Category: Life Lessons

Munger’s Tao

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I recently came across this awesome Tweet & Podcast from David Senra of Founders Podcast, wherein he captures learnings from his dinner with Charlie Munger, as well as his reading of The Tao of Charlier Munger.

Here are some insightful ideas & quotes from Munger that stayed with me from David’s experience:

1/ Buy wonderful businesses at fair prices

Before Munger joined Berkshire, Buffet used to invest in Ben Graham’s “cigar-butt” style – buying super-cheap stocks, often trading below book value.

Munger gave him a new blueprint: “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices”. This is what led to Berkshire becoming the compounding machine it is today.

2/ Cash is king

Through a company called Blue Chip Stamp, Munger & Buffet learned about the value of “float”- excess cash that a business throws up due to the timing difference between receiving payments & settling payouts. This excess cash could then be re-invested in profitable companies.

Through his early investing experiences, Munger started seeing the advantages of investing in better businesses that didn’t have big capital requirements and did have lots of free cash that could be reinvested in expanding operations or buying new businesses.

Munger advises keeping enough cash at all times, in order to take advantage of stock market crashes.

We made so much money because when the great deals came during an economic crisis, we had cash and could move fast.

Charlie Munger

3/ Acting on the few big ideas that matter

Munger says that very few times, you will be presented with an opportunity to buy a great business run by a great manager. Not buying enough when presented with this opportunity is a big mistake.

You have to be willing to act when the right opportunity comes along. ‘Cos great opportunities don’t last very long in this world.

Good ideas are rare. When you find one, bet big.

Charlier Munger

4/ Portfolio concentration creates outlier outcomes

Real wealth is created via concentration. Or to put it in another way, over time, one should expect 1-2 outlier winners to constitute a majority of the portfolio.

When Munger wrapped up his pre-Berkshire fund, Blue Chip Stamp accounted for ~61% of his portfolio.

Worshipping at the altar of diversification is crazy. One truly great business will make your unborn grand children wealthy.

Charlie Munger

5/ Chase unfair advantage

Competition is for losers! Why would you want to compete with people?

Some quotes from Munger on this:

  • “My idea of shooting fish in the barrel is to first drain the barrel”.
  • “Only play games where you have an edge”.
  • “Differentiation is survival”.
  • “Aim for durability”.

Munger talks about how size and market domination has its own kind of competitive advantage. When a company is deeply entrenched with customers, it acts as a deterrent for other players to enter the space.

Sectors that are generally considered to be “bad businesses” (eg. retail, textile, airlines etc.) are intensely competitive. Players beat each other over price and drive down profit margins for everyone, killing cash flows and bringing down chances for long term survival.

That’s why Berskhire looks for great businesses that have a durable competitive advantage. 

Mimicking the herd invites regression to the mean. 

Charlier Munger

6/ The power of Compounding

Find an exceptional business where underlying economics are going to keep increasing its value, and then hold on to it over time.

Quoting Munger – “Time is the greatest friend of an exceptional business. It’s the greatest enemy of a mediocre business”.

Compounding also works in knowledge. Munger gives an example of how over 50 years of consistently reading Barrons, he found just 1 idea worth investing in but that made him $80Mn, which he then gave to Chinese fund manager Li Lu, who turned it into $400-500Mn!

7/ The value of Rationality

To quote Munger:

  • “We don’t let other people’s opinions interfere with our rationality”.
  • “Life is like poker. You have to be willing to fold a much loved hand when new info or facts come to light“.
  • “It’s remarkable how much long term advantage people like us have got by trying to be consistently not-stupid, instead of being highly intelligent”.

8/ Focus is a super-power

Munger says:

  • “I succeed because I have long attention spans. People who multi-task give up their advantage”.
  • “You will always lose in a race to that one guy who sacrifices everything he has in service of one idea”.
  • “Extreme specialization is the key to success”.
  • “Intense interest in a subject matter is super powerful”.

He cites examples of how great companies tend to focus on optimizing one specific lever in their business:

  • Costco – optimizes costs
  • Geico – optimizes distribution via direct-to-consumer
  • Nebraska Furniture Mart – optimizes price for the end customer

What’s the one thing that both Warren Buffet & Bill Gates said was the key to success? Focus!

9/ Frugality drives value

Munger cites one common quality amongst all Berkshire businesses – they will go to great lengths to keep operating costs low. Even Berkshire itself demonstrates the same behavior:

  • It has no PR department.
  • It has no investor relations office.
  • For many years, its annual report was published on the cheapest possible paper & had no expensive color photos.

10/ Brands are magic

Munger says – “A great brand is a piece of magic”.

Brands like Coca Cola & See’s Candies have a piece of a consumer’s mind & therefore, have no competition. Charlie calls them “consumer monopolies”.

A lot changed the day Berkshire realized the power of brands.

11/ Business plans are useless

Munger says Berkshire has no master plan – “We always wants to be accounting for new information. We are individual-opportunity driven. Our acquisition style is driven by simplicity”.

He shares an interesting anecdote. When Mrs. B (Rose Blumkin), Founder of Nebraska Furniture Mart, was asked about having a business plan, she said – “yes, sell cheap & tell the truth”.

12/ Patience is rare

Human nature is all about being impatient. People just can’t sit around, waiting patiently. They want to feel useful. So they end up taking action and doing something stupid.

13/ Learning from mistakes is crucial

Learning from history is a big form of leverage. The biggest financial disasters get forgotten in a few years.

Munger says:

  • “Wise people step on troubles early”.
  • “Every missed chance is an opportunity to learn”.
  • “Be willing to take life’s blows”. 

I love rubbing my nose in my mistakes. It’s an extremely smart thing to do.

Charlier Munger

14/ It takes many, many attempts to find your life’s work

For context, Munger started working on Berkshire in its current form only in his 40s.

15/ Finally, lots of life advice…

“Build relationships with A players”.

“Problems are a part of life. So why are you letting them bother you?”.

“The best way of reducing problems is to go for quality – Go for Great!”.

“It’s the strong swimmers who drown”.

“Envy has no utility. The key to living a well-lived life is killing envy”.

“The best armor for old age is a well spent life preceding it”.

PS: If you love Charlie Munger’s wisdom, you might enjoy my post capturing his musings from the 2o23 Daily Journal Shareholder’s Meeting.

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The Familiarity Conundrum

Earlier this year, my younger son got admitted to the same preschool that the older one attended in SF. As parents, we were elated! Our older one loved this school, we know the Principal and teachers really well, and it significantly reduces uncertainty for us given this school goes up to Middle. A win-win in every respect!

Except, we were caught completely off-guard by how the first few weeks turned out. That the kid was having “adjustment issues” would be an understatement. Everything from sleep schedules & toilet training to eating & social behavior went majorly South. While this is normally expected when kids change schools, what surprised me was how much this derailed us as parents. We were maniacally struggling to manage the kid in this transition while trying to cope with all the mood swings & changes this was bringing to our daily routine.

Of course, things started improving after a couple of months & as we speak, the kid seems all settled in the new environment🤞🏽. But I couldn’t stop introspecting on why we got caught so off-balance in this episode, even when we knew the school intimately & had gone through this exact experience before with our older one?

This was a manifestation of what I call the Familiarity Conundrum. When we deal with things we are intimately familiar with, there is a double-edged sword at play. While familiarity arms us with high-fidelity, experiential data that can be incredibly useful in making a smart decision, it also creates overconfidence-driven blind spots in our ability to deal with the familiar.

In highly familiar situations, our brain tends to short-circuit the decision-making process, perhaps gathering comfort from past anecdotal experience regarding similar situations. The result is a quick decision based on 1st order thinking. We went through this in the above school episode – our brains used a quick, 1st order heuristic – “because this school was so great for our older son, it will be equally good for our younger one too”. We failed to ask even a basic set of questions regarding this decision eg. are the teachers the same this year, is our younger son starting at the same age as the older one, should we expect any changes to the school routines post-Covid etc. These are basic diligence questions that we would have definitely tried to answer had this been an unfamiliar school for us.

This Familiarity Conundrum often leads to sub-optimal decisions in other aspects of life as well. Some examples that I have personally experienced or witnessed:

  • When hiring someone we are highly familiar with eg. an ex-colleague or classmate, our brain tends to unfairly magnify our last, dated view of their strengths, not pushing us enough to evaluate them independently, especially with respect to fit with the current opportunity.
  • When a trusted person introduces us to a deal, say an investment opportunity, our brain wrongly transfers trust with the referrer onto the referred deal, without a rigorous evaluation of the deal on a stand-alone basis as well as the referrer’s true competence in the specific area being evaluated.
  • When operating in an area where we have prior work experience, we tend to under-diligence the opportunity & overestimate our likelihood of success. In areas of perceived expertise, our brain doesn’t push hard enough on 2nd & 3rd order thinking like figuring out ways in which this context is different from our prior experience, trying to see around corners for lurking risks etc.

So what can we do to effectively deal with this Conundrum? Based on what I have learned from my experience as well as studying great rationalists like Charlie Munger, here are a few ideas:

1/ First step is spotting it at the right time – training your mind to spot times when familiarity could be creating blind spots for you, is itself a major part of keeping biases at bay. Personally, I tend to keep a matrix of such mental models both layered in my head as well as often as part of a diligence checklist. For decisions that cross the bar of impact and/or irreversibility, I like to run them through this matrix to check for potential blind spots.

2/ Don’t deviate from the “checklist” – Dr. Atul Gawande argued for the importance of checklists as a tool to make surgeries safer in his popular book “The Checklist Manifesto – how to get things right“. Professionals as diverse as surgeons, pilots & public market investors leverage checklists to handle uncertainty & make better decisions under stress.

The key is not deviating from your operating process even when the context is highly familiar and your brain is pushing you to use crude heuristics to arrive at a quick decision. Like a pilot who will diligently run through the aviation checklist even on the best-weather days, one needs to strive to do the same, each time, every time while taking high-impact decisions.

3/ Always have an independent feedback mechanism – even in areas where you believe you have deep knowledge and/or extensive on-ground experience, it’s always good to get feedback from independent players who are likely to see the opportunity in an unbiased way.

During my early days as an angel investor, I had a tendency to predominantly rely on my own judgment of a startup & often made decisions without taking the time to gather feedback from other sources. Having learned from several missteps, I have now incorporated gathering feedback from several sources including market experts, customers, founder references & other investors, as a core part of my investing process.

In this context, I find the idea of having a “feedback buddy” incredibly useful. For important projects eg. buying a house, a product launch, a big investment, it’s good to have someone who is unrelated to the project be a sounding board to bounce off ideas, poke holes in current thinking & simply provide common-sense feedback.

The bottom line is this – as opposed to explicitly unfamiliar terrain where our natural survival mode gets alerted, familiar contexts are significantly more likely to get our brains in “lazy thinking” mode, creating blind spots that will catch us off-guard. Proactively spotting this dynamic, having the discipline to stick to a rigorous process at all times & consciously incorporating an independent feedback mechanism within it, goes a long way in offsetting this Familiarity Conundrum.

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The real risk is the unknowable, not the unknown

Image Source: BBC Wildlife

I was discussing the SVB blowup situation yesterday with one of my friends who manages the public markets portfolio for a large family office. He and I both have deep financial services backgrounds, having worked across diverse services & asset classes (VC, PE, public markets, Investment Banking, debt etc.). Both of us came to the same conclusion regarding what has unfolded:

Given the complexity of financial markets, with many direct & indirect stakeholders, influencers, interconnections, interdependencies, manual & robo decision engines at play, it’s almost impossible for even the smartest operating teams & regulators to stay on top of systemic risks building up across thousands of organizations in our financial system.

Of course, this risk management challenge gets further exacerbated in pure capitalist markets such as the US, that consciously allow free market cycles, driven by excessive greed followed by excessive fear, to play out without much intervention.

Going beyond the macro discourse around SVB, of which there is enough now in the media & on Twitter, I want to highlight one learning that all of us need to pay attention to from this episode – the real risk in most things in life is in the “unknowable”, not the “unknown”.

What does this mean? In most planning exercises we do around risk management both professionally (eg. what’s the sensitivity around my company’s 2023 revenue?) & personally (if I plan to do a startup, how much personal runway do I need to be able to operate without a salary?), we focus mainly on outlining the “unknowns” – variations in outcomes of visible & obvious elements. Things like revenue from existing customers, attrition of top performers, house rent, holiday budgets etc.

Planning for unknowns is largely driven by first-order thinking. This includes the classic sensitivity analysis playbook of (1) listing out all obvious elements of the game, (2) thinking of a range of values for them (best case/ likely case/ worse case) & (3) using these values as inputs to model out various output scenarios that consequently drive the overall decision-making process.

But if most organizations & individuals follow this kind of solid decision-making framework, why is the real-world full of surprising blow-ups – bank runs, hedge fund unravels, fast-growing companies unexpectedly going bankrupt etc.?

It’s because the real world is a complex adaptive system with emotion-driven humans as actors. Michael Mauboussin, legendary analyst, academic & public markets investor, beautifully outlined the qualities of this type of system in his recent conversation with Tim Ferris:

So, “complex” means lots of agents. Those could be neurons in your brain, ants in an ant colony, people in a city, whatever it is. “Adaptive” means that those agents operate with decision rules. They think about how the world works, and so they go out in there and try to do their thing. And as the environment changes, they change their decision rules. So that’s the adaptive part, their decision rules that are attempting to be appropriate for the environment. And then, “system” is the whole is greater than the sum of the parts. It’s very difficult to understand how a system works, an emergent system works, by looking at the underlying components.

Michael Mauboussin

In such a system, while some risks fall under “unknowns”, a majority of them are “unknowable” given the system is self-evolving & therefore, impossible to predict at a granular level. Many words are used to describe these unknowables – edge cases, tail events, black swans etc.

Even if we do get some additional visibility into a few of these probabilistic unknowables & can foresee their 1st-order impact to an extent, their 2nd & 3rd order effects are really hard to model out.

Given this context, classic risk management approaches work well most of the time, until they don’t. And when they don’t, participants are caught unaware, unprepared, & often facing the Risk of Ruin.

So, how can organizations & individuals prepare better to deal with the unknowables? The following steps can help:

  1. Start by recognizing the presence of “unknowables” – a major first step is to acknowledge one’s ignorance, & consciously keep overconfidence bias at bay by reminding oneself that even after all this data & analysis, there is a lot that is just not possible to predict. Approaching risk management with humility & in defense mode creates a conducive mindset for this.

2. Add a significant “Margin of Safety” on top of your analysis – while a rigorous Sensitivity Analysis will cover the unknowns well, adding a Margin of Safety goes a long way in providing a buffer for the unknowables. How much of it you want to add depends on context but given we live in a highly risky world, it should be significant enough. As an example, legendary value investors like Buffet & Munger insist on a 50% Margin of Safety while buying public securities (buying at half of the intrinsic value of a company).

Btw, this isn’t anything new. Engineers who design everything from trains & storage tanks to nuclear reactors & space shuttles, recognize error rates in their assumptions & therefore, always include an “allowance” in their computations. Millions of lives depend on this method!

3. Routinely stress-test & update your assumptions – with software continuing to eat the world at an exponential pace, cycles are becoming shorter & feedback loops quicker. The Fed raised rates from under 0.5% in Mar’22 to ~5% in less than a year! With information transmitted in real-time, especially via networks like Twitter, & decisions manifested at the push of a button, we saw how SVB unraveled in literally a day. Given this speed of change, it’s important to frequently stress-test your state-of-state, accounting for changes in external & internal environments & updating your assumptions (esp. Margin of Safety) accordingly.

While the Treasury, the Fed & FDIC have joined forces to save everyone impacted by this specific SVB case, most of us can’t count on such White Knights bailing out our families or our startups each time. A pragmatic & defensive risk management approach that accounts for unknowables, incorporates a healthy Margin of Safety, & includes periodic stress testing, can help us cope with outlier events & keep us in the game.

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The futility of Plan B

Image Source: LinkedIn

Growing up in India, where inherent chaos makes sure most things don’t go according to plan, I got organically trained to always have a Plan B. The classic fallback option – the bylane you take when the main road is clogged because a minister is scheduled to pass through, the backup college seat you block in case you ranked low in the entrance exam for your top preference, or the autorickshaw you hail when the car refuses to start.

Look, I get it! Now that I am a father to 2 boys, I see the instinct parents have to ensure their children are tangibly & emotionally “safe” in all situations. So, I can appreciate why my middle-class upbringing was designed this way. To top it up, my technical education & early analytical jobs further pushed me into the world of scenario analysis & fail-safes.

Down the road, as I entered the risky world of startups, I naturally brought this instinct with me. While building, operating & investing in high-risk-high-reward endeavors, my animal brain would always push me to have a Plan B in my backpocket:

  • If this startup doesn’t work, I can always go back to Company X.
  • What if this investment fails? Let me spread my resources & take a smaller bet.
  • If I don’t like living in Country Y, I can always go back to India.

A few years into taking these asymmetric bets (presumably backed by Plan Bs), I expectedly started encountering failures, both big & small, one after another. They ranged everything from major projects going South & unforeseen external risks coming to the party to unexpected company restructurings & gross misjudgment of certain people’s skills & intent.

During a recent introspection of these adverse experiences, something interesting jumped out – every time I attempted to call on a Plan B for a specific situation, more often than not, it wasn’t really there. In some cases, the “backup” companies had changed their strategy & weren’t a fit anymore. In others, I had grown in a different direction & going to a fall-back option would be a negative step. Many times, people I was relying on to help materialize a certain Plan B had either fallen out of touch, were themselves dealing with adversity, or had changed their context & therefore, relevance.

So this was my lightbulb moment that inspired this post – in high-risk-high-reward situations, Plan Bs are….fictitious. The very nature of extremely risky situations is that they take you in unpredictable directions, change your context in unimaginable ways & leave you with baggage that’s hard to foresee. And all this happens in parallel to a rapidly-changing external environment that in most cases, becomes increasingly incongruent with your endeavor (most asymmetric projects are by definition, contrarian in relation to established rules of the game that the majority operates by).

This complex system renders even the most thought-through Plan Bs useless. Given asymmetric bets are driven by power laws (a few will drive a majority of the total outcome) & compounding (need a long enough timeline for ideas to mature, which is when outcomes start growing exponentially), positioning yourself to be on the right side of these rules requires going all-in for a significant period of time.

While having a Plan B provides the initial psychological space to initiate a risk, in my experience, it unfortunately also creates a mental mechanism to cop out of it, & even worse, often doesn’t provide the safe landing space it initially promised.

Going forward, my aim is to ditch the “Plan B” mindset in all asymmetric bets. A fall-back instinct comes from a place of fear, and while controlled fear can be a useful tool to drive alertness & urgency, it becomes adverse when acting as a roadblock to going all-in & persevering on a thoughtfully-chosen path.

It’s important to add here that while ditching the Plan B outlook, I will still proactively focus on avoiding the Risk of Ruin at an overall life level. Asymmetric bets require multiple shots at the goal & therefore, safeguarding the ability to keep playing is paramount.

On a related note, a mental heuristic I have recently started using while making asymmetric decisions I am 50-50 on – “which option is the fear side of my brain asking me to choose?”. In most cases, I then lean towards the other option!

I have found the following quote by Swami Vivekananda to be hugely inspiring in driving this mental transformation:

Take up one idea. Make that one idea your life – think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success.

Swami Vivekananda

As you consider this approach, I want to leave you with this outstanding scene from Christopher Nolan’s ‘The Dark Knight Rises’. As a frustrated Bruce Wayne is trying to catch his breath after yet another failed attempt at climbing out of the pit (he was using a rope each time), an old & wise prisoner gives him the mantra for successfully making the climb:

You do not fear death. You think this makes you strong. It makes you weak.

How can you move faster than possible, fight longer than possible, without the most powerful impulse of experience – the fear of death!

Make the climb…as the child did. Without a rope!

The Dark Knight Rises (2012)

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Munger Musings – Notes from DJCO Shareholders Meeting 2023

As a long-time student of Charlie Munger, I eagerly wait for his musings at the Daily Journal Shareholders Meeting every year. This time was no different! Here are some of my notes capturing Charlie’s wisdom at the DJCO 2023 meeting:

  1. Importance of under-served markets in software

Both Munger & Buffet are big believers in moats. Having witnessed the natural creative destruction of even the best companies like Kodak & Xerox, they understand the power of competition & what it can do to long term returns of investors.

Munger spoke about how the software business of DJCO, which offers a solution to automate legal courts, is operating in a large yet unaddressed market that incumbent software companies hate. It’s an unsexy business that has long sales cycles & as Munger himself said – “it will be a long grind”.

However, these same reasons also limit competition in the space. Munger believes that this combination of a large, underserved TAM + low competition is likely to drive superior long-term returns, as long as DJCO shareholders are prepared to ride through the grind & hold over the long term.

In my view, this idea also has some interesting insights for venture investors in the enterprise software/ SaaS space. Too often, investors start chasing the hot market of the year without realizing that a space that is obviously popular will end up attracting disproportionate competition & investor $$. And as history shows us, too much competition in a market drives down returns for everyone.

Therefore, there is some merit in looking at startups going after unsexy or under-served verticals. These non-obvious nooks & crannies often hold the most potential for contrarian-and-right bets.

2. Holding is tax-efficient

Munger spoke about how he hates to sell his holdings as California would straight-up take 40% away in taxes. As he went on a brief rant about how California is driving businesses away with its tax policies, the underlying insight stayed with me – how holding securities over the long term is a brilliant strategy for tax efficiency. A simple rule that anyone from Berkshire & DJCO to common folks like you and me can follow in our lives.

As the likes of Robinhood have leveraged the excess liquidity environment over the last several years to create a generation of young day traders, many of them don’t realize how tax-inefficient frequent trading is.

3. #1 bias is denial

When asked what the #1 behavioral bias is, Munger said “denial”. And it’s so true. Often times, when the present reality is too brutal to bear, our brain tricks us into living in a delusion. While this stems from an evolutionary survival mechanism our brains have developed, taking major decisions under this denial state can cause havoc in our lives.

Proactively trying to see & live in one’s reality at any point in time is the best way to behave rationally. If one thinks of all of grandma’s wisdom handed down to us in popular sayings (eg. “live within your means”), they all urge us to recognize & live within our own realities.

4. Betting big when the right opportunity knocks

I loved this sentence from Munger – “What % of your networth should you put in a stock if it’s an absolute cinch? The answer is 100%”.

While I am positive that Charlie wouldn’t like this to be construed as a stance against diversification, which is important for almost all portfolios in varying degrees, the spirit of this sentence is this – a few times in your life, you will come across a no-brainer opportunity with massive asymmetric upside. It will happen very infrequently, but when it knocks on your door & you are convinced about it, go all in & bet really big. Over a lifetime, these bets will drive the majority of your returns, financial or otherwise.

If there is one thing that separates the likes of Buffet & Munger from other investors, it’s the mindset of betting really big when the odds are extraordinarily in your favor. During the meeting, Munger mentioned how Ben Graham made 50% of his money from just 1 stock – GEICO. Also, he illustrated the importance of power laws by sharing how Berkshire’s initial $270Mn investment in BYD (made in 2008) is now worth $8Bn!

PS: I have previously riffed on this idea in my post ‘Only need to get a few right‘.

5. On using leverage

Munger admitted to having used leverage to buy Alibaba stock in the DJCO portfolio. When asked why he violated his own rule (his famous quote being “there are only 3 ways a smart person can go broke – liquor, ladies & leverage”), Munger responded with another fascinating quote:

The young man knows the rules. The old man knows the exceptions.

Charlie Munger

The insight behind this is something I say a lot – context is everything! Rules & checklists are great for driving overall discipline & avoiding foolish behavior but as Munger demonstrates, it’s not wise to become a prisoner of your own rules. With experience, one should learn to spot exceptions & when the context is favorable, be bold enough to break the rules.

6. On long-term economic trends

While both Munger & Buffet generally hate to predict macro trends, Charlie mentioned a few interesting observations:

-Inflation is here to stay over the long run, given most democratic govts. globally have shown an ever-increasing inclination to print money.

-Most govts. across the world are going to be increasingly anti-business, with tax rates steadily going up.

-If one looks at economic history, the best way to grow GDP per capita is to have property in private hands & make exchange easy so economic transactions happen (the essence of capitalism).

If these trends are even directionally true, it makes sense to hold assets that can fight inflation (eg. stocks), as well as invest in a tax-efficient way, over the long term. Developing an investor mindset that can operate in a high-inflation environment will be important.

7. The playbook for success in life – Rationality + Patience + Deferred Gratification

When asked the thing that’s helped him the most in life, Munger said – rationality! Loved this line from him:

If you are constantly not crazy, you have a huge advantage over 90% of people.

Charlie Munger

To significantly improve the odds in your favor, Munger prescribes combining 3 things:

-Rationality (which is often, just doing the obvious)

-Patience (take advantage of compounding)

-Deferred gratification (live within means, save & invest)

Like most things Munger says, the above ideas are simple & profound, yet hard to consistently follow for most people as their biases come in the way.

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