Charlie Munger once said: "When everybody goes insane, staying sane...
Oguz Erkan@oguzerkan
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Apr 06, 2025
~2 min read
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Charlie Munger once said:
"When everybody goes insane, staying sane is your competitive advantage."
Here are 7 investing principles to navigate tough times: 🧵
"When everybody goes insane, staying sane is your competitive advantage."
Here are 7 investing principles to navigate tough times: 🧵
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1/ Buy exceptional businesses.
This is the best hedge you can ever have.
Best companies have:
- Simple business model.
- Durable competitive advantage.
- Honest and able management team.
When the business has all three and is trading attractively, you simply buy.
This is the best hedge you can ever have.
Best companies have:
- Simple business model.
- Durable competitive advantage.
- Honest and able management team.
When the business has all three and is trading attractively, you simply buy.
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2/ Think long term.
People panic too much when things are going bad and they too easily have an euphoria when things are good.
Reality is that things always slowly get better over time.
If you think long term, temporary headwinds are great buying opportunities.
People panic too much when things are going bad and they too easily have an euphoria when things are good.
Reality is that things always slowly get better over time.
If you think long term, temporary headwinds are great buying opportunities.
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3/ Never short.
In times of market crash, people think shorting is easy money.
That never ends up well.
They think we are getting in a recovery in the slightest bounce, close their short at loss and open it again when fake bounce fails..
It never works in the long term.
In times of market crash, people think shorting is easy money.
That never ends up well.
They think we are getting in a recovery in the slightest bounce, close their short at loss and open it again when fake bounce fails..
It never works in the long term.
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4/ Be flexible.
Quickly changing your mind is considered a sign of weak decision making in may disciplines, not in investing.
In investing, changing your mind as quickly as possible when you are wrong is considered a skill.
When you are wrong, don't insist. Be flexible.
Quickly changing your mind is considered a sign of weak decision making in may disciplines, not in investing.
In investing, changing your mind as quickly as possible when you are wrong is considered a skill.
When you are wrong, don't insist. Be flexible.
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5/ Look where others aren't looking at.
At the times of crises, investors totally ignore small business as even big businesses struggle.
This is the ultimate opportunity.
You can buy them at dirt cheap prices while nobody is looking. This is how small investors can succeed.
At the times of crises, investors totally ignore small business as even big businesses struggle.
This is the ultimate opportunity.
You can buy them at dirt cheap prices while nobody is looking. This is how small investors can succeed.
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6/ Stay calm, when everybody is going crazy.
There are thee types if advantages in the market:
- Technical
- Behavioral
- Informational
There are too many smart people now so nobody has a technical or informational advantage.
Only advantage you have is behavioral.
There are thee types if advantages in the market:
- Technical
- Behavioral
- Informational
There are too many smart people now so nobody has a technical or informational advantage.
Only advantage you have is behavioral.
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7/ When you have great business, never sell.
As opposed to most people think, owning a great business is the only real long-term protection against downturns.
If inflation skyrockets and cheapest smartphone sells from $1000, people will still pay $1300 and buy the iPhone.
As opposed to most people think, owning a great business is the only real long-term protection against downturns.
If inflation skyrockets and cheapest smartphone sells from $1000, people will still pay $1300 and buy the iPhone.
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Join 12,000+ readers to become a better investor.
You will get a free e-book when you join 👇
capitalist-letters.com