Top investing advice from Charlie Munger (he served as vice chairman of Berkshire Hathaway) as summarized in the Poor Charlie’s Almanack:

Learning # 1

Try to be consistently not stupid.Stay in your circle of competence. Avoid investing in areas and companies that you don’t understand. Very simple yet profound advice.

Learning # 2

Lollapalooza Effect: When outcome is much larger than the sum of the parts. Here 1+1 = 3

Coca Cola is great example of this effect with Great Product + Clever Marketing + Stimulants + Availability + Social proof

Learning  # 3

Learn from other Peoples’ mistakes. Making mistakes yourself is like making yourself miserable! So study history and other highly successful investor and their books. Charlie and Warren climbed the shoulders of Ben Graham and Phil Fisher (Climb the shoulders of the giants)

Learning # 4

Become a multidisciplinary expert with knowledge of business, economics, physics, chemistry, maths psychology, history etc. Company, business environment and economy make a complex system to evaluate. Remember the man with hammer syndrome where this person sees every problem as nail and hammer is the only tool in his kit. Investor needs a good toolkit and for this he has to read a lot!

Learning # 5

Checklists for investing is powerful way to ensure all the bases are covered. Ten areas comprehensively cover various aspects before making any investment are:

Risk Management, Independent assessment, Preparation, Intellectual Humility, Analytic rigor, Allocation, Patience, Decisiveness, Focus and Change

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