Munger's preference toward thinking in reverse was clearly illustrated when he said, "It's remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."
Because he believed good opportunities are rare, Munger seized opportunities when he finally saw them. Quoting his great-grandfather, Munger said, "When you get a lollapalooza, for God's sake, don't hang by like a timid little rabbit."
Consequently, Munger didn't share widely held views on diversification -- even holding 10 stocks risked being over-diversified, in his opinion. After all, if good ideas are truly rare, then why would one diversify a portfolio into dozens of things? The positive impact of the good ideas would only be diluted from all of the mediocre investments in the portfolio.
Munger employed a buy-and-hold investment strategy. When he found a good idea, he continued to hold the stock and allowed compounding to work for him. As he said, "The big money is not in the buying and the selling, but in the waiting."
Finally, Munger was known to be a value investor, but there is an important distinction to be made. Many value investors look for whatever is cheap regardless of the quality of the business, but Munger was willing to pay more for quality.
In his 2014 letter to Berkshire Hathaway shareholders, Buffett credited Munger with changing his perspective on value investing. Buffett quoted Munger as saying, "Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices."
To summarize the investment approach, Munger believed that good investment opportunities are few, so he concentrated his portfolio around only those few good ideas, provided he could buy them for a fair price. After he bought these, he simply held on for the long haul.
