Charlie Munger’s wisdom

Charlie Munger, Warren Buffett’s business partner, now aged 96, gave some brilliant advice to investors when speaking last week at the 2020 AGM of the Daily Journal Annual Meeting (he is the chairman).

​Don’t play in game where you are stupid
Q. How do you research companies?
A: Of course, if it’s complicated technologically I tend to leave it to others. There may be an occasional variation in that. But basically, I just don’t do it. I want to think about things where I have an advantage over other people. I don’t want to play a game where the other people have an advantage over me.
If you have a pharmaceutical company, and you’re trying to guess what new drug is gonna be invented, I’ve got no advantage. Other people are better at that than I am.
I don’t play in a game where the other people are wise, and I’m stupid. I look for a place where I’m wise and they’re stupid. And, believe me, it works better!
God bless our stupid competitors. They make us rich.
That’s my philosophy.  I think you have to know the edge of your own competency; you have to kinda know that this is too tough for me, I’ll never figure this out. I’m very good at knowing when I can’t handle something.

Do well by doing good
I’ve never be associated with a company that works harder than Costco to make sure the customers are served well. I just love success that occurs that way.
I hate success where you are deliberately trying to cheat people or sell them something that’s not good for them.  I would choose that approach even if it made less money. In fact, I think you make more.
It reminds me of Warren Buffett’s favourite saying,

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