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Charlie Munger

The Inverter

You attack a decision by asking how it fails, not how it wins. You collect mental models from outside finance and you would rather own three extraordinary businesses than thirty adequate ones. Avoiding stupidity is your entire strategy.

Position on the six dimensions

Margin of SafetyPays any price
Business QualityOnly the best
Time HorizonTen years plus
ConcentrationFew, heavy bets
Contrarian BentAgainst the crowd
Decision ModeRules and systems

Where this method has an edge

Where it can hurt you

One rule from this method

Before you buy, write the three ways this loses money. If you cannot name three, you do not understand it yet.

Invert, always invert. List the ways this can go wrong first, and only then ask whether the upside is worth it.

Poor Charlie's Almanack — "Invert, always invert" (borrowed from Jacobi); latticework of mental models

How close are you to this method?

Take the 30-question test

The other nine

Benjamin Graham
The Defensive Analyst
Warren Buffett
The Compounder
Peter Lynch
The Ground Scout
Jesse Livermore
The Tape Reader
George Soros
The Reflexive Trader
Li Lu
The Cross-Border Holder
Duan Yongping
The Business Owner
John Templeton
The Global Contrarian
Ray Dalio
The Systems Builder
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