[Token Wisdom] "Always consider opportunity cost" ㅡ Day 42

This content is not investment advice for specific stocks or assets, but aims to help investors cultivate an unwavering investment mindset in highly volatile markets, providing psychological reminders. Wishing you successful investing. [Editor’s note]

Always consider opportunity cost. This is the foundation of everything.

• Charlie Munger -

Investing in Coin A means deciding not to invest this money in Coin B. Every investment decision is accompanied by unseen opportunity costs. When evaluating a new investment, Munger always asks, “Is this better than the best asset I already hold?” Most of the time, the answer is “No.” Because of this, Munger focuses on only a few investments throughout his life. Thinking about opportunity cost can reduce unnecessary trades and naturally improve the quality of the investment portfolio.

Choosing one thing means giving up another.

Charlie Munger (1924–2023) was Warren Buffett’s investment partner for 60 years and the vice chairman of Berkshire Hathaway. He graduated from Harvard Law School and was a pioneer of “multi-disciplinary thinking models,” applying principles from psychology, mathematics, physics, and other fields to investment judgment. He emphasizes “reverse thinking,” teaching that it is more important to avoid failure than to succeed. Buffett once said that after meeting Munger, his investment philosophy evolved from “buying at low prices” to “buying quality assets at reasonable prices.”