According to Charlie Munger, here are the essential considerations for successful investing:
1. Risk: measure it, avoid it if possible, have a margin of safety, and limit downside.
2. Independence: don’t follow the herd, the herd will only do average.
3. Preparation: learning, building mental models, and continual improvement.
4. Humility: acknowledge what you don’t know, don’t be overconfident, stay within your circle of competence, and watch for errors.
5. Analytic rigor: calculate value before looking at price, and be a business analyst and not a securities analyst.
6. Allocation: consider opportunity costs.
7. Patience: Wait for the right opportunities.
8. Decisiveness: great ideas are rare, so bet big when they come along and when you have confidence in them.