Warren Buffett and Charles Munger are masters of keeping it simple while becoming two of the most successful business investors decade after decade.
By using their clear, simple business acquisition standards, they’re not only successful but they’ve also minimized their stress levels in what’s normally a high stress environment.
They keep it simple, but it must not be easy, because other people in their business don’t do it the way Buffett and Munger do.
Here’re are some of their ideas and insights I gathered from, “Seeking Wisdom” by Peter Bevelin:
Munger says, “We have a passion for keeping things simple. ” and “If something is too hard, we move on to something else.” And from Buffet, “We haven’t succeeded because we have some great complicated system or magic formulas we apply or anything of that sort. What we have is simplicity itself.”
Buffet thinks they have a few advantages, “Perhaps the greatest being that we don’t have a strategic plan. So we feel no need to proceed in an ordained direction but can instead simply decide what makes sense for our owners.” Munger adds, “You look ahead as far as you can, but that’s not very far.”
Also:
Encourage people to tell you bad news immediately.
Reward individual performance, not effort or duration. Reward after not before their performance.
Buffett and Munger never look at projections; but they care very much about, and look deeply at, track records.
People overestimate the control they have over events and underestimate chance.
They don’t invest in anything they don’t understand themselves.
They avoid situations where they need to get people to change.
Integrity, intelligence, experience, and dedication are what human enterprises need to run well.
People pay too little attention to failures.
Try to be roughly right rather than precisely wrong.
Don’t try to make back a loss the same way you lost it.
Never risk something you have and need for something you don’t need.
Unlikely things happen if enough time passes.
The big thing to do is avoid being wrong.
People think that if they just hire somebody with the appropriate labels, they can do something very difficult and complex. That is one of the most dangerous ideas a human being can have.
You don’t have to hire out your thinking if you keep it simple.
If I go on, it may not sound simple anymore. I hope I’m not oversimplifying what Buffet and Munger do, but the more I find out about what they do, the simpler it seems, but it’s not easy.