Charlie Munger, the legendary investor and partner of Warren Buffett, believes in starting with the don’ts to achieve success in life and investing. He advises playing it safe by avoiding areas outside one’s circle of competence and limiting risk to understand and control it. Munger also advocates learning from other people’s mistakes and becoming a Swiss Army Knife with a multidisciplinary approach to investing. He stresses the importance of using a checklist to measure risk, maintain independence, practice intellectual humility, allocate capital wisely, exercise patience, and act decisively when opportunities arise. Finally, Munger coined the term “Lollapalooza effect” to describe an extraordinary outcome created when several positive factors reinforce each other.
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