Charlie Munger was the Vice Chair of Berkshire Hathaway and due to the success of the company, he was able to leave a great deal of wisdom for people to try or least have an opportunity to try to do.

In a recent article by Ian McGugan of the Globe and Mail, the writer wrote some of them down: Consider his advice about how to achieve success: you spend less than you earn, invest shrewdly and avoid toxic people and toxic activities and try to keep learning all your life.

Warren Buffett credited his friend from shifting his approach to the market, from his roots as a bargain hunter value investor who sought to buy fair companies at great prices, to focus on acquiring great companies at fair prices. One of the ways he did this was to ensure his companies always had cash flow and savings to use when a recession or recession type environment sent prices of great companies down.

5 lessons to learn from

The Cool Hand Wins

The challenge for investors is to remain sane when you lose money. Another challenge is to remain sane when you are making lots of money. Either can turn you irrational or impatient. To try to avoid this, focus on buying great businesses at low prices. Then you do not need to panic as prices go up and down.

Alway Invert

To boost your rationality, try to invert the problem inside out. Look at the problem backwards. One way to do this is if you want to boost your portfolio – what are the surefire ways to drive the portfolio down? buy on impulse, chase winners, pay too much in management fees. Solution try to avoid these responses.

A lot of success in life and business comes from knowing what you want to avoid.

Look at the Other Side

If you can state the argument against your position better than your opponents, you can have an opinion.

See both sides of the debate comfortably.

Big Bet on the Best

An investor has to dig deep to understand what type of edge a business has if any- a business possess. If you can determine the edge, you should be prepared to bet heavily on the insight. How many insights do you need? for Berkshire, the top 10 accounted for most of the gains.

Find a Smart Friend

Charlie and Warren agreed on the core values, not on every decision. However Charlie always ended the conversation with Warren think about it, you are smart and I am right.

The friend should be trusted but skeptical that forces you to state your assumptions and clarify your logic. The right alter ego can make the process fun and you might get rich along the way.

Linking to dividend paying stocks, one of the reasons they are profitable is they are great companies. When the market prices go down, it is a time to add more – have some power to shoot from is a term heard on Wall Street. The important aspect is doing your homework so when prices are down, you know what to buy and why and as you wait for the prices to go up you are paid a dividend along the way.

There are more questions than answers, till the next time – to raising questions.