Everyone knows that Warren Buffett and Charlie Munger are a formidable duo when it comes to smart investments. But what is their secret to being so successful? Read on..

1. The secret to Warren Buffett's success
Everyone knows that Warren Buffett and Charlie Munger are a formidable duo when it comes to
smart investments. But what is their secret to being so successful? Read on.......
Author : iFast Content Team
There is an article titled The Buffett Formula - How To Get Smarter that has gotten extremely
popular and is doing the rounds on the net. One should not be surprised. Any advice from
Buffett is always welcome. This article throws light on the investing success of two world-
renowned investors who work at Berkshire Hathaway- Warren Buffet and Charlie Munger. I
have culled out a few extracts and noted them here.
What is really interesting is that Munger sees his knowledge accumulation as an acquired,
rather than natural, genius. And he gives all the credit to the studying he does. “Neither Warren
nor I is smart enough to make the decisions with no time to think,” Munger once told a reporter.
“We make actual decisions very rapidly because we’ve spent so much time preparing ourselves
by quietly sitting and reading and thinking.”
So let's look at the Buffett formula, named after Buffett and his longtime business partner
Munger. Not only are they an extraordinary combination of minds but are also learning
machines. They didn’t get smart because they are both billionaires. No, in fact they became
billionaires because they are smart. More importantly, they keep getting smarter.
 Read. A lot.
Buffett says, “I just sit in my office and read all day.” He estimates that he spends 80% of his
working day reading and thinking. “You could hardly find a partnership in which two people
settle on reading more hours of the day than in ours,” Munger commented.
When asked how to get smarter, Buffett once held up stacks of paper and said “read 500 pages
like this every day. That’s how knowledge builds up, like compound interest.”
One smart cookie who implemented Buffett’s advice, Todd Combs, now works for the legendary
investor.
But how you read matters too. You need to be critical and always thinking. You need to do the
mental work required to hold an opinion.
In Working Tougher: Why Great Partnerships Succeed Buffett comments to author Michael
Eisner: "Look, my job is essentially just corralling more and more and more facts and
information, and occasionally seeing whether that leads to some action. And Charlie—his
children call him a book with legs."
 Learn. Continuously & Constantly.
Eisner comments that the reason both men agreed that it’s better that they never lived in the
same city, or worked in the same office is because they would have wanted to talk all the time,
leaving no time for the reading. Munger himself says: “If we had not been continuous learners,
the record would not have been as good. And we were so extreme about it that we both spent
the better part of our days reading, so we could learn more, which is not a common pattern in
business.”
There's a catch here. They don't read the celebrity pages to find Kim Kardashian's latest antics
or how many children Brad Pitt and Angelina Jolie currently have. Neither do they read other
people's opinions. “We don’t read other people’s opinions. We want to get the facts, and then
think,” explains Buffett. “Charlie can’t encounter a problem without thinking of an answer. He

2. has the best 30-second mind I’ve ever seen. I’ll call him up, and within 30 seconds, he’ll grasp it.
He just sees things immediately.”
Munger offers: "We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s
not enough. You have to have a temperament to grab ideas and do sensible things. Most people
don’t grab the right ideas or don’t know what to do with them."
Commenting on what it means to have knowledge, in How To Read A Book: The Classic Guide to
Intelligent Reading, Mortimer Adler writes: “The person who says he knows what he thinks but
cannot express it usually does not know what he thinks.”
I know a lot of people like that and frankly, sometimes I am guilty of the same.
Can you explain what you know to someone else? Try it. Pick an idea you think you have a grasp
of and write it out on a sheet of paper as if you were explaining it to someone else. Or better still,
get someone to sit down and listen to you and then ask him if you are making sense.
 Stop the blame game. Specially when its your genes.
In an interview he gave for his authorized biography The Snowball: Warren Buffett and the
Business of Life, Buffett narrated this story:
Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s
my most valuable client?’ He decided it was himself. So he decided to sell himself an hour each
day. Everybody should do this, be the client, and then work for other people, too, and sell
yourself an hour a day. It’s important to think about the opportunity cost of this hour. On one
hand you can check twitter, read some online news, and reply to a few emails while pretending
to finish the memo that is supposed to be the focus of your attention. On the other hand, you can
dedicate the time to improving yourself. In the short term, you’re better off with the dopamine
laced rush of email and twitter while multitasking. In the long term, the investment in learning
something new and improving yourself goes further.
“I have always wanted to improve what I do,” Munger comments “even if it reduces my income
in any given year. And I always set aside time so I can play my own self-amusement and
improvement game.”
Go to bed smarter than when you woke up
- Charlie Munger
Have you ever realised that most people go through life not really getting any smarter? Is that
not shocking? That is simply because they won’t do the work required. It’s easy to come home,
sit on the couch, watch TV and zone out until bed time rolls around. But that’s not really going to
help you get smarter. Sure you know what happened on Survivor and Mad Men and who Carrie
Bradshaw in Sex and the City is currently dating. But that’s not knowledge accumulation, it’s a
mind-numbing sedative.
So read and concentrate when you do that. Another way to get smarter, outside of reading, is to
surround yourself with people who are not afraid to challenge your ideas. It sharpens your
thought process, makes you question your convictions and forces you to think harder and
smarter.
 Howards Marks: What makes an investor smart
 Warren Buffett: Wisdom & advice at 2013 annual meet
 World's most famous contrarian investors

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