Keep it simple in investing - Cryptocurrency exchange platform

Munger believes that “keeping things simple is the key to avoiding trouble,”

This is fundamentally based on his deep understanding of “human cognitive limitations” and “the risks of complex systems”—simple patterns can reduce variables in decision-making,

and lower the probability of errors caused by excessive complexity.

From his investment and life philosophy,

there are two core principles:

1. “Counteracting cognitive overload”: the human brain has limited information processing capacity,

complex decisions (such as overly diversified investments,

using complex financial models) introduce a large number of redundant variables,

making it easy to overlook key risks (such as hidden costs,

black swan events),

while simple strategies (such as focusing on one’s circle of competence,

only investing in understandable companies) help people focus on core logic,

reducing judgment errors.

2. “Reducing system fragility”: any complex system (such as complicated interpersonal relationships,

multi-layered business structures) carries the risk of “a small change causing a chain reaction,”

a minor mistake in one link can trigger a series of problems; simple structures (such as clear interpersonal boundaries,

single core business) are easier to monitor and correct,

and have stronger risk resistance.

His philosophy does not deny complex problems,

but emphasizes using “simple thinking” to filter key information—such as in investing, only focusing on the three core elements of "company moat,

management capability,

and fair valuation,"

rather than getting lost in complex financial statement calculations,

to avoid unnecessary trouble from the source.

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