I spent the summer reading everything I could find about Charlie Munger. Interviews, speeches, shareholder letters, the biography. All of it.

Three ideas stuck: circle of competence, inner scorecard, and patience.

Not because they're complicated. Because they're simple. And simple ideas, applied consistently, compound into wisdom.

Circle of Competence

Munger's first principle: know what you know, know what you don't know, and stay inside the circle.

Most people fail because they operate outside their circle of competence. They invest in industries they don't understand. They start businesses in markets they haven't studied. They give advice on topics they haven't mastered.

Munger and Buffett built Berkshire Hathaway by staying ruthlessly inside their circle. They passed on thousands of deals because they didn't understand the business model, the industry dynamics, or the competitive moat. They only invested when they had an edge.

This sounds obvious. It's not obvious when you're watching other people get rich in crypto or AI or whatever the hot sector is. It's not obvious when everyone around you is taking big swings and you're sitting on the sidelines.

But staying inside your circle isn't about being conservative. It's about being honest. You can expand your circle. You just have to do the work first.

The Inner Scorecard

Munger borrowed this from Buffett: would you rather be the best lover in the world and have everyone think you're the worst, or be the worst lover in the world and have everyone think you're the best?

The question reveals whether you're playing to the inner scorecard or the outer scorecard.

The outer scorecard is what other people think. The inner scorecard is what you know to be true.

Most people optimize for the outer scorecard. They make decisions based on how they'll be perceived. They chase status, titles, recognition. They care more about looking successful than being successful.

Munger optimized for the inner scorecard. He didn't care if people thought he was smart. He cared if he was actually right. He didn't care if people admired his portfolio. He cared if his investments were sound.

This is harder than it sounds. The outer scorecard gives you immediate feedback. The inner scorecard requires patience and self-knowledge.

But the outer scorecard is a trap. You end up living someone else's life, chasing someone else's definition of success.

The inner scorecard is freedom. You get to define what matters. You get to decide what success looks like. You get to live according to your own principles, not someone else's expectations.

Patience

Munger's third lesson: good investing requires patience. So does good thinking. So does a good life.

Berkshire Hathaway didn't get rich by trading. They got rich by buying great companies and holding them for decades. They let compound interest do the work.

Most people can't do this. They get bored. They get anxious. They see other people making money faster and they panic. They sell too early or buy too late or chase the next hot thing.

Munger understood that patience is a competitive advantage. If you can wait longer than everyone else, you win. If you can hold through volatility, you win. If you can ignore the noise and stick to your principles, you win.

This applies to more than investing. It applies to careers. It applies to relationships. It applies to building anything worth building.

You don't get good at something in six months. You get good at something in six years. You don't build a great company in two years. You build a great company in twenty years.

Patience isn't passive. It's active. It's the discipline to keep doing the right thing even when the results aren't showing up yet.

What Changed for Me

These three ideas, circle of competence, inner scorecard, and patience, changed how I make decisions.

Before Munger, I was optimizing for speed and breadth. I wanted to learn everything, do everything, be good at everything. I was playing to the outer scorecard, chasing recognition and status.

After Munger, I started optimizing for depth and alignment. I focused on getting really good at a few things instead of being mediocre at many things. I started making decisions based on my own principles instead of other people's expectations. I started thinking in decades instead of quarters.

I stopped chasing opportunities outside my circle of competence. I stopped caring what people thought about my choices. I stopped expecting results to show up immediately.

I got more patient. I got more focused. I got more honest with myself.

The Munger Method

Munger's method is simple: read a lot, think a lot, wait a lot.

Read widely across disciplines. Build mental models. Understand how the world works.

Think deeply about what you know and what you don't know. Stay inside your circle. Expand it deliberately.

Wait for the right opportunity. Don't force it. Don't chase it. Let it come to you.

When the right opportunity shows up, when it's inside your circle and aligned with your principles, go all in.

Then wait again. Let compound interest do the work.

What You Should Do

Define your circle of competence. Write it down. Be honest about what you actually know versus what you think you know.

Build your inner scorecard. Write down your principles. Decide what success looks like for you, not for other people.

Practice patience. Stop optimizing for speed. Start optimizing for compounding.

Read Munger. Read Buffett. Read their shareholder letters. Read Poor Charlie's Almanack. Read everything they've said about investing, thinking, and living.

Then apply it. Not just to investing. To everything.

Circle of competence. Inner scorecard. Patience.

Three simple ideas. Applied consistently. Compounded over time.

That's the Tao of Charlie Munger.