Charlie Munger, Warren Buffett's friend and partner, is quite an investor in his own right. A recent Motley Fool article "Charlie Munger's 10 Rules for Investment Success" details Munger's 10-step investment checklist from his book Poor Charlie's Almanac. Here are the steps:
- Measure risk: All investment evaluations should begin by measuring risk, especially reputational.
- Be independent: Only in fairy tales are emperors told they're naked.
- Prepare ahead: The only way to win is to work, work, work, and hope to have a few insights.
- Have intellectual humility: Acknowledging what you don't know is the dawning of wisdom.
- Analyze rigorously: Use effective checklists to minimize errors and omissions.
- Allocate assets wisely: Proper allocation of capital is an investor's No. 1 job.
- Have patience: Resist the natural human bias to act.
- Be decisive: When proper circumstances present themselves, act with decisiveness and conviction.
- Be ready for change: Accept unremovable complexity.
- Stay focused: Keep it simple and remember what you set out to do.
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These rules are no good. I need to get rich right now!! Just kidding. What I love about Munger and Buffett is that what they say just makes sense! I might have to pick up Poor Charlie's Almanac. Thanks!
Anon: You can't be poor and pick up his booked. I was shocked at the $150+ price of the book.
Best Wishes,
D4L
If you enjoy Mungerism's ,you might want to read Charlie's letters to shareholders:
http://www.wescofinancial.com/page2.html
I checked WSC's historical prices on bigcharts.com. Over the past 10 years the results of the stock are average.
Year Stock Price % change
1977 6.875
1978 6.5 -5.45%
1979 8.375 28.85%
1980 8 -4.48%
1981 9.375 17.19%
1982 13.5 44.00%
1983 17.375 28.70%
1984 21.75 25.18%
1985 35.875 64.94%
1986 37.25 3.83%
1987 34.25 -8.05%
1988 41 19.71%
1989 62.25 51.83%
1990 47.875 -23.09%
1991 72.375 51.17%
1992 83 14.68%
1993 129.5 56.02%
1994 115.125 -11.10%
1995 182 58.09%
1996 187 2.75%
1997 300 60.43%
1998 354.75 18.25%
1999 245 -30.94%
2000 281.75 15.00%
2001 315 11.80%
2002 309.95 -1.60%
2003 352 13.57%
2004 393 11.65%
2005 385 -2.04%
2006 460 19.48%
2007 389 -15.43%
Annual Average return 17.16%
Dividend Growth: I appreciate the links to Munger's letters.
17% is really good, but there sure is a lot of volatility.
Best Wishes,
D4L