Charlie Munger’s ‘Mental Tricks’ Will Make You A Successful Investor

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Full Charlie Munger Speech

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Disclaimer:
The information in this video is general information only and should not be taken as constituting professional advice from Hamish Hodder.
Hamish Hodder is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
Hamish Hodder is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video.

[ResourceTalks]

One of the very first things I learned about investing was from this man and his business partner (Waren Buffett): We shouldn’t be looking ONLY at the price but rather and the underlying value of THE BUSINESS. You’re not buying ticker symbols, you’re buying pieces of a business.

[TheFatmadster]

Hey I am fifteen and I am currently reading a lot about value investing. I have just finished reading the intelligent investor by Ben Graham. I would like you to make a video where you give your complete understanding of the intelligent investor and what principles actually stood out for you in the book
Great videos and podcast btw keep doin them mate.

[InvestingEducation]

Thinking backwards, forwards, inversely and in the whole is impt to being a better investor

[toscatoot]

Great video mate keep up this awesome content !!

[timk]

...or the manager fires you... Still I also agree that it is right to stand up and say or do what you believe is correct.

[belovedsurfing]

Taking The High Road. Many people would call such a notion naive, or that the person promoting the idea is selling you a sweet story to promote themselves. Personally, I like to believe that Charlie is being sincere when he says that taking the high road is one of the secrets to his success. That's how I want to live my life at least. Striving to do the right thing.


This segues rather smoothly into a suggestion I have for Hamish and anyone else interested.


What about a Youtube Channel dedicated to talking about the challenging journey of being as Ethical and Moral an Investor possible.


It could be called simply : The Ethical Investor


The idea came to me when I was watching another Finance Youtube channel and 2 stocks were recommended : Tencent and Alibaba.


It didn't take me much research to find out that the CEO's of both companies are members of the Communist Party of China. Both companies are involved in sending user data to the Government and are likely contributing to the Social Credit System, all making China a true Surveillance State.


I categorically will not invest in either of these companies, nor many Chinese companies, as so many of them are deeply entwined with the Chinese Government, whose history of human rights is terrible and current approach to maintaining power is autocratic. All that, without mentioning they have given the world a very bad cough that is decimating the economy and ruining lives, and still have the lead ear to go ahead and reopen the repellent Wet Markets. Unreal man. Not going to touch companies connected to that government if I can help it.


But less than upstanding practices are certainly not unique to Chinese companies. Warren's beloved Coca Cola is hardly a health food and can actually be used as a substitute for Paint Thinner if you can't be bothered to go to the Hardware store.

One could argue that "The High Road" for one, might not be so for another. That's fair. Goes back to my idea of the Youtube Channel. A channel dedicated to looking at companies, and examining their Ethical side. Maybe give suggestions about the most Ethical companies. Maybe do interviews with the CEO's of really well run, really ethically minded companies. Maybe talk about the strategies of successful Ethical Investors.


I even thought of a slogan for the channel (might not be original, so my apologies if I borrowed it from someone else) : "Invest in what you want to see in the world." and / or "As an Investor, you have the very real power to have a powerful effect on the shape of the world. Use it wisely."


So, if Hamish or anyone else wants to run with the idea, please do so with my full support. I'll be eager to subscribe, watch, and share your content.


Thanks for the video Hamish. Good stuff. Happy TGIF.

[dmt_benchpress]

is it really necessary with background music?

[kal]

I've been watch for a couple weeks and there are some really good videos. Not sure about your portfolio theory example. Portfolio theory is mainly about creating a portfolio to gain the benefit of diversification and long term investing. It's about adjusting your risk based on asset allocation. It never says you should sell a share if the price drops. It's basically the Aus superfund approach.



Maybe you mean technical analysis? That basically says, the market is efficient and if the share price drops, you should sell.


Your example is flawed since logically, for a share to fall 50%, an internal or external shock MUST happen. This inherently changes the asset risk profile. There are plenty of opportunity in that volatility as markets often times overreact to this risk adjustment.

Love to hear your thoughts.

[jackbrady]

Btw can you link original video timestamps in your future video so if we want we can choose to get context. Thanks

[Investorblog]

I liked the "high road" delivered by Munger, and they way that you killed the Modern Portfolio Theory!

[Mihir.Bhadauria]

Most people are afraid and they rather follow everyone else. Just like you say with how this can be applied in life I fully agree. If you want what most people want to dream then you cannot follow their path. Only the minority through their habits succeed as winners and losers both have same goals but different habits. Great video and sorry for my rant

[pkh]

Hi Hamish, loving the free youtube content, Thanks always. Just wondering if Learn by example covers/will cover a lot of Australian tax that relates too investing?

[eggcluck]

Around 06:58 my experience of life is very different. You will not be respected instead you will be outcast and be the target and scapegoat for every little thing until you eventually get the hint and quit and move on to your next crappy job with a bad boss and no prospects.

[Deskzor]

Great video indeed! When does subscription to "learn by example platform" expire? thanks

[Krevis]

Thank you Hamish for you lessons! You are doing top content on investing. I just started and my stocks are already up 8, 77 %. I am very curious how it will be going in the long run. I found one company, Align Technology, analysed it with your spreadsheet and it's all green. Very curious what do you think about the company. And also I would like to hear your thoughts about Shiller PE Ratio. Best wishes from Europe!

[ValuedInvesting]

Great video Hamish. Many people forget how brilliant Charlie is just because of who he sits next to, but he truly is one of the best investors of our time. Doing the right thing and being truthful seems so straightforward, yet these are such rare feats in our community.

Being someone who's learned Modern Portfolio Theory, I know it has limitations. I think too many people want a simple answer to investing and so some of the anomalies of MPT have allowed portfolio managers to take advantage of factors and anomalies to create above average returns.

- Shailen

[jackbrady]

Ok your analysis on "take the high road", how you linked that to investing is complete bullshit. You tried linking "do the right thing" in a moral sense with "doing the right thing" from a value investors perspective. They're on two different planets mate. Take the high road is a moral mindset and if you were to try and (foolishly) apply it to the world of investing, then it would be about not investing in businesses that are highly profitable but morally corrupt. For example, if you decide your principles are anti-war, then you would not invest in a bullet, gun or bomb manufacturing business, regardless of how high it's ROI is.

What you tried to do was link it to what your opinion on smart investing is. Doing the right thing = doing the moral thing NOT doing the smart thing.