5 lessons from Charlie Munger

The investing world lost a legend on Tuesday, November 28, 2023. Charlie Munger, who was Warren Buffett’s right-hand man, passed away at 99. He was just 33 days short of 100.

Anyone who’s ever sought wisdom about life and markets has surely benefited from Munger’s timeless, down-to-earth quotes and teachings. While we could spend months recounting all of the wisdom Munger offered to the world, I’ll share five of my favorite lessons from the late Vice-Chairman of Berkshire Hathaway. He was truly a legend in the investment world.

Lesson No. 1: Never stop learning.

In the 2017 Berkshire Hathaway Annual Meeting, Munger said, “I think that a life properly lived is just learn, learn, learn all the time.” “In all facets of life, including investing, always focus on developing and nurturing your skills. The best investors, no matter their forte, are on a never-ending quest for education and wisdom.”

“Every setback is an opportunity to grow, and a step closer to the goal. Each lump I take, I get wiser. Each triumph, I’m better. Never stop learning.”

Lesson No. 2: Keep reading.

Munger was an avid reader. In his book Poor Charlie’s Almanack, he wrote, “In my whole life, I have known no wise people who didn’t read all the time — none, zero.”

Wisdom is bred through constantly turning pages. Our minds are sponges, soaking up precious tidbits of information that shape our perceptions. As it relates to investing, there’s no quicker way to sharpen your toolkit than by continuously reading subject matter that inspires you. Learn from past traders and investors and plot your own journey.

“If you’re into macro trading, read Stanley Druckenmiller. If you’re into long-term investing, learn about Warren Buffett and Peter Lynch. No matter what you read, just keep reading.”

Lesson No. 3: Have a long-term mindset.

Munger put a lot of focus on the long-term mindset… going for the big buck rather than the quick buck.

“The big money is not in the buying and selling, but in the waiting.” That passage excites me every time I read it.

It’s true. Every single monster-winning stock he ever had took years of simply holding. I know of several stories of growing a very large stock position from very little by doing absolutely nothing. Have a long-term mindset.

Lesson No. 4: Perfect your “fastball.”

“If your curveball stinks but your fastball is promising, don’t spend extra time developing the curveball. Instead, master what you’re excelling at, the fastball.” Munger stated: “Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.”

That’s powerfully true. If your passion is dividend investing, focus there. If it’s trading options, more power to you.

If you’re constantly hunting for the next big 10-bagger, concentrate on the best growth businesses growing earnings year after year. Perfect your investing fastball.

Lesson No. 5: Give the gift of knowledge.

We only have a select amount of time on this earth. Why not spend every day helping others?

Charlie put it simply, “The best thing a human being can do is to help another human being know more.” Give the gift of knowledge.

That is what I have strived to do in writing my columns since 2006. Giving information is great, but offering insights that will make you a better investor is the best value I can ever offer. Hopefully, I’ve passed on a little knowledge over these years.

Wall Street and the world lost an investing legend, but Charlie Munger’s teachings will empower investors for generations. Charlie exemplified a life dedicated to continuous wisdom. We should all strive to do the same. Thanks for reading.