the right hand of Warren Buffet. They both are cited as one of the leading men in investment with the base of their company Berkshire Hathaway. The company has been in the limelight for the wonders it does. The high revenue they get and the recognition it has earned.

Charlie Munger has been often regarded as an excellent source to turn for getting the best tips on investing in any business. He’sHe’s known to share his experience and express his opinions and thoughts on various subjects that interest him.

The mantras that Charles says to adhere to are not very difficult or huge strictly. Simple yet most effective mantras he quoted that will help you get the best return out of the investment. Also, his interest has led him to invest in a lot of domains of industries.