Charlie Munger’s 5 key investments to create wealth

The first thing you have to do is assert yourself, Munger teaches. The root of his wealth is hidden in these five investments.

On November 28, Charlie Munger passed away at the age of 99.

Charlie Munger is known as a legend in the investment world.

The company he ran with Warren Buffett, Berkshire Hathaway, became one of the four largest reinsurance companies in the world.

However, in her early years she had to pay for her children’s medical treatment, which plunged her family into poverty.

How did a penniless kid become an investment guru?

Countless people look to Munger’s life for the code of wealth.

Munger himself gave the answer a long time ago:

First, focus on doing a good job in the moment; Second, invest in your own future.

Munger’s lifelong wealth is hidden in these five investments.

The famous Chinese investor Li Lu had breakfast with Munger several times. At each appointment, Munger arrived early, took out a book or newspaper, and read quietly in his seat. This has always been Munger’s custom.

Whether on business trips or at meetings, he always carries a book with him, thinks: “As long as I have a book in my hand, I don’t feel like I’m wasting my time.”. Munger is known for his love of books, and children laugh at him like “the book with two legs”. He has read all kinds of books, from economics and investing to psychology and biology, and his knowledge of different fields has expanded his cognitive limits.

He enjoys reading biographies of famous people, and believes that he has benefited greatly from befriending “recent greats” such as Adam Smith and Benjamin Franklin.

This wide range of readings gives Munger insight into human nature and allows him to invest from a higher point of view.

In any sector, in the end what counts is knowledge.

The time you spend reading, the performance you will get from turning each page of the book, are shaping a better you.

Knowledge to make money is a shortcut that every normal person can take.

In the book “Poor Charlie’s Treasure Book”, the young businessman asked Munger: «What do I have to do, like you, live like a rich old man?»

Munger smiled and said It’s very simple, every day when you wake up, strive to be smarter than yesterday.

How can you be smarter than yesterday?

Indeed, if there is a “shortcut” to becoming more intelligent, I think it is reading.

The writer Mizuki Ran mentioned a “law of conservation of wealth.”

Wealth is an external manifestation, a “gain”, while our internal quality is a “virtue”.

The essence of wealth is the fulfillment of character.

Munger once bought a company with a partner, Glenn.

At that time, two elderly women owned bonds issued by the company.

Initially, it would have been easy for them to acquire these bonds at a price well below their face value.

But Munger insisted on paying them at par.

Then Glenn wanted to cash out his shares in exchange for cash because he was investing in another project.

Munger asked him how much he wanted.

Glenn thought about it and said $130,000.

Munger told him: «No, you have done the math wrong»

That is, Munger has always been upholding the principle of business: taking the right path, the broadest path.

If you often worry about taking advantage of yourself, clients don’t dare trust you; If you often dig a grave for colleagues, colleagues do not dare to cooperate with you.

People with bad character, even if they climb higher and farther, will fall one day.

One time, Munger was at the airport to catch a plane and, for some reason, the metal detector went off constantly every time he walked through it.

He had no choice but to return again and again to pass the security check.

With this delay, you couldn’t miss your flight.

But he didn’t yell at the staff or get in a bad mood. He rebooked his flight and waited calmly in the terminal.

This has always been Munger’s mentality: not to believe himself a victim.

He has hit many lows in his life, watching his 7-year-old son swallow his last breath from leukemia;

He has lost his left eye in an operation;

He also lived through the global oil crisis and the stock market crash, which caused the investment company he ran to lose more than half of its value.

Desperate times are enough to make a normal person break down.

However, Munger never felt sorry for himself, but instead poured out the complaints and bitterness in his heart, to get out of trouble step by step.

Because of this, after he hit rock bottom, Munger was able to meet one turning point at a time and grow wealth to a new height.

I can’t help but think of the two concepts mentioned by business consultant Liu Yun: “fragility” and “elasticity.”

Who will break first when a vase and a ball fall to the ground at the same time?

The answer is obvious.

Sometimes we are like vases, we cannot resist the ups and downs, we cannot bear the accidents.

As soon as we hit a setback, we are stuck at a dead end.

When we train ourselves to be a ball, we can bounce from the bottom no matter how many hammerings we have received or how many hardships we have suffered.

Author Peter Kaufman is an admirer of Munger.

He has collected hundreds of Munger’s speeches into a book that examines why he has been so successful in his life.

He compared Munger to the average investor.

Munger can talk to all types of investment gurus, not only about their operational concepts, techniques, but also to point out their strengths and weaknesses.

Furthermore, he did not fall into the mold of his predecessors, and established a set of “value judgment” investment systems for himself.

He has developed a hundred thinking models to deal with all kinds of problems in his work.

Peter once asked him: Why do you keep learning so much?

The world progresses every second, and your stagnation is a kind of regression.

If you go to work and try to fish in the water, you will waste your own martial arts and become more and more mediocre.

If you know how to hone your skills, so that you become someone at the top of the industry, your value will increase.

American computer experts, the Dreyfus brothers, once proposed a “Dreyfus model”:

Competence in a professional skill can be achieved through five steps: beginner, advanced beginner, competent, proficient and expert.

If you want to make money, you first have to make it worth it.

Confucianism recognizes that there are “five relationships” between people, for example, ruler and subject, father and son, husband and wife, brother and friend.

Of these five relationships, three are family relationships.

In the opinion of the Chinese, family harmony is the key to prosperity, which is why family relationships are highly valued.

Munger agrees with this concept, as he stated at the Polkshire Hathaway shareholder meeting:

He has the habit of sitting at the table with his family, no matter how busy he is.

At the table, Munger told stories and shared anecdotes about his life in colorful ways to improve his relationship with his family.

When he travels alone, he always travels in economy class, both on business and personal trips.

But when he travels with his wife, Nancy, he takes his own private jet and takes the utmost care of them.

Explain: «My wife has given me a lot in her life by raising so many children, and it is not good, so I have to take good care of her».

Nancy was also touched by Munger’s care.

When people reach a certain age, they realize that running a good family is making money.

When you work overtime, you can stay to eat, when you are sad, you can be comforted, and when you are sick, you can be busy.

With such strong support, we can focus on doing good work and growing the business.

Harvard University has been running an experiment for 78 years to study: what kind of people are most likely to become achievers in life?

In the end, it was concluded that those who scored high on “close relationships” had a much higher average annual salary than those who scored low.

The family is good, the career is good.

Having a partner who helps us through thick and thin is the greatest wealth of our lives.

Munger said: “My sword is passed on to those who can wield it”.

Anyone would want to take this sword.

But what kind of people can?

I think those who think about getting rich overnight will end up losing it.

Only those who have invested their lives in themselves and cultivated deeply can wield this sword.