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Charlie Munger’s Investment Rules to Make Money in Stock Market

Charlie Munger's Philosophy
Charlie Munger’s Philosophy

Rule # 1 – Measure Risk
All investment evaluations should begin by measuring risk, especially reputational.

Rule # 2 – Be Independent
Only in fairy tales are emperors told they’re naked.

Rule # 3 – Prepare Ahead
The only way to win is to work, work, work, and hope to have a few insights.

Rule # 4 – Have Intellectual Humility
Acknowledging what you don’t know is the dawning of wisdom.

Rule # 5 – Analyze Rigorously
Use effective checklists to minimize errors and omissions.

Rule # 6 – Allocate Assets Wisely

Proper allocation of capital is an investor’s No. 1 job.

Rule # 7 – Have Patience
Resist the natural human bias to act.

Rule # 8 – Be Decisive
When proper circumstances present themselves, act with decisiveness and conviction.

Rule # 9 – Be Ready For Change
Accept unremovable complexity.

Rule # 10 – Stay Focused
Keep it simple and remember what you set out to do.

From Poor Charles Almanack, a book by Charlie Munger and must read for every Value Investor.

Charlie Munger
You need a different checklist and different mental models for different companies. I can never make it easy by saying, ‘Here are three things.’ You have to derive it yourself to ingrain it in your head for the rest of your life.

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