# Richer, Wiser, Happier **William Green** | [[Foundations]]  --- > "That mental habit of thinking dispassionately about facts and figures, probabilities, trade-offs between risk and reward, and the paramount importance of simply avoiding catastrophe does much to explain how the savviest investors live long and prosper." The greatest investors are intellectual mavericks. They profit from the misperceptions of people who think less rationally, rigorously, and objectively. But what makes them different isn't access to better information—it's temperament. The willingness to be lonely. The capacity to defy conventional opinion and follow their own peculiar path. This book distils decades of conversations with investors like Howard Marks, Charlie Munger, Mohnish Pabrai, and Nick Sleep. It's not really about stock picking. It's about how to think clearly in domains where the crowd is reliably wrong and patience is systematically punished. --- ## Core Ideas ### [[Scale Economies Shared]] Nick Sleep and Qais Zakaria developed what may be the most powerful business model insight in investing. Most companies capture scale economies for themselves—costs fall, margins rise, shareholders benefit. But a few companies *share* those savings with customers, creating a flywheel of lower prices, more customers, and further scale. Costco is the canonical example: as they get bigger, they pass savings to members rather than pocketing them. This creates customer loyalty that compounds over decades. Amazon operates similarly. The key insight is that generosity, structured correctly, can be a source of durable competitive advantage. ### [[Destination Analysis]] Sleep and Zakaria asked different questions than most analysts. Not "what will earnings be next quarter?" but: What is the intended destination for this business in ten or twenty years? What must management be doing today to raise the probability of arriving there? And what could prevent them from reaching it? This shifts analysis from short-term metrics to long-term inputs: Is the company strengthening relationships with customers? Is capital allocated rationally? Is there any shortsighted behaviour that could jeopardise eventual greatness? The destination matters more than quarterly checkpoints. ### [[Inversion]] Munger's approach to problems, borrowed from the mathematician Carl Jacobi: "Invert, always invert." If someone asks how to help India, ask instead: "What could I do to really ruin India?" Think through all the ways to cause disaster, then reverse it and avoid those actions. This is counterintuitive but powerful. Avoiding stupidity is often more tractable than achieving brilliance. Munger gave students "prescriptions for guaranteed misery"—be unreliable, avoid compromise, harbour resentments, stay down when struck by reverses. Don't do these things, and you're ahead of most people. Applied to investing: Don't pay too much. Don't invest in businesses prone to obsolescence. Don't invest with crooks and idiots. Don't invest in things you don't understand. The negative checklist is often more valuable than the positive one. --- ## Key Insights **The only way to beat the market is to diverge from the market.** This task favours brilliant oddballs—people with a rare capacity to defy conventional opinion. They care more about being right than gaining social acceptance. > "Unless you have a rational reason to believe you have an edge, then you probably don't." **Investing is mostly waiting.** There are no prizes for frenetic activity. It's a matter of waiting for rare moments when the odds of making money vastly outweigh the odds of losing it. Howard Marks: "Our performance doesn't come from what we buy or sell. It comes from what we hold. So the main activity is holding, not buying and selling." **Avoid anything that's too hard.** Pabrai's secret isn't finding complex opportunities—it's avoiding them. Stay within your circle of competence. Make a small number of mispriced bets with minimal downside and significant upside. Assume you'll be right no more than two-thirds of the time. **Deferred gratification is the meta-skill.** "When you look at all the mistakes you make in life, private and professional, it's almost always because you reached for some short-term fix or some short-term high." The advantage comes from moving consistently against short-termism. > "Take a simple idea and take it seriously." **Size positions by risk, not expected return.** Greenblatt: "I don't buy more of the ones I can make the most money on. I buy more of the ones that I can't lose money on." Gundlach asks one question before every investment: "If I assume that I'm wrong on this, what's the consequence going to be?" Make your mistakes nonfatal. **The best strategy is one you can stick with.** "For most individuals, the best strategy is not the one that's going to get you the highest return. Rather, the ideal is a good strategy that you can stick with in bad times." This is about temperament, not technique. **Change is inevitable; cling to nothing.** Marks: "We cannot expect to control our environment. We have to accommodate to our environment." The Buddha's teaching applies to investing: we doom ourselves to suffer when we expect things to stay the same. Freedom comes from knowing everything is ephemeral. **Small, incremental advances compound.** "If you want the secret to great success, it's just to make each day a little bit better than the day before." The cumulative effect of minuscule advantages—one extra company visited, two extra hours of reading—adds up over years. --- ## Connects To - [[The Most Important Thing]] - Howard Marks appears throughout; this extends his framework on cycles, risk, and second-level thinking - [[Antifragile]] - the importance of avoiding catastrophe, making mistakes nonfatal, and accepting volatility - [[Skin in the Game]] - investors who bear consequences of their decisions vs those who don't - [[Via Negativa]] - Munger's inversion is the investment application of improving by subtraction - [[The Barbell Strategy]] - size bets by downside, not upside; combine safety with asymmetric bets - [[Optionality]] - waiting for fat pitches, saying no to almost everything - [[Process vs Outcome]] - judging decisions by quality of thinking, not results; accepting 30% error rates --- ## Final Thought > "Refrain from what is unwholesome. Do good. Purify the mind." The book's title understates its scope. The investors profiled aren't just good at making money—they've thought deeply about how to live. Stoic philosophy runs through their approaches: control what you can, accept what you can't, focus on doing the work rather than obsessing over outcomes. Conduct your life so you can handle the fifty percent decline with aplomb. Don't try to avoid it—it will come. The question is whether you're built to endure.