Charlie Munger passed away recently at 99 years of age. Munger is perhaps best known for his association with Warren Buffett but his influence over Buffett is underappreciated. Before meeting Munger, Buffett was a classic value investor.

Buffett practiced what was coined as cigar butt investing where he bought dirt cheap companies with ‘one puff’ left. He was able to profit off of these investments and earned enviable returns until the bull market of the 1960s started. As valuation levels steadily rose Buffett’s approach was no longer viable. He decided to give up and ended the Buffett Partnership telling his investors that he no longer understood what was happening with markets.

Buffett and Munger had been introduced at a dinner in Omaha in 1959. Munger was a lawyer who had graduated at the top of his Harvard Law School class but his attention slowly shifted to investing in shares and real estate. Soon Buffett and Munger were on the phone every day talking about investing. And Buffett credits Munger as the originator of the Berkshire Hathaway investment approach.

The new approach was no longer based on finding dirt cheap companies. Instead, Buffett and Munger focused on finding great businesses with sustainable competitive advantages and fair valuation levels. They would then aim to hold them forever.

Below are some of my favourite Munger quotes along with my interpretation of the lessons investors can take from them.

“The big money is not in the buying and the selling, but in the waiting.”

Humans are action oriented. It is in our DNA. And in most endeavours action yields the best results. Investing is a little different. Patience is the key to success.

The issue investors run into is that being patient means going against our instincts and the enabling technology that bombards us with data and breaks down any friction to trading.

Simply understanding that patience is the key to success is likely not enough. Putting structure around decision making will help you to profit from Munger’s wisdom in your own portfolio. Start by defining your goals and an investment strategy that includes the criteria for selecting investments and trading.

“Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted independence. I desperately wanted it..”

People keep telling me they don’t have a favourite child. As an only child with no children of my own I will have to take their word on it. There is nothing stopping anyone from having a favourite Munger quote. And this is mine.

Munger’s fortune was recently estimated at $2.6 billion. That is a lot of independence. But what has always inspired me to save and invest was gaining independence. And it is a journey.

At first it was just having an emergency fund so I knew I could cover unexpected expenses. Then I wanted to have more spending money to go out for a meal when I wanted and to start traveling. My goal now is to get to a point where I’m not reliant on my fortnightly pay check to pay for my life – whether I choose to stop working or not.

What we all have to ask ourselves is if we want to look rich to people we don’t know or be independent to pursue the life we want. Munger choose the later.

“There is no better teacher than history in determining the future… There are answers worth billions of dollars in a history book.”

We all believe we live in a unique time. That the challenges we face as a society and on an individual level are distinct. In reality the same patterns are repeated throughout history.

A starting point for an investor looking to navigate current market conditions is to look to the past. And what worked in the past is likely ignoring all the noise and just focusing on the things that can be controlled – minimising taxes, minimising fees and sticking with great companies over the long-term.

“A majority of life’s errors are caused by forgetting what one is really trying to do.”

Most investors don’t know what they are trying to achieve. And no ‘getting rich’ doesn’t count. Figuring out what you are trying to accomplish is a pre-requisite for understanding how to do it.

We have more investment choices than we need. And each of these choices has an articulate advocate making a compelling case of why something is a great opportunity. It is no wonder that investors ping pong between different strategies and investment products.

Take a breath. Spend some time thinking about your end goal and what is needed to accomplish it. You’ll know you have a well defined approach when you are able to ignore most of the pitches we are constantly bombarded with.

“Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”

This one is self-explanatory. Live a life on your own terms that other people can envy. Something that Charlie Munger accomplished.