Charlie Munger died at the age of 99 years on November 28, 2023,
According to the first rule, you should invest money in only those securities or shares which have performed well in the recent past. Such shares will continue to do well.
Charlie Munger was considered the right hand of Warren Buffet. He is one of the members who helped Warren Buffet in building Berkshire Hathaway into an investment powerhouse. Munger served as Buffett’s sounding board on investments and business decisions. He led Berkshire as its vice chairman for decades. He died at the age of 99 years. He took his last breath in 2023.
Along with being a businessman, Charlie Munger was also an investor and philanthropist. Charlie Munger, a veteran player in the stock market, has given two rules regarding investment, which can be followed to make money.
Charlie Munger once said in 2017, “A friend of mine told me two rules of fishing, first- fish where the fish are. The second rule is that the first rule should not be forgotten.” He stresses the importance of these rules while investing in business, stocks or other entities.
By citing this example, Charlie Munger tried to decode the complexities of the stock market for beginners or people who are facing difficulties in investments. According to the first rule, you should invest money in only those securities or shares which have performed well in the recent past. Such shares will continue to do well. The stocks which have been performing poorly are expected to perform poorly in future also, he claims.
The second rule is to never forget the first rule. He decided to add this rule so that people understand the importance of first steps or basics. Charlie Munger told the second rule because many times investors buy falling shares since they are cheap. Munger’s investment approach was predicated on the assumption that good opportunities are few and infrequent. As he once said, “Life is not just bathing you with unlimited opportunities.”
Therefore, through this, it can be said that Munger’s process wasn’t about finding as many good ideas as he could. On the contrary, he sought to first eliminate bad and mediocre ideas. He always believed that good opportunities are rare but he used to seize the one if discovered. This might seem like a backward approach, but he often spoke about the value of inverting one’s thinking.