Charlie Munger’s 5 golden investment formulas, which transformed Warren Buffett from a millionaire to a billionaire, are equally effective even today.

New Delhi. Charlie Munger’s name is taken in the world of investment in the same way as Chanakya’s name is taken in the world of strategy. Munger, Warren Buffett’s closest associate and the real architect of Berkshire Hathaway’s unprecedented success, completely changed the thinking of Buffett himself. The investment principles of Munger, who left the world on 28 November 2023 at the age of 99, are still like a Bible for millions of investors.1. If you don’t understand, don’t touch it – avoid greed. Munger’s first and most important principle was that you should invest money only in those businesses which you understand well. Even if the whole world is crazy about a stock, if you don’t understand its business model then stay away from it. Munger used to divide investments into three categories – yes, no and very difficult. He always left the ‘too difficult’ things immediately.2. Think upside down – recognize the mistakes, success will come automatically. Munger used to emphasize on thinking backwards to solve problems. His advice was not to think about how to become rich, but think about what mistakes can make me poor. The person who recognizes his mistakes and removes them, success automatically comes to him.3. Waiting is the real investment – ​​the magic of compounding According to Munger, the real money in investment is not in buying or selling shares but in waiting patiently. The biggest mistake is to overreact to daily market fluctuations. Once you choose a great company, keep it with you for years because the magic of compounding works only when you give time.4. Buy a great company, not a cheap one – this is what changed Buffett’s fortunes. This was the advice that changed the fortunes of Berkshire Hathaway. Munger helped Buffett break the habit of buying cheap companies and said that it is better to buy a great company at a fair price than to buy an ordinary company at a great price. Munger gave preference to such companies which had brand value or an impenetrable fort like patent i.e. Moat.5. Not just economics—read psychology and history too Munger did not consider investing to be just a game of numbers. He used to take investment decisions by combining psychology, history, physics and mathematics. He said that to someone who has only a hammer, every problem looks like a nail. Therefore, the more you expand the scope of your knowledge, the better you will be able to understand the market.