Late Tuesday, Nov. 28, a message in a chat of two lifelong friends — bonds forged over 25+ years — stopped me in my tracks. It contained a news article, “Charlie Munger, Warren Buffet’s right-hand man at Berkshire Hathaway, passes away at 99.” Instantly, a wave of profound sadness washed over me.

Why such a deep, emotional response? The story begins four years after my grandfather Julius ignited my journey into personal finance at the tender age of 10. While my peers were mainly only immersed in the worlds of sports and video games, I encountered a figure who would leave an indelible imprint on my life: Charlie Munger.

Renowned as an investor, it was his philosophical depth, sharp wit and steadfast integrity that truly resonated with me. In paying tribute to Munger, I explore the invaluable lessons his life and wisdom imparted upon me, lessons that not only shaped my personal ethos but also profoundly align with the guiding principles of Julius Wealth Advisors.

Compound Interest Is the Eighth Wonder of the World

Munger’s teachings on compound interest transcended the mere accumulation of wealth; they illuminated a powerful metaphor for life itself. Compounding, in his view, was not limited to financial growth — it applied equally to the realms of knowledge, relationships and personal development. It’s a mindset that when embraced in all aspects of one’s life can lead to exponential growth. This growth might remain inconspicuous in the short-term, but over time, its impact becomes profoundly significant.

This concept forms the bedrock of the message I share with both prospects and clients at Julius Wealth Advisors: Time + Discipline? = Financial Freedom. It’s about cultivating the discipline to make consistent, incremental progress, a practice that, over time, can yield results beyond one’s wildest dreams.

This philosophy has borne fruit in various aspects of my life: nurturing friendships that have lasted over 25 years, earning a full scholarship to a D1 football program, elevating my wealth from a negative balance to over seven figures, and founding my own business. Yet, my aspiration is to emulate Charlie — to be a steadfast “sidekick” in others’ journeys, jointly navigating the path toward our goals, anchored in time, discipline and the joy of witnessing the magic of compounding unfold.

Knowing What You Don’t Know

Munger’s humility in recognizing his own intellectual boundaries was a profound lesson in itself. He often emphasized the significance of knowing the limits of your expertise. This deeply resonated with me, teaching me the importance of acknowledging when I lacked answers and the power in seeking wisdom from those who had them. I explored this concept extensively in my “The Big Bo $how” podcast episode titled “The 4 Quadrants of Knowledge.”

This principle is about staying within what Munger termed your “circle of competence.” Many people fall into the trap of trying to be a “jack of all trades,” often leading to a superficial understanding of many subjects rather than a deep knowledge of a few. This fear of admitting ignorance can lead to significant errors, both in life and in investment decisions.

The key is to understand what you know, recognize what you don’t, and either seek assistance or steer clear of areas beyond your understanding. However, when it comes to personal finance — a topic that is inescapable yet often not taught in schools — seeking guidance becomes crucial. It’s vital to be brutally honest with yourself about your areas of ignorance.

Avoiding Stupidity Is Easier Than Seeking Brilliance

Munger’s adage, “avoiding stupidity is easier than seeking brilliance,” offers profound wisdom, particularly relevant in finance and life’s many other realms. It suggests that while striving for brilliance or perfection can lead to complexity and unrealistic expectations, avoiding poor decisions is often a more pragmatic and rewarding strategy. This principle, distinct from merely “knowing what you don’t know,” emphasizes proactive decision-making and behavior to prevent negative outcomes.

In finance, this mindset is particularly crucial. The urge to achieve perfection or outperform can lead to aggressive strategies and uncalculated risks. Munger’s approach has taught me that risk management isn’t about boasting intellect, but about avoiding foolish mistakes. It’s a balance between protecting assets and pursuing growth, emphasizing prudence and risk mitigation over chasing volatile returns.

This philosophy isn’t limited to financial management; it’s equally applicable in everyday life. It encourages cautious decision-making, considering long-term implications over short-term benefits. This approach is beneficial in various aspects of life, from career choices and personal investments to daily interactions, helping to avoid unnecessary complications and fostering a more thoughtful, calculated approach to challenges.

The Psychology of Human Misjudgment

Munger’s profound insights into human behavior, especially highlighted in his renowned talk on the “psychology of human misjudgment,” offer a deep dive into the biases and irrationalities inherent in decision-making. This exploration provides a critical understanding of how our primal instincts, remnants of our cave-dwelling ancestors, often influence our modern-day choices, especially in high-stress environments. Which personal finance and trying to create long-term sustainable wealth often tend to be.

Despite our evolutionary advancements, we remain, at our core, emotional beings. Our brains, wired for survival in a vastly different era, are predisposed to react emotionally to situations like market fluctuations or investment risks. This recognition is crucial to the approach of advising people, and why Julius Wealth Advisors integrates behavioral coaching. Acting as an objective, unemotional third-party coach, we seek to help clients navigate through the emotional rollercoaster of trying to create long-term sustainable wealth. This approach involves guiding clients to recognize and manage their emotional biases, enabling them to make more rational, well-informed decisions that align with their long-term financial goals.

In essence, Munger’s insights into the psychology of human misjudgment extend beyond identifying the pitfalls of our psychological biases. They provide a framework for understanding and overcoming these challenges, both in personal finance and broader life decisions. By applying these lessons, the goal is to empower our clients, equipping them with the knowledge and tools to master their emotional responses and make more balanced, informed decisions in their financial journeys.

The Art of Lifelong Learning

Munger’s dedication to lifelong learning has significantly shaped both my personal development and professional approach. His multidisciplinary pursuit of knowledge, spanning diverse fields from history to psychology, has profoundly influenced my understanding of education. Munger’s belief, encapsulated in his statement, “In my whole life, I have known no wise people who didn’t read all the time — none, zero,” has been a constant reminder of the endless journey of learning.

In my professional practice, Munger’s holistic educational philosophy has been instrumental. It has prompted me to consider not just the financial aspects but also the emotional and personal dimensions of our clients’ lives in our advising at Julius Wealth Advisors. His approach helps in understanding the wider context of financial decisions, recognizing them as deeply connected to human behavior and broader societal dynamics.

Ultimately, Munger’s ethos of lifelong learning is more than a personal mantra; it’s a collective imperative. It’s about inspiring a continuous quest for knowledge and intellectual curiosity in others. This principle extends beyond the pursuit of personal success, promoting a shared journey of knowledge and understanding. As Munger himself suggested, the goal is to “go to bed smarter than when you woke up,” a philosophy that drives us to embrace and impart the power of lifelong learning.

So, Thank You, Charlie!

In summary, the legacy of Charlie Munger stretches far beyond his remarkable feats in the financial realm. His teachings have been a lighthouse, guiding me through critical moments and shaping the foundations of my career and life philosophy. The wisdom he imparted will continue to be a source of inspiration and guidance for me.

In a landscape often clouded by the pursuit of immediate gratification and transient triumphs, Munger’s teachings stand out as a timeless reminder of the importance of patience, integrity and an unyielding commitment to knowledge. His wisdom doesn’t just enlighten; it challenges all of us to make informed decisions and embrace purposeful growth in every aspect of our lives.

Munger’s teachings are more than just lessons; they are a call to action for anyone aspiring to lead a meaningful and well-considered life. One filled with passion!

Rest in peace, Charlie Munger. Your wisdom continues to light the way.

Jason Blumstein, CFA® is the CEO and founder of Julius Wealth Advisors, LLC (www.juliuswealthadvisors.com), a registered investment adviser. He is also the host of “The Big Bo $how” podcast available on Spotify and Apple podcasts. Jason has been investing and educating himself on personal finance since the age of 10. His company’s mission is to empower people to live their best financial lives while fostering an ecosystem of integrity, knowledge and passion. Jason currently resides in Englewood with his wife and two kids. He can be reached at (201) 289-9181 and/or [email protected].

Disclosures: This piece contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. Past performance does not guarantee any future results. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. For additional information about Julius Wealth Advisors, including its services and fees, contact us or visit adviserinfo.sec.gov.