Home > Uncategorized > How thinking like Charlie Munger may have saved my life

How thinking like Charlie Munger may have saved my life

How to avoid blowing up your portfolio.

25iq

This is a continuation of my previous blog posts on “the Psychology of Human Misjudgment,” which is Charlie Munger’s description of dysfunctional decision making heuristics.  Munger writes:

“…tendencies are probably much more good than bad. Otherwise, they wouldn’t be there, working pretty well for man, given his condition and his limited brain capacity. So the tendencies can’t be simply washed out automatically, and shouldn’t be. Nevertheless, the psychological thought system described, when properly understood and used, enables the spread of wisdom and good conduct and facilitates the avoidance of disaster. Tendency is not always destiny, and knowing the tendencies and their antidotes can often help prevent trouble that would otherwise occur.”  Poor Charlie’s Almanack

Here is a personal example of potentially dysfunctional heuristics at work.  For a few months I had been having slight pain in my biceps near my elbows.  My doctor said it was probably an injury…

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