Charlie Munger's Investment Wisdom: 5 Timeless Lessons From Warren Buffett's Ex-Business Partner For Building Wealth

Former vice chairman of Berkshire Hathaway Charlie Munger was a long-time business partner of Warren Buffett. The two turned a small textile business into a staggering $860 billion empire with investments ranging from the energy sector to software and beyond.

Munger’s pragmatic wisdom, sharp intellect, and unorthodox approach to decision-making have earned him a reputation as a sage in investment circles.

While he passed away in November, his investment lessons are timeless. "Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom, and participation," Buffett said on Munger's passing.

That is for good reason, too. Between 1958 and 2022, Berkshire Hathaway delivered annual returns of 19.8%, while the S&P 500's annualized return stood at 9.9%.

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1. ‘Big Money Is…In The Waiting'

Buffett and Munger are known for their long-term investment horizons. No wonder then that this is one of Munger's top investment advice.

"The big money is not in the buying or the selling, but in the waiting."

The "power" of compounding is an oft-repeated investment advice, and Munger lived by it.

2. Be A ‘Lifelong Self-Learner'

Another timeless Munger lesson is to never quit learning, no matter the age, success, or time. He believed learning is a lifelong process.

"Spend each day trying to be a little wiser than you were when you woke up. Acknowledging what you don't know is the dawning of wisdom."

Munger was a voracious reader and his interests included psychology, finance, philosophy, and letters from well-known investors.

3. ‘Buy Wonderful Businesses At Fair Prices'

Munger was not a believer in penny-pinching. He always recommended buying good businesses at fair prices.

"Forget what you know about buying fair businesses at wonderful prices. Instead, buy wonderful businesses at fair prices."

This lesson from Munger was so good that it rubbed off immensely on his partner Buffett, too, who went from buying the cheapest businesses he could find to focusing on the "wonderful" ones, like Munger.

4. ‘Invert, Always Invert'

The best way to solve a problem, according to Munger, is flipping it on its head.

"Invert, always invert: Turn a situation or problem upside down. Look at it backward."

Instead of trying to understand how to succeed, Munger would try to understand how to avoid failure.

"All I want to know is where I'm going to be wrong."

5. Stick To The Fundamentals

A book, clock and study essentials kept on a table | Image generated using Dall-E

One of the best ways to ignore market volatility and not be bothered by it is to invest in good businesses with strong fundamentals.

"Like the weather, I just ignore the weather. I just try to invest whatever capital I have as best I can and take the results as they fall. I just seize whatever opportunities I can and I hope I get my share."

Good businesses with strong fundamentals can withstand short-term market volatility.

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