Financial Wisdom - Charles Munger

The most famous quote by Charles T. Munger: Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day - if you live long enough - like most people, you will get out of life what you deserve.

In his letter to the shareholders of Berkshire Hathaway, Warren Buffet wrote this: In the physical world, great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten. Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect.

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Munger focusses first on what to avoid (things we should not do) before the steps he will take, "All I want to know is where I'm going to die, so I'll never go there."

Succumbing to emotions - herd mentality, loss aversion and other biases will cause investors to make bad decisions. Munger is known for going against popular opinion.
Under or over diversifying - for index funds, many own funds that overlap. For US investors, many hold only US stocks and overlook foreign equities. Own too few stocks is speculation while for those who own too many may be better off buying the index
Timing the market - a buy and hold strategy is better than timing the market
Misusing leverage - leverage refers to using a small amount to invest in a larger trade position. Munger advise is to be conservative as the market uncertainty has the potential to swing the other way which may wipe out the early gains.

The checklist below is lifted off from Chapter 3 of Poor Charlie's Almanac - the advice is so good that it would be an injustice to write anything else - you can buy the excellent book from Amazon

So here goes...

Time Management or is it really Project Management?

We have been told since young by others that in order to do something well, we need to have good time management. As one who leads projects for a living who knows a thing or two about this, I will say that time management is a fallacy. Purely speaking, time management (just like managing people) refers to managing time in which we control time, i.e. we can accelerate it (to make it go faster), slow it down, or to stop time. We can do this with a lot of things but we cannot manage time - it continues to chug along, whether we like it or not. If you were to ask me the time and my answer is, say 9:00am, that time is already gone because it is 9:01am when you continue with what you are doing. Time is like a freight train or a subway that we can only latch on to and hope we can do things within the allotted time. Ask the student who needs to submit the paper at 11:59pm Sunday night or the employee who need to submit the report Mon morning 9:00am. In truth, what ...

The Mental You - Reducing Stress part 2

Just like there are always 2 sides to each story (the good and the bad), we can tackle issues in 2 ways - either head on or perhaps we can do something opposite altogether. The previous post is primarily concerned on how to overcome stress by reducing it. Another way is to focus on something totally unrelated to stress. So, rather than looking at fixing the bad, we focus on the good such that there is little room for the bad. Let's work on this together... Positive Thinking What do you see if you turn on the news, or start looking at social media? More often than not, aside from the beautiful people and cute cats, the news is mostly gloom and doom. There are wars and rumors of wars, climate change due to global warming causing floods, and other disasters, earthquakes at various parts of the world. So, it's no uncommon for us to no longer see the world in rose-tinted glasses but glasses with murky lenses. And yet, to reduce stress, this is the one thing we must do - to think ...

Parenting

How did you do it? This question has been asked by many of my friends and colleagues when they found out about my children. We had initially thought that what we went through is typical. But as we talked to more and more people, it is only then we realized that the journey is not so common after all. Singapore has been ranked amongst the top countries in the world by PISA, short for the Program for International Student Assessment that is under the OECD umbrella. In some years, it is actually ranked number 1. In other words, to be able to get through the Singapore education system is difficult enough as it is. The Journey to College By the grace of God, both my kids did well in the system by being selected into the Gifted Education Program (GEP) - for the top 1% of students - and then getting into Raffles Institution (supposedly the number 1 school in Singapore), and achieving straight As in the Singapore-GCE Cambridge "A" levels, and then receiving offers from a few o...

Paving the Wei

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