Warren Buffett just brought the greatest investing career in history to a close. After six decades at the helm of Berkshire, he led the firm to a staggering 5 million percent in returns. But he’s always been clear. He didn’t build it alone.
Charlie Munger was his partner for over 50 years. More than that, he was the one who changed how Buffett thought. “Charlie has helped me immensely by making me see the foolishness of my own behavior,” Buffett has said. Not which stocks to pick, but how to avoid the mental traps that lead to bad decisions in the first place. Munger upgraded the whole operating system.
Most people spend their lives trying to be smart. Munger spent his trying not to be stupid. That distinction sits at the core of everything he taught.
Munger died in 2023 at 99. His Poor Charlie’s Almanack distills seven decades of clear thinking in a world designed to make you think poorly. I just finished it. Here’s what actually matters.
Invert, always invert
Munger borrowed this idea from the mathematician Carl Jacobi: “Invert, always invert.” Instead of asking how to succeed, ask how you would fail. Then avoid those paths.
This is harder than it sounds. Most people optimize for upside. Munger optimized for avoiding catastrophe.
He treated his own conclusions like a scientist treats a hypothesis. Something to test, not defend. Charles Darwin did the same thing. When he encountered evidence against his theory, he wrote it down immediately, knowing the mind would otherwise find a way to ignore it.
Self-criticism isn’t natural. But it’s one of the few reliable paths toward truth.
Build a latticework of mental models
Munger called this “remedial worldly wisdom.” The idea is simple. If you only have one tool, you’ll misuse it. “A man with a hammer sees every problem as a nail.”
The fix is drawing from multiple disciplines. Psychology, economics, biology, physics, history. Not mastery of each, but enough familiarity to recognize which model fits the situation in front of you. Use them or lose them. Munger kept a checklist to make sure he did.
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Welcome to Mixed Realities, a place where I share thoughts on the future of the physical and digital worlds and the interactions between the two. I explore how these overlapping realities shape the way we live, connect, and create. I’m TJ Kawamura, an entrepreneur and investor exploring the intersections of technology, culture, and community. My background spans building companies, advising in the crypto and gaming space, and writing about emerging technologies and the rituals that shape daily life. You can find more about my work at tjkawamura.com
Most specialists are blind outside their domain. Munger’s edge was being a generalist who could see across boundaries.
Incentives explain almost everything
“Show me the incentive and I’ll show you the outcome.” This might be Munger’s most quoted line, and for good reason.
People don’t act according to what they say, or even what they believe. They act according to how they’re rewarded. If you want to understand why a system behaves the way it does, look at the incentives. If you want to change behavior, change the incentives.
Benjamin Franklin, who was Munger’s hero, put it simply: “If you would persuade, appeal to interest, not to reason.”
Know your circle of competence
Munger was relentless about knowing what he didn’t know. The edge isn’t having answers for everything. It’s knowing exactly where your knowledge ends.
He and Buffett famously avoided entire industries they didn’t understand. They missed opportunities. They didn’t care. Staying inside your circle means passing on most things.
But when you’re inside your circle, act with conviction. Munger and Buffett didn’t spread bets thin. They made few decisions, but when they saw something clearly, they went big. Diversification, Munger said, is for people who don’t know what they’re doing.
Learn to handle mistakes
You will be wrong. The question is what you do next.
Munger’s advice was pragmatic. Play the hand or fold the hand based on facts and odds, not what you want to be true. Don’t live in denial. The worst decision-makers are the ones who can’t update. Pride keeps them holding on. Ego makes the loss feel personal.
Munger had no patience for people who fought reality. The world won’t adapt to you. You adapt to it. Recognize what’s true even when you don’t like it. Every mistake is tuition, but only if you’re paying attention.
Avoid the deadly modes of thought
Envy, resentment, revenge, and self-pity. Munger considered these four habits lethal to clear thinking.
They feel justified in the moment. That’s what makes them dangerous. Each one shifts your attention from what you can control to what you can’t. Each one clouds judgment. And each one compounds.
Munger’s solution was to refuse to indulge them. Not because it’s virtuous, but because they make you worse at everything.
Be a learning machine
The people who rise to the top aren’t always the smartest. They’re the ones who work consistently to be a little wiser than the day before.
Munger read constantly. Across fields. Across eras. He studied the greats. Franklin. Rockefeller. Carnegie. He believed knowledge compounds the same way capital does. Go to bed smarter than you woke up. Repeat that for decades.
Curiosity and perseverance matter more than raw intelligence.
Deliver what you would buy yourself
This is about integrity, but also about quality.
If you wouldn’t buy what you’re selling, something is wrong. Munger believed that building things you’re proud of is both a moral position and a strategic one. Reputation compounds. So does its opposite. It’s the only asset you can’t buy back.
None of this is complicated. But the obvious things are the easiest to ignore.
Munger didn’t ignore them. He returned to them daily. He let them compound.
That was the edge.
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