The late Charlie Munger, who passed away last week at age 99, often credited his success and longevity to a single piece of advice: “Avoid crazy at all costs.” In an interview with CNBC’s Becky Quick last month, Munger emphasized the importance of caution in both personal and professional life. Known as the longtime business partner and friend of Warren Buffett, Munger’s net worth was estimated at $2.3 billion, while Buffett’s net worth stands at $120 billion.

Munger attributed his long and successful life to avoiding major catastrophes, stating, “Crazy is way more common than you think. It’s easy to slip into crazy. Just avoid it, avoid it, avoid it.” When asked about the definition of “crazy,” Munger cited his partner’s advice: “My partner Charlie says there are only three ways a smart person can go broke: liquor, ladies, and leverage.”

By “leverage,” Buffett referred to borrowing money to invest, a strategy they deliberately avoided at Berkshire Hathaway. Munger explained that Berkshire would “easily be worth twice what it is now” if they had used leverage, but the risk was too high for smaller shareholders. Instead, they opted for a cautious approach, favoring long-term investments over short-term gambles.

Munger also extended his caution to personal vices, advising to stay away from anything that can “take that many fine people into deep trouble.” This included smoking and excessive drinking, both of which he avoided due to their potential to lead to alcoholism.

Munger’s approach to life was characterized by avoiding standard ways of failing and being cautious in decision-making. While he acknowledged two minor vices he couldn’t give up—peanut brittle and Diet Coke—he maintained that his game in life was “always to avoid all standard ways of failing.”

In summary, Munger’s wisdom emphasized the importance of avoiding risky behaviors, being cautious in decision-making, and steering clear of potential pitfalls in both personal and professional life.

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