Source: Qilehui.

Firstly, thinking about issues in reverse can make them easier to solve.

Adapting to the working methods of complex systems is 'thinking in reverse', and many times, issues can become easier as a result.

The problem-solving approach adopted by Charlie Munger is completely opposite to the methods most people use in life.

Backward reasoning and reverse thinking are two descriptions of this method.

For example, a good way to stay happy is to avoid things that cause you pain.

Munger once gave a speech about Johnny Carson, saying that Carson mentioned he couldn't tell graduates how to be happy, but he could share personal experiences on how to become unhappy.

Carson believes that there are three things that cause suffering:

1) Drugs that change emotions or perceptions;

2) Jealousy;

3) Resentment.

Carson's idea is to think about a problem in reverse, studying how to create happiness by considering what not to do that causes you pain.

Here's another example of Munger's reverse thinking, an effective way to stay smart is to avoid making foolish decisions.

Avoiding foolish decisions certainly sounds easier than trying to be a smart person, as you can rely on a few simple principles to steer clear of certain stupid choices.

Munger also mentioned: "Much of the success in life and business comes from avoiding certain things, such as early death, bad marriages, etc."

2. Thinking in reverse is beneficial for understanding the essence of things.

Thinking in reverse is beneficial for understanding the essence of things, thereby helping to solve many difficult problems.

Munger once joked that he wanted to know where he would die so that he would not go there again.

He also told a story like this:

I often give my family some small challenges. Not long ago, I posed the following question to them: There is a sport in the usa that involves one-on-one competitions, and there is a national championship. One person won the championship in two competitions that were 65 years apart. Now, please state the name of the sport.

I have a son who is a physicist, and his way of thinking is greatly influenced by me. He immediately provided the answer, reasoning as follows: This sport cannot be one that requires hand-eye coordination; no one can win the national billiards league at the age of 85. It also cannot be chess, because this sport has complex rules and demands a considerable amount of endurance.

At this point, he thought of checkers, realizing that even at the age of 85, as long as one has rich experience, one can perform well in this sport.

Without a doubt, this is the correct answer.

If the obvious and well-known things are often wrong, then what is right?

Those that subvert conventions.

In fact, most things that most people do not understand or believe are often the best. For example, some investment concepts and methods are not yet widely accepted, and only those with sufficient insight can seize such opportunities.

Third, in the long run, avoiding stupidity can make us excel.

Charlie Munger once said: "I believe part of the reason Berkshire is popular is that we seem to have found the 'investment trick.' In fact, it's not because we are exceptionally talented; we just avoid stupidity. You might not think it, but just avoiding stupidity allows us to perform so well."

This is also why Warren Buffett says that the first and second rules of investing are 'Don't lose money.'

The hardest part of the value investment system is emotional and psychological, rather than understanding the system itself.

The long-term advantage of 'avoiding stupidity' is seriously underestimated.

Note that we are talking about 'long-term.' This word is very important because longevity indicates that one is not merely relying on luck to avoid foolishness. This state requires humility, especially when it is beyond one's abilities.

Just as a person using a tool should be aware of its limitations, an investor relying on their own understanding must know the limitations of that understanding.

In your life, you have the opportunity to learn from your inevitable mistakes and the mistakes of others. This process is unlikely to yield positive results, but it is also beneficial for investing.

Humility helps reduce mistakes made due to arrogance.

4. Be greedy when others are fearful and fearful when others are greedy.

Munger advocates a way of thinking that involves reverse thinking, which he applies in many areas.

He once said, 'If I were to answer the question: What is the real failure in life? What do you most wish to avoid? I would think in reverse and consider what qualities I most wish to possess.'

And my answer is: controlling the primitive irrational emotions. When you are under a huge stimulus, you will exhibit many strange behaviors. If you can remain wise in such moments, you will benefit.

Christopher Davis, the director of Davis Advisors, said: Munger not only uses reverse thinking in his reasoning but also in his emotions. He seems to be able to turn emotions around; when others are ecstatic, he becomes uninterested; and when others are uncertain or fearful, he engages deeply.

This is why Munger and Buffett give such advice: to be greedy when others are fearful and to be fearful when others are greedy.

It is easier said than done. That is why it is said that successful investing is very simple, yet not easy.

Five, do not be deceived by high IQ.

Investors usually have high IQs, so they will think that making difficult investment decisions is beneficial. In fact, even if you try to do something difficult, you won't be rewarded.

High IQ may lead investors to prioritize finding and solving difficult problems because they believe their intellect will bring some benefits, but this is incorrect.

In this regard, Munger's view is: 'I categorize things into three types: good, bad, and too difficult. For something, unless I am certain that I have special insights, I will place it in the 'too difficult' category.'

A better strategy is to use high IQ to solve 'simple but highly rewarding' problems. Munger likes to work with those who think their IQ is low, but who actually have a high level of intelligence.

Six. Avoid doing things that others can do better.

Understand your own strengths.

You need to figure out what your own talents are. If someone else is more gifted at a certain game and you are not, you will lose. You have to identify your strengths and work within your own capabilities.

Work within your circle of competence.

If you indeed have a certain ability, you also need to understand the limits of your capability. In fact, everyone should know their strengths better than others, but not everyone can do it.

This is actually related to the concept of 'circle of competence.' Risks often come from not knowing what you are doing, so the wise approach is to ensure that you work within your capability.

'Margin of safety' also applies to this topic. If you are unclear about the limits of your capability, you should maintain a sufficient margin of safety. Do not be incompetent and foolish like your competitors, as this will be a significant advantage.

Learn to self-evaluate appropriately.

It is very difficult to promote the extension of the capability circle, and it is important to learn to self-evaluate properly regarding this.

We all have certain talents and skills, and we should all strive to improve these skills.

However, it is wise to understand the limits of your current skill development.

Especially when the risks are high, it is necessary to be conservative when self-evaluating. One of the main issues caused by human misjudgment psychology is overconfidence.

People tend to be overly optimistic; for example, a study in Sweden showed that 90% of drivers believe their driving skills are above average. And for investors, almost no one claims in public that their performance is below average.

Avoid doing things that others can do better.

Munger said, "Buffett and I will avoid doing things that others at Berkshire can do better."

If you let people who can do better than you handle it, life will become easier and better.

For example, for Munger, he focuses on buying a moat rather than building one. Munger leaves the construction of the moat to entrepreneurs and venture capitalists, positioning these matters as "too difficult."

Editor/Lambor