Warren Buffett and Charlie Munger: Lessons from the investing legends

Warren Buffett and Charlie Munger are like the dynamic duo of investing. These guys have a wealth of knowledge and experience that is worth tapping into.

Lucky for me, I stumbled upon a fascinating podcast by Founders that discussed the incredible wisdom these legends have shared over the years.

Inspired by their insights, I thought it would be great to distil the essential takeaways and share them with you.

So, enjoy reading!

Life in general:

• To try to live your life free of mistakes is a life of inaction.

  
  

• If you get into the mental habit of relating what you are reading to the basic underlying ideas being demonstrated, you gradually accumulate some wisdom.

  
  

• I think people who multitask pay a huge price. When you multitask so much, you do not have time to think deeply about anything. You are giving the world an advantage you should not do. Everybody is drifting into that mistake. I did not succeed in life by intelligence. I succeeded because I have a long attention span.

  
  

• It is just that simple. We have had enough good sense to know that when something is working well, keep doing it. The fundamental algorithm of life: repeat what works.

  
  

• It is an inversion process. Start with failure, and then engineer its removal.

  
  

• I figure out what I do not like instead of figuring out what I like in order to get what I like.

  
  

• History allows you to keep things in perspective.

  
  

• Pretend that every single person you meet has a sign around his or her neck that says, ‘Make me feel important.’

  
  

• The difference between successful people and very successful people is that very successful people say no to almost everything.

  
  

• Life tends to snap you at your weakest link.

  
  

• We are here on earth only one time, so you ought to be doing something that you enjoy as you go along, and that you can be enthusiastic about.

  
  

• The problem is not getting rich; it is staying sane.

  
  

• Repetition is the mother of learning.

  
  

• Learning is not memorising information. Learning is changing your behaviour.

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Business and investing:

• The sign above the players' entrance to the field at Notre Dame reads ´Play Like a Champion Today.' I sometimes joke that the sign in Nebraska reads 'Remember Your Helmet.' Charlie and I are 'Remember Your Helmet' kind of guys. We like to keep it simple. You must structure your life and business to survive the inevitable bad decisions you will make.

  
  

• We make actual decisions very rapidly, but that is because we have spent so much time preparing ourselves by quietly sitting, reading, and thinking.

  
  

• We both hate to have too many forward commitments in our schedules. We both insist on a lot of time being available to just sit and think.

  
  

• I need eight hours of sleep. I think better. I have more energy. My mood is better. And think about it, as a senior executive, what do you really get paid to do? You get paid to make a small number of high-quality decisions.

  
  

• You can see the results of not learning from others' mistakes by simply looking at yourself. What little originality there is in the common disasters of humankind. Business failures due to the repetition of obvious mistakes made by predecessors, and so on.

  
  

• Berkshire was a small business at one time. It just takes time. It is the nature of compound interest. You cannot build it in one day or one week.

  
  

• In almost 60 years of investing, we found it practically useless to give advice to anyone.

  
  

• One of my favourite stories is about a little boy in Texas. The teacher asked the class, “If there are nine sheep in the pen and one jumps out, how many are left?” And everybody got the answer right except this little boy, who said, none of them is left. And the teacher said, “You don't understand arithmetic.” And he said, “No, teacher. You don't understand sheep.”

  
  

• I am very suspicious of the person who is very good at one business, who starts thinking they should tell the world how to behave on everything.

  
  

• Market forecasters will fill your ear, but they will never fill your wallet.

  
  

• We do not have any new tricks. We just know the old tricks better.

  
  

• Obsess over customers. Buffett said this about Amazon in 2012. Amazon could affect many businesses that do not think they will be. For Amazon, it is very hard to find unhappy customers. A business with millions and millions of happy customers can introduce them to new products; it will be a powerhouse and could affect many businesses.

  
  

• We should make a list of everything that irritates a customer, and then we should eliminate those defects one by one.

  
  

• Most companies, when they get rich, get sloppy.

  
  

• One of the models in my head is the 'Northern Pike Model.’ You have a lake full of trout. But if you throw in a few northern pikes, pretty soon there are not many trout left but a lot of northern pikes. Wal-Mart in its early days was the northern pike. It figured out how to better serve the customer and just galloped through the world like Genghis Khan.

Want a concise version of Charlie Munger’s 25 human misjudgements? Download here!