Charlie Munger’s Inverse Thinking Process

I was watching a few Charlie Munger speeches recently – Warren Buffett’s partner in leading Berkshire Hathaway.

Charlie talks a lot about “Inverse Thinking”…

The Inverse Thinking Process

What is Inverse Thinking?  Charlie says it is helpful to turn a question on its head.  If you want to know what would improve the situation of India, ask what would make India worse?  You can apply this to most situations:  If you want to know what would improve your life, ask what would make your life worse?  If you want to know what would improve schools, ask what would make schools worse?

Charlie does provide his answer to how to make life worse.

Charlie’s Recipe for a Miserable Life

His answer:  The perfect path to a miserable failure of a life is combining:

1. Sloth and
2. Unreliability

Another of Charlie’s particular questions he asks himself is how to keep from fanatical ideology?  He sees that human beings are so open to self-deception that we must (yes even you) all be on the lookout for our own beliefs that have become fanatical.

Charlie’s Recipe to Keep From Fanaticism

Can you state the arguments against your position as well as your opposition?  If you can state the arguments against your position as effectively as the opposing camp, then you can allow yourself to feel that you are not being fanatical.

Charlie on the Danger of Perverse Incentives

Be careful about being in situations that motivate unhappy behaviour.  Are the incentives in the systems in which you operate motivating behaviours that make you a better person, or a worse person.  Be careful if you think your answer is “neutral”…

Charlie on the Danger of Perverse People

Don’t work for those who you do not admire.

Never.

It will damage you.

Charlie Munger speaking at USC Graduation

There is one random quote that stuck with me from Charlie:

“Hope is not necessary to persevere” Frederick the Great

There… those are my thoughts for this Sunday afternoon 😉  It is now time to head to the Camp Nou for FC Barcelona’s game against Espanyol…  key for the league, and the Barcelona derby!