“You don’t have to pee on an electric fence to learn not to do it.” — How to learn from others' experiences in investing?

"You Don't Have to Pee on an Electric Fence to Know It’s Wrong" — How to Learn from Others' Experiences in Investing?

Hey folks, this quote from Charlie Munger really hits home. As Warren Buffett’s longtime partner, Munger loves using vivid metaphors to remind us: Some mistakes don’t require firsthand experience to learn from. Just like you wouldn’t be foolish enough to test peeing on an electric fence, the same applies to investing—you don’t need to lose your shirt to figure out which pitfalls to avoid. Instead, learning from others’ experiences helps you dodge disasters and save a ton of "tuition." Below, I’ll break down how to put this into practice. I’ve made my share of mistakes too, but learning to observe and absorb others’ wisdom changed my game. Hope this helps you.

1. First, Understand What Munger’s Wisdom Means for Investing

Simply put: Learn from others’ mistakes. The investing world is full of cautionary tales—people chasing hot stocks only to lose everything in a crash, or ignoring risks and getting wiped out by over-leveraging. These aren’t fairy tales; they’re real-life cases. You don’t need to test the "electric fence" yourself to know it’s dangerous. Munger and Buffett built their fortune on this approach—devouring books and studying countless corporate failures to avoid repeating history.

Example: During the 2008 financial crisis, many loaded up on risky subprime products and got burned. But if you’d learned from the 1929 Great Depression (stock bubble burst), you’d know not to put all eggs in one basket. Result? Savvy investors like Buffett scooped up bargains during the chaos and came out ahead.

2. How to Actually Learn from Others: A Step-by-Step Guide

I’m no guru, but here’s what worked for me:

• Read Books and Listen to Stories: Start simple. Read Poor Charlie’s Almanack (Munger’s wisdom) or The Intelligent Investor (Graham’s classic on avoiding traps). Biographies of Buffett or Soros reveal how they learned from others’ failures. Early on, these taught me: Don’t chase trends—it’s why most people lose money.

• Study Historical Cases: Investing isn’t gambling—analyze data and history. Look at past events like the dot-com bubble (2000 tech crash). Many thought tech stocks only went up… until they vanished overnight. Lesson: Don’t get blinded by "the next big thing." Use tools like Yahoo Finance or Snowball App to study financial reports and stock histories.

• Join Communities and Share Stories: Don’t go solo. Join investing forums (e.g., Zhihu, Reddit’s r/investing). Listen to others: "I lost $500k in crypto by not setting stop-losses." Remember: Risk management is king. Verify claims, but this beats learning the hard way.

• Master Basic Risk Management: Munger stresses inversion—first ask "What could ruin me?" then avoid it. For example:

  • Diversify: Don’t bet everything on one stock. Spread across sectors.
  • Set Stop-Losses: Learn from blowup stories—cut losses early.
  • Think Long-Term: Volatility is normal. Avoid panic selling like many do.

3. My Tip: Don’t Just Watch—Apply

Learning isn’t enough—tailor it to your situation. Start small (e.g., index funds like the CSI 300) while observing markets. Remember: Experience isn’t about copying success; it’s about dodging others’ errors. I chased hype early on and lost some cash, but studying history steadied me. My rule now: Better to miss an opportunity than make a catastrophic mistake.

Ultimately, investing is a marathon, not a sprint. Munger’s quote reminds us: Smart people grow through others’ experiences; fools insist on touching the fence themselves. Try these steps—you’ll find investing less intimidating. Questions? Ask away—let’s chat!