Tuesday, February 15, 2011

Lessons from the Legends: Charlie Munger

In my mind, Charlie Munger is likely the second smartest investor in the world. He is the man that really brought a qualitative side of analysis into Warren Buffett's previously pure quantitative mindset.

He gives some simple but valuable insights in this video. You owe it to your future self and family to watch it!!



As he outlines, their approach to finding value is as simple as 4 steps:

Invest only in businesses:
1. You are capable of understanding
2. With intrinsic characteristics that give it a durable competitive advantage
3. With management in place who have a lot of integrity and talent
4. At a price that makes sense & gives margin of safety

20 comments:

  1. i tho this was common sense, i mean why do people simply assume that they will become millionare in no time with investments

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  2. id like to ask him about blogging ;)

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  3. Very interesting video scott. Looking forward to your next post.

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  4. profound statements. good video, will recommend it!

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  5. ive had marginal success with my investments and any knowledge to help me protect my principal is welcome!

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  6. Pretty interesting. This will help me in the future.

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  7. So you pretty much gotta do your homework if you're going to invest.

    The last point seems to be one of the biggest to me. Investing seems to be all risk.

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  8. yeah i was gonna say the same thing as niko. investing in something shouldnt happen over night. it should be a long drawn out process. and on top of that, there should be a fall back in case things go wrong

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  9. really enjoyed listening to him. its nice to hear someone with a different angle on things once in a while.

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  10. Great post. Some of it seems like common sense, like the, with management in place who have a lot of integrity and talent, but I guess if it was it wouldn't need to be said. Great advice none-the-less though. Looking forward to your next post.

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  11. Could use more help with my investments, thanks.

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  12. very good advice, keep up the good posts.

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  13. @Niko: You're quite right, the price you pay is extremely important. If you pay too high of a price, the company it self can grow at an astronomical rate, but the price will go no where because it started off too high. Warren Buffett said somewhere (think it was in his partnership letters, but I can't recall right now) that the risk of an investment in shares lies mostly in the price you pay.

    @The Almighty Lewis: It really is common sense. Fortunately for us, as Munger said, the brainiacs think they need to complicate things and that gets them off track.

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  14. I was thinking about investing, but I didn't know much about it. I'll be sure to become a follower so I can gain a few more pointers. Love the background by the way!

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  15. Interesting stuff, I am looking at building some investments in the next couple years. Pretty much as soon as I get a full time job and can put aside money for it. Thanks for the tips.

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  16. He sounds like a smart guy, his name will certainly come in handy in the near future when I decide to explore lucrative investment opportunities.

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  17. THis is too much to take in. Kudos to you for such an in depth post.

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