Stuck? Did You Try To Invert The Problem?

“Avoiding stupidity is easier than seeking brilliance.” — quoted from FS Blog

Inversion is one of the most adaptable models, just because it can be applied to almost any situation. It involves approaching a problem from the opposite side and doing the opposite of what seems intuitive to most people. Charlie Munger, a great investor, was a strong advocate of this approach.

To apply inversion, start by defining your goal and then consider what could go wrong or prevent you from achieving it. By avoiding these pitfalls, you increase your chances of success. There are many successful examples of inversion.

For instance, John Bogle created The Vanguard Group in 1974, which is now the largest mutual fund company in the world in 2023. He used inversion by focusing on minimizing losses and fees instead of trying to beat the markets. With this logic, he popularised Index Funds, which have become immensely popular and now have a 50% market share in the US markets.

The same is true in Personal Finance as well. To build wealth, focus on avoiding actions that harm your finances. Use inversion to make sure you’re steering clear of the worst money mistakes.

Thinking about the opposite of what you want is not common but can be useful. Smart people in history naturally did this. Inversion helps you understand problems better by making you think from different angles. The key takeaway is to spend less time trying to be brilliant and more time avoiding obvious mistakes.

After all, avoiding mistakes is easier than trying to be brilliant.

In short, when you’re stuck, simply Invert, Always Invert. If you think about the findings of your inversion seriously, you’ll make great progress.