MICHEL PIREU: Knowing what not to do is more important than what to do
Making money is as much about steering clear of black spots as it is about chasing the light
“A lot of success in life comes from knowing what you want to avoid: early death, a bad marriage, etc,” says Charlie Munger. “If you want it short, try Buddha, who said, ‘I only teach one thing: I teach the cause of human sorrow and how to avoid some of it.’ That’s my approach: go around figuring out what doesn’t work and then avoid it — and when you get the sorrow, how to handle it. I think this is a very rational approach to the human condition. If you want to avoid sorrow, you gotta know the cause of sorrow. Avoid things like racing trains to the crossing, doing cocaine, etc.” That applies to investing. All the more so since one of the main reasons most of us are our own worst enemies as investors is that the financial universe is set up to deceive us. “The competitive and psychological pressure to give bad advice is so intense, the demand to produce noise is so unremitting,” says Jason Zweig, who writes for The Wall Street Journal, “that I often feel like a performer onstage bef...
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