Speaking at last week's annual meeting of the Daily Journal Charlie Munger invited shareholders to remain sane and rational, and not only with regard to share selection, but in all aspects of life.
I've transcribed his words:
Part of the reason that some of the companies I’ve been affiliated with that have been successful, it’s not that we’re so smart, it’s that we stayed sane. A lot of what goes on is absolutely nuts.
One of my favourite tricks is the inversion process. To give an example: When I was a meteorologist in WW2 they told me how to draw weather maps and predict the weather. But what we were actually doing is to clear pilots to take flights. And I just reversed the problem, I inverted.
I said suppose I wanted to kill a lot of pilots, what would be the easy way to do it? I soon concluded that the only easy way to do it was to get so much ice on the planes that they couldn’t handle it or to get the pilot to a place where he’d run out of fuel before he could safely land [He was stationed in Alaska].
So I made up my mind I was gonna stay miles away from killing pilots by either icing or getting them sucked into conditions where they couldn’t land. I think that helped me be a better meteorologist – I just reversed the problem.
And if somebody hired me to fix India I would immediately say, ‘what could I do if I really wanted to hurt India?’ I’d figure out all the things that would most easily hurt India and then I’d figure out how to avoid them. Now, you’d say it’s the same thing, just in reverse. It works better to frequently invert the problem…You can help India best if you really understand what will really hurt India the easiest and worst.
Every great algebraist inverts all the time because the problems are solved easier.
Young [people] should do the same thing in the ordinary walks of life. You don’t think of what you want, you think of what you want to avoid. When you’………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Prof. Glen Arnold
I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author.
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