8 Lessons from Charlie Munger s Approach to Business and Investing

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1. Inverted Thinking: Munger's process of inverted thinking involves identifying the threats to a business and then inverting them to find solutions. This process helps to identify and eliminate potential problems.
2. Simplicity: Munger valued simplicity and would often respond to complex situations by saying "too hard." This approach emphasizes the importance of simplicity and avoiding overcomplication.
3. Expensive and Sticky Air: Munger's concept of "unique, expensive, and sticky air" describes the perfect business, which has a unique brand, high profit margins, and sticky customer relationships.
4. Hiring Owners: Munger believed in hiring "wonderful people" who act like business owners, with a long-term perspective and a commitment to making decisions that benefit the company.
5. Brand: Munger emphasized the importance of brand and saw the companies they invested in, such as Apple, as having a strategic moat due to their strong brands.
6. Living within your means: Munger's rule number one is to spend less than you earn, which is essential for maintaining financial independence.
7. Learning from the mistakes of others: Munger and Warren Buffett are known for learning from their own mistakes and those of others, which has helped them avoid costly errors.
8. Knowing when enough is enough: Munger's approach to investing and business is characterized by a focus on simplicity and avoiding overcomplication. He knew when to say "no" to opportunities and focus on what was truly important.

These lessons provide valuable insights into Charlie Munger's approach to business, investing, and life, and can be applied to one's own personal and professional life.

Source: Charlie Munger Changed My Life [8 Lessons], Alex Hormozi