Learn from Others’ Mistakes

Charlie Munger and Warren Buffett have shared a lot of sage investment wisdom over the years. Munger had a great interview in the Wall Street Journal leading up to this year’s Berkshire Hathaway annual meeting (WSJ). In it, he repeated one of my favorite nuggets. He wants to learn as much as he can from other people’s investment mistakes. As he says, “It’s too painful to [learn] by personal hardship.”

Avoiding mistakes is half the battle in growing and preserving your wealth. Let’s be honest. We all make mistakes. The goal is to avoid the major blunders by learning from the ones others made.

Here are a few examples of major blunders that we should avoid:

  • Many Enron employees had all of their wealth tied up in their company stock in 2001. It went bankrupt and they were left with nothing (CNN Money).
  • A similar fate met investors who held Wachovia Bank in 2008 (Charlotte Observer).
  • As for preserving your estate, make sure you set up a will – unlike Prince (Forbes). Two years after his death, his heirs still hadn’t received a penny because he didn’t get around to writing a will.
  • Prince isn’t the only one to die without a will. His death prompted many lists of famous people who died without wills to be published. Here’s one (Forbes).

They say those who don’t learn from history are doomed to repeat it. May we all learn from others so that we don’t repeat their mistakes.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.