Humans tend to complicate things, but Mr. Charlie Munger does the opposite:We are keen to keep things simple, and if things are too troublesome, we will skip to another one.What could be easier than to do that?

The really strong is the easiest.

Buffett agrees: "the reason for failure is that we have 'great' and complex systems, or use magical rules, but all we have to do is get back to simplicity." "

The procedure must be simplified.

Simplify complex problems, everything from the point of view of easy to solve the problem, remove miscellaneous waste, leaving the essence.

Break the problem into several elements, but think about it comprehensively and comprehensively. First outline the main problems, list the main factors on the paper, and analyze the relationship between the various factors.

As Charlie Munger said, when dealing with difficult tasks, I usually start with the easiest decisions.

Proceed from the problem itself, not from solving the problem, only take the most effective method, because what matters is the result, not the solution. Look for a good solution to the current problem, rather than a perfect and beautiful one.

Making fewer decisions is better, because it forces us to pay more attention to each decision, while reducing the chances of making mistakes.

Buffett gives a good reason:

"Charlie and I knew a long time ago that it's hard to make hundreds of smart small investment decisions in one's investment career. This idea became more and more mature as Berkshire's capital grew, so we decided that it would be enough to make wise decisions in only a few times, rather than being smart. so now we only need to have a good investment idea once a year. "

We need to avoid noise or irrelevant factors and look at the overall situation.

The trick to being smart, says William James, is to identify priorities, to know what is important and what to ignore.

Charlie Munger, on the other hand, tells us the importance of removing fake semen:"I think it is partly due to the ability to distinguish between stupidity and wisdom. Kick out the stupid behavior, the brain becomes clear, so that you can do something wise. "

Sometimes, available information is often flooded, including misinformation or information that cannot help us explain and predict.

Sometimes we pay too much attention to details and things that are irrelevant and unknowable.

Sometimes we ignore the obvious facts. The focus will allow us to be clear about our priorities.

Sometimes, a limited number of action steps can achieve great results.

So there are only a few decisions that really matter.

More information does not mean richer knowledge or more successful decisions

Today we get more information, but at the same time we have more access to wrong information.

'sometimes the harder you work, the more confidence you have, but you may be working in the wrong direction, 'Mr. Munger said.

In Conan Doyle's Legend Mystery, Sherlock Holmes says that the most important art of detectives is to distinguish coincidences and keys from many clues.

We must understand what we must avoid in life. Instead of constantly exploring ways to succeed, it is better to know the areas, situations and people you must avoid first, which will help reduce mistakes and make more effective use of your time. In addition, prevention in advance is easier than treatment afterwards.

Charlie Munger puts things that are "resolutely untouchable" in "too tricky"baskets" because they are "tiresome".

Buffett describes what he and Charlie Munger did:"after 25 years of business management and running different businesses, Charlie and I still haven't learned how to solve problems, but we've learned how to avoid them. At this point, we have been quite successful. "

"We specialize in the one-foot hurdles and avoid the seven-foot high jump. This finding may seem unfair, but whether in business or investment, sticking to a company that makes you easy and transparent will be more profitable than sticking to a company you can't control. Our consistent attitude is that you can't do business with a man of bad character, but we don't protect ourselves with contracts and due prudence-none of this is needed. We can cooperate more with people we like, admire and trust. "

Charlie Munger continued:

"Warren said a long time ago that the difference between a good company and a bad company is that the former always makes it easy for you to make one decision after another, while the latter always brings a lot of problems-the difficult decision: 'does it work?' 'is it worth so much?' So, this is a way to decide between good companies and bad ones: whether it always poses big problems for management-or whether it always leads to satisfying, no-brain decisions. "

Samuel Johnson said that excellence generally depends on a lifetime of tireless pursuit, because it cannot be achieved easily. It is impossible for the brain to focus on many things at the same time, let alone expect it to accomplish these tasks easily. It takes time and effort for the brain to switch between different tasks, especially between complex and unfamiliar tasks.

If we focus on only one thing at a time, our actions and decisions will be easier. Doing two things at the same time is equivalent to not doing one thing. If we only grasp one thing to do, we will do better and grow our talents.

For business management, concentration is very important.

There are some good companies that abandon the solid basic business because of the deviation of business direction, and instead go to buy those companies with average or even poor performance. Gekco Insurance is a case in point. Gekco Insurance intervened in all kinds of business everywhere in the 1980s, almost none of them succeeded, and paid a huge price for it.

When Buffett and Mr. Charlie Munger are thinking about whether to invest in companies that look very good, what they are most concerned about is whether it makes them lose their focus.

Buffett said: "I think it is not uncommon for arrogance or unwillingness to be lonely to make some managers delusional, which in turn leads to the stagnation of corporate value." I like focused management. "

Before you solve the problem, ask yourself whether it is worth your time and effort to solve.

Buffett explained the success of his life and business with Charlie Munger:

"before making a decision, there are two questions you must ask yourself: 1. Is it knowable? 2. Is it important? If it is unknowable, then pass by, because we know that there are many important but unknown things in the world. In addition, if it is not important, whether it is knowable or unknowable, there is no difference, we also pass by. "

Indeed, there are some important things we don't know, such as the trend of the stock market, but sometimes what we know is not important.

Einstein said that asking a problem is often more important than solving a problem, because solving a problem may be just a mathematical or experimental skill.

Sometimes it is more difficult to understand a problem than to solve it.

It's helpful to ask the basic question: what does it mean? What is the simplest example? What's the first question? Is it difficult for me to discern the correct answer? Can you give some examples to make the problem clearer? It is not enough to ask the right questions, we should also find the right direction and ask the right people.

Don't rely too much on your own assumptions, because we are not sure that other people's assumptions are the same as ours, so we need to give others a chance to explain.

You can think perfectly without pressure, time limits, threats, or other people's judgment.

It takes time to think, and when we are half-hearted, simple truths often turn a blind eye. If you can cool the problem for a while and let the subconscious start to move, you can often solve a problem better and get more inspiration.

Since Conan Doyle created those fascinating stories for us, there is now a moment in almost every detective novel: the investigator has collected all the facts and can solve at least part of the problem.

These facts seem strange, they are not connected and have nothing to do with each other. But great detectives know that these investigations are enough, and now there are only some pure thinking activities left to organize the data collected. So Einstein would play the violin or smoke lazily on the sofa, and all of a sudden, he found the answer.

Roger Roewenstein describes Buffett in the Legend of Buffett: the growth of an American capitalist: "Buffett's genius is mainly reflected in character-patience, discipline and reason." His talent comes from his unparalleled independent mind, able to work attentively without all outside interference. "

You must have enough patience to wait for an opportunity, dare to refuse temptation and make a wrong judgment when you are in a hurry. This is the secret of investment.

Buffett said: "in terms of capital allocation, activities are not proportional to achievements. In fact, in the field of investment and acquisition, manic behavior will only make you get half the result with twice the effort." If you feel the urgent need to invest every day, you are sure to make a lot of mistakes. This is not the case with investment, you have to wait for a good opportunity to sell. "

Mr. Charlie Munger added: "important opportunities like this always come to people who have been waiting and looking patiently, who are curious and carefully analyze many variables." When a great opportunity comes, all they need is to make big bets, exercise their long-standing caution and patience, and then make use of the resources at hand. "

What can be done to help avoid problems or guide decision-making behavior?

Benjamin Franklin put forward a principle: concentrate on the task at hand, concentrate on it, and don't have the foolish idea of getting rich overnight. Diligence and patience are the first necessary means of wisdom.

Charlie Munger also came up with a rule with an example: "any time anyone recommends you a 200-page manual and has to pay a large commission, don't be fooled." If you adopt this' Munger rule', you may occasionally go wrong. But in the long run, you will always be ahead of others in your life-and reduce some unpleasant experiences that may wear away your love for the people around you. "

Buffett provides us with guidance on how to succeed in the insurance industry, which can also be applied in other areas.

Truly successful companies must adhere to the following three important principles:

1. Accept only risks that can be properly measured, carefully assess all relevant factors, including the possibility of minimum losses, and then arrive at the expected profit value. These companies never aim at market share, and they are not eager to see the same industry compete for customers or offer unreasonable terms for settlement of claims.

2. The content of the business to be undertaken should be strictly restricted to ensure that the company does not accumulate claims as a result of a single accident and its associated world, resulting in damage to the company's solvency, while sparing no effort to look for seemingly unrelated risks. each other's potential views.

3. Avoid getting involved in businesses that may cause moral hazard, no matter how attractive the insurance rates are, don't expect to take advantage of the bad guys, the integrity of most customers is trustworthy, so you don't have to deal with people with moral concerns. it usually turns out to be much more expensive than expected.

"just like when we invest, insurers want excellent long-term performance, not on a few successful cases, but on how to avoid making stupid decisions. "Buffett said.

Screening allows you to focus and focus on what is meaningful. After knowing your goals, you need some criteria to measure the various options. Ask yourself: what are the most important and knowable factors to achieve your goals or avoid problems?

The criteria of judgment should be based on facts and with appropriate predictability, that is, we can rely on them appropriately. The criteria used to judge things must be the most necessary and concise, and then rank them in order of importance and act as filters.

Set decision thresholds, reduce the likelihood of misforecasts and losses, consider the consequences of wrong decisions, and with filters, we can say "no" to 90% of things in 10 seconds.

At a press conference in 2001, when Buffett was asked how to evaluate a new business idea, he replied that four criteria were used as filters: can I understand? If so, take the following; does it have a sustainable competitive advantage, if so, take the following; does the management gather a lot of capable and honest people, if so, take the following; is the price reasonable? If we finally get through this filter, let's start writing checks.

Buffett's so-called "understanding" is predictable.

Buffett's definition of "understanding" is to be able to answer questions about the direction of the company within 10 years with considerable certainty.

"the only way we can make money is whether we can evaluate a company. If we can't evaluate a carbon steel company, we won't buy it. But that doesn't mean it's not a good deal, it doesn't mean it can't sell its own value, it just means we don't know how to evaluate it. "

Give another example where rules and filters can be combined. Practical experience often tells us that dealing with people of poor character often brings us trouble.

Therefore, one principle is: "avoid dealing with people of bad character." "

One filter is: "maintain a good track record and character." "

If you have a good understanding of this principle, you can ask the relevant question: "what is the character of this person?" "

The process of elimination means the process of accumulating effort. For example, it is necessary to find proof to support those views that contradict basic scientific views. Skip those that can cause great pain, unimportant or unknown, impossible or impossible, impossible to anticipate or explain, unverifiable, negated, oversimplified decisions, wrong assumptions, and problems that we can't do or are outside our capabilities.

Exclusion is also needed in the field of science. In order to avoid messing with observations or experiments with incomplete information, scientists consider what kind of experiments are the most important and convincing before observing and experimenting: what do we want to get or prove? How can we achieve the goal? What can't happen? By asking these questions, they reduce the possibility. This is similar to what Buffett advocated-eliminate some possibilities and then focus on a few possible points.

Using the checklist program, you can work with other tools to reduce losses and focus on key points. If we don't check these key points properly, it may hurt us.

Charlie Munger suggests that we should use models in the form of lists: generally speaking, we should master some intellectual models, and it is necessary to take the time to make a list and check from beginning to end to see if this item is missing and that item is missing. If there are two or three important items that are not on the list-suppose you are a pilot, you are likely to crash. Similarly, if you do not use a complete project list when analyzing a company, you are likely to make a wrong investment.

The following issues should be taken into account when designing lists: different issues require different lists; a list should include each key project to ensure safety and avoid accidents; practical, simple and convenient; and in line with reality. However, don't rely too much on lists. They sometimes give us a fake sense of security.

The list works on the premise that everything is predictable, but sometimes something unexpected happens, and things that are ignored may be the main cause of the problem. Acting according to our pre-principles, filters, and lists is often more reasonable than doing things with passion, but it is not appropriate to make too many rules, filters, or mindless things. We must always be aware of our ultimate goals.