Entering text into the input field will update the search result below

Invert, Always Invert

Jan. 29, 2017 5:37 PM ET2 Comments
Finalytiks profile picture


  • To find solutions to problems, it might be a better idea to invert the problem.
  • Charlie Munger popularized this method, taking a leaf out of mathematician Carl Jacobi's maxim "Invert, always invert".
  • This concept can be applied to investing - think: "what could go wrong in this investment?".
  • As Buffett and Munger found out, success in investing is more about avoiding losers, than finding winners.

Inverting a problem to find solutions is a concept I heard from Charlie Munger. Inspired by the mathematician Carl Jacobi, he said:

Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don't we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead - through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I'm going to die, that is, so I don't go there. - Charlie Munger

Warren Buffett has a similar take:

Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them. - Warren Buffett

Munger says that the best way to achieve success is by avoiding failures. He implies that it is not brilliance that made Berkshire Hathaway succeed. They consistently avoided stupidity.

It is easier to avoid failures, than to strive for success directly.

Looking at problems and scenarios from a different perspective helps us to identify obstacles in a better way.

Step-by-step guide to inversion

We can summarize inverted method to problem solving as below:

  1. Figure out what you want to achieve.
  2. What do you don't want to happen? This is the worst-case scenario.
  3. How could the worst-case scenario happen?
  4. How can you avoid the worst-case scenario?

Let's look at some real-life examples:

How to drive safe? By avoiding accidents. How do you avoid accidents? Here is how:

  1. Maintain the car properly, including brakes, tires etc.
  2. Ensure that the rear view mirrors are correctly aligned for your view. Ensure that your blind spots are covered as much as possible.
  3. Do not over-speed. Also, control emotions.
  4. Do

This article was written by

Finalytiks profile picture
The Banking Analyst (tBA):* CFA Charterholder with more than a decade's experience in finance* More than six years' experience in covering banks in developed markets* Currently covering the US banks exclusively"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1."~ Warren Buffett

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (2)

Kayode Omotosho profile picture
If the only thing we find in an annual report is the risk section , nobody will invest. I like the idea of inverting. One has to be careful however not to paint too much scary scenarios
TabbyKatz profile picture
Well done article.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.