As Charlie Munger dies at 99, these are the simple investing rules Warren Buffett’s right-hand man lived by

Investment titan Charlie Munger, Warren Buffett’s longtime business partner, died Tuesday at the age of 99.

Berkshire Hathaway, the company the couple ran, announced that he had died “peacefully” in a California hospital.

These are the core principles of his investment philosophy. Although sometimes considered controversial, they made him one of the most successful investors in American history.

Earlier this year, he was worth an estimated $2.6 billion, according to Forbes—he had already made a large fortune before he teamed up with Buffett in the 1960s—but most of his financial wisdom is simple, clear, and valuable to ordinary investors.

Buy and hold

Despite having lived through multiple stock market evolutions and witnessed the increasing popularity of higher frequency trading, Munger has always been a staunch advocate of long-term investments.

“The big money is not in buying and selling, but in waiting,” he famously said.

Good investments are rare

Munger often believed that good opportunities are rare, saying, “Life doesn’t just shower you with unlimited opportunities.”

According to Munger, it is important to seize opportunities when opportunities arise. Quoting his grandfather, he said, “If you get a lollapalooza, for God’s sake don’t hang around like a shy bunny.”

Diversification is contrarian

Despite the widespread view that diversifying a portfolio is the key to its strength, Munger had a somewhat opposing view on what he described as “deworming.”

The core of his argument is that while diversification with different investments in multiple assets can limit risk and protect against losses, it will also limit the potential for high returns.

Avoid toxicity

In addition to thinking about long-term investments, Munger also emphasized the importance of having an open mind to be successful.

Speaking at Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska, along with Buffett in May, he said: “It’s so easy to spend less than you earn, invest smartly, and avoid toxic people and toxic activities, and to try to keep learning all your knowledge. living, and doing a lot of delayed gratification.

‘If you do all those things, you are almost guaranteed success. If you don’t, you’ll need a lot of luck.’

Put money into tracker funds

Munger has long advocated the fairly simple approach of investing in funds that track the value of popular indexes such as the S&P 500 – which tracks the 500 largest companies in the US, including Apple, Microsoft and Google.

While they may be diversified and therefore generate less noticeable income, these funds consistently deliver results, often offer lower fees and are a particularly useful place to invest retirement savings, he says.

“Consistently buy a cheap S&P 500 index fund,” he said in 2017. “Continue buying it through thick and thin, and especially through thin.”