Munger's Mantras UPDATE June 1 2025

Famous investor Warren Buffett and his company Berkshire Hathaway have been in business making investors rich since 1965.  Although Berkshire was founded in 1839, it was a much different company. The company buys other companies by investing directly in them or buying their stock. As any stock, Berkshire has it risks, and as part of the stock market, may go down in market crashes.

Although Buffett’s name is the one most often tossed around when mentioning Berkshire Hathaway, he had a right hand man named Charlie Munger. Having met at a party in 1959, they haD been together as business partners up until Munger’s death and both steered the company to legendary greatness.

Munger passed in 2023 at age 99 and worked as vice chairman up until the day he died.

Both Munger and Buffett shunned things they didn’t understand and had more of a general macro view when deciding what companies to buy.

Munger’s approach on how to invest were simple and straight forward and unlike any I have ever heard of before or since.

  1. Inversion: Solve a problem from the back end forward. As a weather forecaster in the air corps, instead of opinionating on what weather was good to fly in, he instead thought of what weather would instead might kill pilots and simply avoided that. When investing, consider not only what you could make but what you could lose.
  2. Opportunity cost: Could you make more money elsewhere. Should you invest in that dividend stock paying 3% when you could buy a CD paying 4%?
  3. Circle of Competence: Admit what you don’t know and stick within the circle of what you do know. Stay within your limits of what you know and don’t guess.
  4. Confirmation Bias: Avoid leaning into what you BELIEVE should happen and instead only focus only on what IS happening. We often look through rose colored glasses and see only what we want to see.
  5. The Lollapalooza Effect: Multiple positive factors can amplify gains many times over. When all things align and are positive, gains can explode.
  6. Second Order thinking: Considering the many possible outcomes now and farther down the road instead of just considering the initial idea, concept or possible expected outcome. Consider all possibilities that can occur now AND later.
  7. The Map is not the Territory: All economic or investing theories are just theories only. Consider they are not absolute predictors of what will happen. Nothing is cast in stone.
  8. Mr. Market: The market is a fickle beast and an emotional one. It may not always be logical or rational and in actuality, seldom is.
  9. Social Proof: Avoid jumping o bandwagons or following the mob. Stay rational. When everyone is thinking the same thing, nobody’s thinking.
  10. Occam’s Razor: The most logical and obvious answer often is the correct one. Consider all possibilities, but the most obvious answer more often than not is the right one.

 

In conclusion, Munger and Buffett used common sense to steer their company Berkshire Hathaway. Buying iconic brands like Coca-Cola, Wells Fargo and See’s Candies, among others, the reason for buying companies were not complexed.

It’s just a good business!

“Watching the markets so you don’t have to”    

(end)    As mentioned please use the below disclaimer exactly THANKS   (Regulations)    

You can sign up for his Investing class at Placer School for Adults (530) 885.8585. This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com.