How to Invest Like Warren Buffett

There is a great article on Morningstar in which Buffett's right hand man Charlie Munger (pictured) gave several factors that, working in concert, led to one of the most spectacular investment and business records in the history of capitalism. Those factors are:

Mental Aptitude. Warren Buffett is obviously a very smart man, but Munger stated he probably overachieved given his innate mental ability. For example, Buffett could not "beat all comers playing chess blindfolded" like U.S. chess champion Patrick Wolff. (Wolff beats multiple opponents simultaneously while blindfolded at Berkshire Hathaway annual meetings.) Using the dry humor of a ridiculous understatement, Munger called Wolff's skill "interesting."

Intense Interest. Munger noted that Buffett was intensely interested in business and investing from a very young age. "There is no substitute for a very intense interest."

Early Start. Another factor in the success of Berkshire Hathaway was that Buffett got an early start and was able to use his skills to compound capital over many decades.

Constant Learning. Munger stated that Buffett is one of the best "learning machines." The key to success is to continue learning throughout your life with a voracious appetite. Munger later circled back to this topic when he said the best way to gain wisdom was by "sitting on your [behind] and reading all day."

Concentration. Another factor in Berkshire's success was that the work was heavily concentrated in Buffett's mind. "It's hard to think of committees that have been successful." Munger used the analogy of John Wooden's player rotation strategy. The great UCLA basketball coach would only play seven out of his 12 players, so as to concentrate the experience into his seven best players. Similarly, most of Berkshire's work was concentrated in its best mind, Buffett's.

Article: "Munger Speaks on Berkshire's Success"
Toan Tran