Charlie Munger was a legendary investor, thinker, and philanthropist. He passed away in late November 2023, leaving behind a legacy of wisdom and generosity.
To honor his life and learn from his insights, I decided to immerse myself in his writings and speeches. I bought the book, which I intend to study and revisit throughout the year. I also consumed various articles, podcasts, and interviews featuring him.
I'm fascinated by his approach to life, his endless wisdom, and his infectious curiosity. I got so inspired that I wanted to share my thoughts and notes on the lessons Charlie taught us.
The following notes are very raw. Excuse my grammar, punctuation or any other mistakes. Please, focus on the substance of the ideas.
I want to make it clear that most of the paragraphs below are my thoughts around the ideas of Charlie Munger. While I have been inspired by his wisdom, most of the writing below is a derivative of his ideas. It’s important to give credit where it’s due, and I encourage you to explore Charlie Munger’s work further.
Before I forgot - this is a living article, which I'll be updating regularly with new quotes and ideas I stumble across during my exploration of Charlie's legacy.
Enjoy.
Just avoid stupidity
The first one is to try to the best of your abilities to avoid stupidity.
Charlie often refers to that idea as "having a common sense".
Another connected idea is the principle of inversion. Thinking about how not to fail in life is much more productive and safe in the long run than figuring out creative ways to win.
Ask yourself what should you avoid at all cost?
Focus on doing the right thing. One step at a time.
Here are some examples from real-life situations of what to avoid and what's the right thing.
- Avoid: Dress like a weirdo. The right thing: Dress casually, less colors, less materials, layering.
- Avoid: Too much processes and tools in order to stay productive. The right thing: Just have an inbox and four lists - to do today, to do someday, goals and active projects.
- Avoid: Quick dopamine, short-form content, doom scrolling. The right thing: Read books.
- Avoid: Trying to game people. The right thing: Participate in win-win transactions.
It’s all common sense. But because so many people don’t do it, it’s basically uncommon sense.
“Figure out what works and do it. Figure out what doesn’t work and avoid it.” - Charlie Munger
Know your circle of competence
There are things you know and things you don't know. Things you're good at and things you're (still) not good at.
It's a very simple idea. You should avoid doing things you have no expertise at and do only the ones you know how to do. Again - common sense.
But what about the gurus who say, “You can do anything you set your mind to”? Are they lying?
No, they're not lying. You can do anything you set your mind to, indeed. But you can't do everything, and you certainly can't do anything at any given time. It's a subtle, but very important distinction.
The circle of competence (and its counterpart, the circle of incompetency) should be thought of in terms of the current moment in time. That's crucial. You may wish that you could run an ultra marathon tomorrow, without having any preparation or previous experience. The gurus may very well say that you can do anything you set your mind to, even that. But the chances to finish the marathon are close to zero, no matter how dedicated and motivated you are. It's outside of your circle of competence now. You have to have the patience and the discipline to expand the circle of competence in that direction (winning an ultra-marathon).
That is a process in itself.
Always think about your competence in terms of where you are in life at that given moment. Operate within that circle, but always expand it in the directions you want to.
Focus on what's durable
Many times in many conversations and interviews Charlie mentions that one of the most important aspects of every business if for that business to have a moat. In simple words, that means having some feature or trait that is very, very, very hard to duplicate.
For Nike, it's their brand. For Coca-Cola, it's their distribution chanels. For Amazon, it's their reach.
The important thing here is that having a good, solid moat, makes the business basically unbeatable and highly durable.
That's also a solid principle to integrate in your life.
Focusing on things that are durable in life, means doing things that are sure to work in the long run. Such as investing some amount of money every single month for long enought time to take advantage of the compounding effects. Or picking a diet that's sustainable in the context of your daily activities and busyness. Or engaging in learning disciplines that have been around for centuries and are also going to be around forever - like phisics, math, biology, etc. Or doubling down on algorithms and building software architecture that's always going to be the fundamental knowledge of creating software, no matter the technology.
All of these things are durable, long-lasting and effective no matter the context.
The lindy effect
The Lindy effect (also known as Lindy's Law) is a theorized phenomenon by which the future life expectancy of some non-perishable things, like a technology or an idea, is proportional to their current age. Thus, the Lindy effect proposes the longer a period something has survived to exist or be used in the present, the longer its remaining life expectancy. - Wikipedia
In other words, the more something non-perishable lives, the more we can expect it to live in the future.
It's a very simple mental model, which you can apply when making decisions of whether or not something is worth your attention.
Again, when we see things from that perspective, learning algorithms is a wise move. Also, using Vim, but I'm not going to go into that now :)