The 21 Lessons From “The Tao of Charlie Munger”


I read The Tao of Charlie Munger book this weekend and following are my favourite lessons from it. It is a book that you can read in half a day.

  1. Focus on your circle of competence. I have written about it in LIL #3.
  2. Diversification makes no sense for someone who knows what they are doing. It is a protection against ignorance.
  3. You should bet heavily when odds are in your favour.
  4. Patience is the key to becoming a successful investor. I succeed because I have a long attention span.
  5. Overconfidence destroys even the smartest among all.
  6. Wait for the right opportunity. All of the humanity problem stems from the man’s inability to sit quietly in a room alone.
  7. Try not be stupid rather than trying to be intelligent.
  8. Fear is essential to make people work.
  9. A great business at a fair price is superior to a fair business at a great price.
  10. There is no master plan. You have to keep iterating and improving.
  11. Spend each day trying to be a little wiser that you were when you wake up.
  12. Good people find other good people.
  13. Know big ideas from different disciplines.
  14. Watch out for people who always confidently answer questions about which they don’t have any real knowledge.
  15. Admit your stupidity
  16. Specialization protects us from the competition.
  17. Live within your means.
  18. To be successful in something, we need to be passionately interested in it.
  19. If you don’t need something, you don’t have to buy it. Be frugal.
  20. Become a learning machine.
  21. In marriage, you shouldn’t look for someone with good looks and character. You should look for someone with low expectations.

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