Tell Me Where I Will Die And I Won't Go There
Charlie Munger, renowned for his investment wisdom as Warren Buffett’s business partner and the Vice Chairman of Berkshire Hathaway, famously said,
“All I want to know is where I’m going to die, so I’ll never go there.“
He was inspired by German mathematician Carl Gustav Jacob Jacobi, who coined the phrase “man muss immer umkehren” (“invert, always invert.”).
Inversion is an approach to solve a problem that starts with the end and works back towards the beginning.
While Jacobi used inversion primarily in the realm of mathematics, Munger adapted this mental model for a wide array of problems. Both Jacobi and Munger both intuitively understood that many complex problems - in math, business or life - are best solved when approached backwards.
Stoic philosophers, much like Munger, engaged in a similar exercise of reflection. Daily, they would imagine — in excruciating detail—all that could go horribly wrong in the days, weeks, and months ahead. This practice, known as premeditatio malorum — followed the principle of inversion and helped them to prepare mentally for the worst.
Similarly, in the business world, the principle of inversion proves equally valuable. Inversion helps uncover hidden beliefs and assumptions that may impede problem-solving. Think in reverse to uncover hidden assumptions, think in reverse to dodge pitfalls, and think in reverse to turn risks into opportunities.
For instance, in fostering organizational innovation, instead of merely brainstorming progressive steps, one could invert the problem and instead prevent actions that could stifle innovation—steps that the organization might already be taking unknowingly.
This principle of looking at things backward is not limited to business alone; it extends into our personal lives as well. When pondering the good life, think not just about what brings joy, but also about what breeds misery. The strategy? Avoid those things that do.
In essence, as Munger advises, spend less time trying to be brilliant and more time trying to avoid obvious stupidity.
In fact, in a great speech titled How to guarantee a life of misery Charlie Munger outlined 7 ways to guarantee a miserable life.
Ingesting chemicals in an effort to alter mood or perception
Envy
Resentment
Be unreliable. Do not faithfully do what you have engaged to do
Learn everything you possibly can from your own personal experience, minimizing what you learn vicariously from the good and bad experience of others, living and dead
To go down and stay down when you get your first, second, third severe reverse in the battle of life because there is so much adversity out there, even for the lucky and wise, this will guarantee that, in due course, you will be permanently mired in misery
Ignore the story about a rustic who said: “I wish I knew where I was going to die, and then I’d never go there.”
The whole speech is worth reading not just for the wisdom contained in it but also for the wit and effect with which Munger conveys his message.
Whether in business strategy or personal life, inversion turns risks into opportunities. For instance, a company that faced a decline in customer retention reversed the trend by asking, 'What is making our existing customers leave?' rather than 'How can we attract more customers?'
When facing life's challenges, think of inversion as an "avoiding stupidity filter." It may not always offer a solution, but it helps you dodge potential pitfalls. That may not be as glamorous as seeking brilliance, but it's easier to execute and hence more effective.
In line with Munger’s thoughts, Josh Wolfe's perspective on failure adds another dimension to this approach. He says, 'Failure comes from failure to imagine failure.' In that he is suggesting that imagining failure can open doors to success. These doors only appear because the knowledge of potential failure can be turned into a concrete plan for success.
Once again, the idea is to imagine what would cause us to fail and work to avoid it. When we imagine failure, we identify causes for potential failures. Those causes allow us to make plans to prevent us from failing, ultimately improving our chances of success.
In applying the inversion approach to my own decision-making, I've discovered that strength lies in realizing the significance of actions not taken, sometimes even more than those that were taken. For eg. avoiding buying overvalued stocks in the Cathy Woods era, not buying into the housing boom during the real-estate bubble, and ignoring the bitcoin mania proved to be far more prudent investment decisions vs buying the right stocks. Today that might apply to being prudent about AI stocks.
In exploring the insightful world of Charlie Munger and the inversion principle, we uncover a powerful tool for decision-making, not just in the realms of business and investment but also in our everyday lives.
Now, I invite you to pause and reflect:
In which areas of your life could this approach be transformative?
How might thinking in reverse prevent potential pitfalls and uncover hidden solutions?
As you face future decisions, big or small, challenge yourself to apply this 'inverted' thinking. Consider what actions, or perhaps inactions, might lead to better outcomes.
In this journey of thoughtful decision-making, we align with Munger's philosophy that often, the greatest advantage comes not from extraordinary intelligence but from avoiding simple errors. As we strive to apply inversion in our lives, let us heed Munger’s words:
It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent.
Thanks for reading Wisdom & Prosperity!