Always Invert: The Problem-Solving Trick To Investing

If you’re like me, you probably spend a lot of time trying to figure out how to make things go smoothly. Whether at work, with investments, or just day-to-day life. But there’s a surprisingly simple mental trick I picked up from Charlie Munger, Warren Buffett’s long-time business partner, that changed the way I tackle problems: 

 

“Always Invert.”

 

So, What Does “Invert” Actually Mean?

 

At its heart, inversion just means flipping a problem around and looking at it from the opposite direction . Instead of just asking yourself, “How can I succeed?” you also ask, “What would make me fail?” This simple shift in thinking can reveal risks and mistakes you might otherwise miss.

Munger credits this idea to a 19th-century mathematician who liked to say, “Invert, always invert.” He believed that turning problems upside down could make them easier to solve—and Munger found the same thing worked in business and investing.

 

Why Should You Worry About What Could Go Wrong?

 

Most of us are wired to chase after winning strategies, but we don’t always pay enough attention to what could trip us up. When you try to spot the potholes and dead-ends in advance, you have a better shot at avoiding them. It’s like planning a road trip: You’ll have a much smoother journey if you know where the construction zones and detours are.

 

Here’s What This Looks Like in Real Life:

• Investing:  Instead of fixating on how to be a successful investor, ask yourself what kinds of mistakes lead to losing money.  For example, like panic selling, bringing emotions into investing, or investing in things you don’t understand.
• Running a Business:  Don’t just ask, “How can we make the company thrive?” Ask, “What could make this fail?” Maybe it’s losing touch with customers, running out of cash, or resisting change.
• Personal Life:  If your goal is to be happier, try asking, “What’s guaranteed to make me miserable?” You might realize that holding grudges or skipping out on sleep are things to avoid.

How to Use Inversion Starting Today

1. Figure Out Your Goal:  What do you want?
2. Flip It Around:  What would totally mess this up?
3. List All the Pitfalls:  Make a quick list of mistakes or bad habits that would get in the way.
4. Make a Plan to Avoid Them:  This is your roadmap for steering clear of trouble.

One of my favorite Munger quotes is: "All I want to know is where I'm going to die, so I'll never go there." 😂 

 

It’s a funny way to put it, but it definitely drives the point home.

 

Everywhere you look, someone is promising the secret formula for success. But sometimes, the best formula is simply not doing the dumb things that derails most people. I’ve found it is helpful for everything from investment moves to how to live a happy life.