Happy New Year, 2023!

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Charlie Munger is turning 99 tomorrow. He was born on 1 January 1924. This article is to celebrate the new year 2023 and see what we can learn from him.

Treat this article as my New Year’s gift to you 😉

Who is Charlie Munger?

Charlie is the vice chairman of Berkshire Hathway. And the right-hand man of Warren Buffett.

8 Tips on Life and Investment from Charlie Munger

1. Beware of ingesting chemicals, envy, and resentment

In a speech delivered to Harvard School on June 13, 1986, Charlie quoted John Carson’s prescriptions for a guaranteed misery in life, and he said:

“What Carson said was that he couldn’t tell the graduating class how to be happy, but he could tell them from personal experience how to guarantee misery. Carson’s prescriptions for sure misery included:

1) Ingesting chemicals in an effort to alter mood or perception;

2) Envy; and

3) Resentment.”

Charlie expanded on point number 1, where two of four of his closest friends in his youth died with alcohol as a contributing factor, and the third is living alcoholics (if you can call that living, Charlie said).

Charlie said that addiction could happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken.

Envy and resentment are two other areas we must be careful of. Johnson says that life is hard enough to swallow without squeezing in the bitter rind of resentment.

Charlie also said he never cared about comparing his riches to others.

In the latest annual meeting of the Daily Journal, he said, “the world is not driven by greed. It’s driven by envy.” and “I have conquered envy in my own life. I don’t envy anybody.”

He has had a track record in interviews saying he always tries to avoid feelings of “envy and jealousy” in business as we will likely be making more biased decisions that can turn out poorly.

Avoiding envy, Charlie said in 2019, is one of the “simple” secrets to a happy life.

2. Do not be unreliable

We have to faithfully do what we are engaged in doing.

Be a reliable person.

We will be distrusted and excluded from the best human contribution and company if we are unreliable.

Charlie shared a story about his college roommate, who was severely dyslexic. But he is perhaps the most reliable man Charlie has ever known. He has had a wonderful life, has an outstanding wife and children, and is CEO of a multibillion-dollar corporation.

3. Don’t Give Up

Life will always have challenges.

Charlie said that a prescription for misery is to go down and stay down when we get our first, second, and third severe reverse in the battle of life.

There is a lot of adversity, even for the lucky and the wise.

So do not give up.

Image source: Eurosport

Roger Federer, one of the all-time tennis greats, has said that he always believes that if we are stuck in a hole and maybe things are not going well, we will come out stronger. Everything in life is this way.

4. Never stop learning

Are you a lifelong learner?

Charlie once said, “you’d be amazed at how much Warren reads- at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

He also said that he constantly sees people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines.

Never stop learning. We need to stay curious for a long, long time.

5.  Be Prepared for The Worst

“Over the past 50 years, we lived through the best time of human history. It is likely to get worse. I recommend you to prepare for worse because pleasant surprises are easy to handle.” – Charlie Munger.

It is relatively easy when good times happen, but when the good times happen, people often forget to prepare for the worst.

So at all times, we should be prepared for the worst.

6. To get what we want, deserve what we want

Charlie Munger said that the best way to get what we want is to “deserve what you want.”

We should deliver “what you would buy if you were on the other end.”

Not just wealth, but respect and trust.

To gain respect and trust, give respect and trust.

This is because people have a tendency to only care about themselves, rather than others.

Charlie Munger called this a “self-serving bias,” – which is not helpful in life.

He says that most successful people in sales or any relationship aim to minimize their self-serving bias while understanding what matters to others.

Always think about what is in it for the other party. As Benjamin Franklin said, “If you want to persuade, appeal to interest, not reason.”

7. Go after mouthwatering opportunities

“It takes character to sit with all that cash and to do nothing. I don’t get to where I am going after mediocre opportunities.” – Charlie Munger.

It is common that when we have cash, we get tempted to go after mediocre opportunities.

To avoid that, we must be rational enough to ascertain what is a mouthwatering opportunity and what is a mediocre one.

8. All intelligent investing is value investing

There is no need to differentiate between value and growth investing. Because both are the same.

All investors invest in making money.

When we invest in any company, we consider its growth for the valuation.

Ultimately as Charlie said, all intelligent investing is value investing.

In summary

Beware of greed. envy and resentment. Be a reliable person, never give up and never stop learning.

Go after mouthwatering opportunities while being prepared for the worst.

To get what we want in life, in 2023, be good enough to deserve it. See things from others’ points of view.

And lastly, invest well.

Image source: VIM

Wishing you a good 2023, and may the market be in your favor!

Disclosure:

I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer:

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