By Shane Parrish
February 23, 2015
IDEAS
Shane Parrish writes Farnam Street

Here are five simple notions, found in Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger, that Charlie Munger, the billionaire business partner of Warren Buffett, finds helpful in solving problems.

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1. Simplify

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2. Numerical Fluency

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3. Invert

Inverting the problem won’t always solve it, but it will help you avoid trouble. Call it the avoiding stupidity filter.

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4. Study The Basics

The basics are something that keeps coming up. The first of the five elements of effective thinking is understand deeply.

Munger also believes in the basics:

This happens in part because professional advisors are often undone, not by their conscious malfeasance rather by troubles found in their subconscious bias.

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5. Lollapalooza Effects

And you need to combine really big things.

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Still Curious?

See how Munger applies these in this essay. Learn more about the wit and wisdom of Charlie Munger by picking up a copy of Poor Charlie’s Almanackand Damn Right!: Behind the Scenes with Berkshire Hathaway billionaire Charlie Munger.

This piece originally appeared on Farnam Street.

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