Charlie Munger’s lessons came from running real businesses and his own life’s journey that was difficult at times. He believes that mistakes can be some of the best education you can get in life as you learn things from experience. He is an avid reader like Warren Buffett but believes that is just one way to grow smarter each day.

Let’s look at some of the mistakes that he says to avoid in life.

Charlie Munger On Life

Avoiding mistakes in the first place is better than managing them after the fact. 

“My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.” – Charlie Munger

You should be very thoughtful in your choice of spouse as it can cost you half your net worth when chosen poorly. 

“I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you.” — Charlie Munger 

“Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you, and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter stock buying opportunities.”
—Charlie Munger 

Enter investments with enough of a margin of safety that you can adjust for errors and still win. 

“How do you scramble out of your mistakes without them costing too much? And we’ve done some of that too. If you look at Berkshire Hathaway, think of its founding businesses. A doomed department store, a doomed New England textile company, and a doomed trading stamp company. Out of that came Berkshire Hathaway. Now, we handled those losing hands pretty well when we bought into them very cheaply. But of course, the success came from changing our ways and getting into the better businesses. It isn’t that we were so good at doing things that were difficult. We were good at avoiding things that were difficult.” – Charlie Munger

Holding onto resentments and hatred just destroys yourself and does nothing to fix the original problems. 

“Part of the secret of a long life, that’s worked as well as mine, is not to expect too much of human nature. It’s almost bound to be a lot of defects and problems. And to have your life full of seething resentments and hatreds, it’s counterproductive. You’re punishing yourself and not fixing the world. Can you think of anything much more stupid than trying to fix the world in a way that ruins yourself and doesn’t fix the world? It’s pretty stupid.” – Charlie Munger

Stop worrying so much it’s not productive. Patience is required to seize great opportunities as they don’t come around often, but when they do you must take action aggressively. 

“Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it’s time.” – Charlie Munger

Charlie Munger 10 Rules

  1. Never stop learning.
  2. You must deserve what you want, it takes hard work to earn trust, respect, and success.
  3. Know what your own strengths are, focus on your edge and your own circle of competency.
  4. Managing risks and surviving is the first step to success.
  5. Practice doing the right things with every opportunity you are given.
  6. Understand what you are doing, stay within your circle of competence.
  7. Invest in people, businesses, and methods you trust.
  8. Understand all of the big ideas and mental models.
  9. Operate in your professional life as competently as you can but know that you will fail at times, we all do.
  10. Don’t submerge yourself in self-pity.[1]

What does Charlie Munger read every day?

Charlie Munger believes it is a huge mistake to not read as much as you can each day. 

He also reads a lot of newspapers including “The Wall Street Journal,” “The New York Times,” “The Financial Times” and the “Los Angeles Times,” and is a weekly reader of “The Economist.” He believes the simple habit of reading is the key to wisdom and success. [3]

“In my whole life, I have known no wise people who didn’t read all the time — none, zero.” – Charlie Munger

If you’re interested in learning how to avoid making big mistakes in trading the markets you can check out my best selling trading books on Amazon here. I have also created trading eCourses on my NewTraderUniversity.com website here. My educational resources can save you both time and money in your trading journey. 

Charlie Munger on Mistakes to Avoid in Life.
Image created by Holly Burns