Charlie Munger had a guiding philosophy on checklists: “No wise pilot, no matter how great his talent and experience, fails to use his checklist.”
His investing checklist reflects that same discipline:
- Risk – begin every evaluation by measuring risk, especially reputational
- Independence – only in fairy tales are emperors told they are naked. You need independence of thought to ensure you aren’t just following the crowd blindly.
- Preparation – the only way to win is to work, work, work, and hope for a few insights.
- Intellectual humility – acknowledging what you don’t know is the dawning of wisdom
- Analytical rigor – the scientific method and effective checklists minimize errors
- Allocation – proper allocation of capital is the investor’s number one job
- Patience – resist the human bias to act
- Decisiveness – when the right circumstances present themselves, act with conviction
- Change – accept unremovable complexity
- Focus – keep things simple and remember what you set out to do
Easy to say. Really hard to do.
But underneath it all, Munger’s approach distills to four things: extreme preparation (work, work, work, work), consistent discipline, patience, and decisiveness.
Applies just as much to investing as it does to life.
A Learning a Day 