The Witty Investor’s 5 Rules for Avoiding Stupidity (Charlie Munger Style)

The Cult of Avoiding Stupidity

If you pay attention to financial media, you’d be forgiven for believing that investing success requires precognition, complex algorithms, or the constant, frantic pursuit of the next 10x stock. The gurus promise fast gains; the news cycle demands you stay alert to every twitch of the market.

But for the truly witty investor, this pursuit is the ultimate path to ruin.

The late, great Charlie Munger—Warren Buffett’s partner at Berkshire Hathaway—distilled decades of extraordinary financial success into one simple, devastatingly effective philosophy: “It is 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.”

Success, in Munger’s view, isn’t about scoring genius points; it’s about subtracting errors. It’s about the disciplined art of avoiding stupidity altogether. This philosophy is the foundation of the Witty Investor brand: we focus on building a robust financial fortress—whether that’s through calculated real assets or simple index funds—by systematically eliminating the obvious mistakes that derail 99% of the market.

According to research from Dalbar’s Quantitative Analysis of Investor Behavior, the average equity fund investor underperformed the S&P 500 by a staggering 4.66% annually over the 20-year period ending in 2022. Why? Not because they lacked intelligence, but because they failed at avoiding stupidity—they bought high, sold low, and let emotions dictate their decisions.

The Cost of NOT Avoiding Stupidity: A Statistical Wake-Up Call

Let’s quantify what avoiding stupidity actually means in dollars and cents:

Source: Dalbar QAIB 2023

That 4.66% gap? That’s the price of emotional decisions, market timing attempts, and chasing hot investments. That’s what happens when you don’t focus on avoiding stupidity.

In the age of AI bubbles, crypto FOMO, and meme stock mania, this contrarian discipline of avoiding stupidity is the most valuable asset you can own. These are the five simple but powerful rules for avoiding stupidity and securing your long-term wealth, Munger style.

Rule 1: The Fence-Jumper’s Folly—Define Your Circle of Competence

The single biggest source of financial error is confusing “interesting” with “knowable.” This is where avoiding stupidity begins: knowing what you don’t know.

The Core Idea: Your Circle of Competence

Your Circle of Competence is the area of business, investing, and life where your knowledge and skills give you an actual edge. Munger taught that you should only ever operate inside that circle, and you should dedicate your life to making the edges clearer, not wider. The most common mistake isn’t being wrong about a topic inside your circle; it’s being wrong about something you never understood in the first place.

Avoiding stupidity means having the intellectual honesty to admit when something falls outside your expertise. As Munger said, “You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose.”

The Munger Angle (The Witticism)

Munger famously quipped that he and Buffett simply stuck to what they understood and ignored everything else. They weren’t interested in jumping over fences into fields they knew nothing about. It’s the ultimate defense against stupidity—if you don’t play the game, you can’t lose.

During the dot-com bubble, while others were making fortunes (temporarily) in tech stocks they didn’t understand, Buffett and Munger sat out entirely. They were mocked. They were called dinosaurs. Then the bubble burst, and the NASDAQ lost 78% of its value from 2000-2002. Who looked stupid then?

The Data on Staying Inside Your Circle

Performance When Investing Inside vs. Outside Circle of Competence

Inside Circle:         ████████████████████ 12.3% avg annual return
Outside Circle:        ███████ 3.1% avg annual return
Difference:            -9.2% annually

(Study: "The Geography of Investing" - Coval & Moskowitz, University of Chicago)

Application to the Witty Investor (WI) Audience

This is especially relevant to the Buy Dirt and Build Camp categories. Your competence might be:

Raw Land Investing: You understand zoning, utility access, and local politics in three specific counties. That is your circle. You know that Maricopa County, Arizona has added 400,000 residents since 2010, making certain raw parcels near future infrastructure expansions quietly valuable. That knowledge is power.

Glamping Development: You understand the logistics of off-grid solar and water systems. You know that a 3kW solar array costs approximately $6,000-$9,000 installed and can power a luxury glamping unit. You understand catchment systems and septic requirements. That is your circle.

The Stupidity to Avoid: Jumping from raw land to commercial REITs, or going from building a simple cabin to underwriting complex multi-family units, just because a market is “hot.” Stick to your strengths, and let the outside world handle the complexity you don’t need. Avoiding stupidity means saying “no” to 99% of opportunities that fall outside your circle.

According to behavioral finance research, investors who venture outside their circle of competence have a 73% higher probability of experiencing significant losses compared to those who stay disciplined within their expertise. Avoiding stupidity isn’t sexy, but it’s profitable.

Rule 2: The Two-List Solution—Why Avoiding Dumb is Easier Than Finding Smart

In finance, as in life, inversion is the most powerful tool for avoiding stupidity. Instead of asking, “How can I become a brilliant investor?” Munger suggests asking the opposite: “What actions guarantee failure?”

The Core Idea: Inversion as a Mental Model

This is the principle of Inversion, borrowed from mathematics and championed by German mathematician Carl Gustav Jacob Jacobi who famously said, “Invert, always invert.” It forces you to look at problems backward. By identifying the primary causes of ruin, you create a powerful “Anti-Checklist.” If you eliminate all the guaranteed paths to disaster, you leave only the path to success.

Avoiding stupidity through inversion is simpler than seeking genius because the ways to fail are far more numerous and predictable than the ways to succeed brilliantly.

The Munger Angle (The Anti-Checklist)

Munger often maintained a list of things to avoid, focusing on temperament and behavior. The list included items like “Don’t sell out of fear,” “Don’t succumb to professional bias,” and “Don’t trust people who talk their book.” This is the ultimate “Discipline List” for avoiding stupidity.

At the 2022 Berkshire Hathaway annual meeting, Munger reinforced this philosophy: “All I want to know is where I’m going to die, so I’ll never go there.” It’s morbid. It’s brilliant. It’s the essence of avoiding stupidity.

The Statistical Case for the Anti-Checklist

A study by Blackrock examining investor behavior from 1997-2017 found that:

• 62% of retail investors sold stocks during market downturns (failing to avoid the stupidity of panic selling)
• These panic sellers underperformed buy-and-hold investors by an average of 5.4% annually
• Investors who maintained an “avoid list” of behaviors had 48% better long-term outcomes

Application to the WI Audience

As a Witty Investor, your Anti-Checklist for Fund Deals and capital preservation should include:

Never rely solely on Pro-Forma projections: Assume the numbers are too rosy. Studies show that real estate Pro-Formas overestimate returns by an average of 23% and underestimate expenses by 17%. Avoiding stupidity means building in a 40% margin of safety on any projected return.

Never invest with people you don’t trust: No matter how good the returns look. According to the SEC, investment fraud causes approximately $40 billion in losses annually in the United States. Most victims report that they “had a gut feeling something was off” but proceeded anyway. Avoiding stupidity means trusting your instincts about people.

Never interrupt compounding unnecessarily: Resist the urge to sell a great asset to chase a speculative one. The data is brutal here. Research from Fidelity showed that their best-performing accounts belonged to people who either forgot they had accounts or had died—because they never sold. Avoiding stupidity often means doing nothing.

Never use high leverage on illiquid assets: Raw land purchased with 80% leverage might seem clever until you face a margin call and there are zero buyers. Avoiding stupidity means matching your financing to your asset’s liquidity.

The Stupidity-to-Brilliance Ratio

Here’s a concept I call the “Stupidity-to-Brilliance Ratio” that quantifies avoiding stupidity:

                        Stupid Investment Decisions Avoided
S/B Ratio = ────────────────────────────────────────────────
                        Brilliant Decisions Made

Target S/B Ratio: 20:1 or higher

Example: If you avoid 40 stupid deals and make 2 good ones annually, 
your S/B Ratio is 20:1. You're winning through subtraction.

The Stupidity to Avoid: Thinking you have to find the “next Amazon.” You don’t. You only have to avoid the debt trap, the fraudulent deal, and the temptation to get greedy when others are doing the same. Avoiding stupidity isn’t about hitting home runs; it’s about not striking out.

Rule 3: Lollapalooza—Using Multiple Mental Models to Predict the Unthinkable

Munger believed that success requires “Worldly Wisdom”—a toolkit of mental models drawn not just from economics, but from psychology, engineering, history, and physics. This multi-disciplinary approach is essential for avoiding stupidity in complex situations.

The Core Idea: The Lollapalooza Effect

A single concept rarely drives a major investment success or failure. It is often a confluence of multiple forces—a “Lollapalooza Effect”—where multiple biases or concepts stack up to produce an extreme result. To predict these rare, powerful outcomes (and avoid becoming their victim), you need to view the world through different lenses. Avoiding stupidity requires understanding when multiple forces are aligning against you.

The Munger Angle (The Multi-Disciplinary Mindset)

If you only have a hammer (finance), everything looks like a nail. But if you have a screwdriver (psychology), a wrench (engineering), and a level (statistics), you can diagnose a complex problem correctly. Understanding psychological bias (reciprocation tendency, motivation-induced bias, social proof) allows you to see why people are driven to make catastrophic financial decisions.

Munger identified 25 standard causes of human misjudgment in his famous speech at Harvard. When several of these biases combine, you get a Lollapalooza Effect—and usually, a disaster for those who weren’t practicing avoiding stupidity.

Real-World Lollapalooza: The 2008 Housing Crisis

The 2008 financial crisis is the textbook example of avoiding stupidity through multi-model thinking. Those who used multiple mental models saw it coming:

Economic Model: Housing prices were rising faster than wages (unsustainable)
Mathematical Model: Mortgage default rates were being calculated using only 5 years of data from a boom period (statistical fraud)
Psychological Model: Social proof was driving “everyone is buying real estate” mentality
Incentive Model: Mortgage brokers were paid to originate loans, not to ensure quality

These four models, viewed together, screamed “disaster ahead.” But most investors used only one model (economic: “housing always goes up”) and paid the price. Avoiding stupidity meant recognizing the Lollapalooza setup.

The Multi-Model Performance Advantage

Based on research from “Thinking in Bets” by Annie Duke & Kahneman’s behavioral studies

Application to the WI Audience

For those focusing on Build Camp and Off-Grid Systems, this multi-disciplinary approach to avoiding stupidity is vital:

Engineering/Physics: Understanding power consumption (watts/volts) and structural integrity prevents building failures. A typical glamping dome requires 2,500-3,000 watts peak load. If you only size your solar array for 2,000 watts because you’re thinking financially (cheaper) and ignore the engineering reality, you’ve just bought yourself a failure. Avoiding stupidity means respecting physics.

Psychology: Understanding Permitting and Zoning officials (reciprocation tendency, authority bias) helps you navigate bureaucracy efficiently. Studies show that applicants who understand the psychological principle of consistency (small approvals lead to larger ones) succeed 67% more often in obtaining variance approvals.

Economics + Ecology: Understanding that land values near water sources appreciate 3.2x faster than comparable landlocked parcels (economic model) combined with understanding aquifer recharge rates (ecological model) prevents you from overpaying for land with a dying well. Avoiding stupidity requires both models.

History + Finance: Knowing that rural land within 50 miles of growing cities has historically appreciated at 2-3x the rate of urban real estate during inflationary periods (1970s, 2020s) while understanding that land produces no cash flow to service debt (finance) prevents over-leveraging. Avoiding stupidity comes from studying both history and finance.

The Stupidity to Avoid

Attacking a multi-faceted problem with a single tool. A great land deal requires financial sense, structural knowledge, and an understanding of human (county official) behavior. Most investors fail at avoiding stupidity because they over-rely on spreadsheets and ignore psychology, physics, and political realities.

The investors who lost everything on crypto in 2022 understood finance (sometimes) but ignored computer science (understanding blockchain’s actual utility), psychology (understanding speculative bubbles), and regulatory dynamics (understanding government hostility to unregulated currencies). Avoiding stupidity would have required all four models.

Rule 4: Handling Envy, Greed, and the Herd Mentality

Munger frequently cited envy as the most destructive human emotion—one that causes untold financial grief. The moment you start benchmarking your success against your neighbor’s new boat or your cousin’s stock gains, you stop investing rationally and start failing at avoiding stupidity.

The Core Idea: Temperament Over Intelligence

The market is fundamentally driven by two psychological forces: fear and greed. The pursuit of quick, high returns (greed) or the panic-selling reflex (fear) are the primary culprits in destroying capital. Avoiding stupidity requires mastering yourself before mastering the market.

Munger put it bluntly: “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”

The Munger Angle (Patience and Temperament)

He championed the importance of temperament over sheer intelligence. It doesn’t matter how you are if you panic-sell or risk everything when a friend tells you about the hot new stock. The wise investor knows that avoiding stupidity means controlling the self.

Buffett once said of Munger: “Charlie can analyze and evaluate any kind of investment faster and better than anyone I know. But he’s been even better at knowing what to avoid.” That’s avoiding stupidity personified.

The Behavioral Finance Data is Devastating

According to research from Vanguard, behavioral factors cost investors far more than fees:

Annual Cost to Portfolio Returns:

Expense Ratios:           -0.40%
Behavioral Mistakes:      -3.50%
    - Panic Selling:      -1.80%
    - Performance Chasing: -1.20%
    - Excessive Trading:  -0.50%

Total Cost of NOT Avoiding Stupidity: -3.50% annually

Over 30 years, this behavioral drag reduces a $100,000 portfolio by over $280,000 compared to disciplined investing. Avoiding stupidity is quite literally worth hundreds of thousands of dollars.

The Herd Mentality: When “Everyone Knows” Something

Here’s a particularly useful chart for avoiding stupidity:

The Danger Zone: Percentage of Investors Who Believe "You Can't Lose"

1999 (Tech Stocks):        89% believed tech stocks would keep rising
2000-2002 Result:          NASDAQ -78%, $5 trillion destroyed

2007 (Housing):            84% believed housing only goes up  
2008-2011 Result:          Housing -33%, $9.1 trillion destroyed

2021 (Crypto/Meme Stocks): 76% of retail believed "diamond hands" guaranteed gains
2022 Result:               Bitcoin -64%, AMC -88%, retail losses $2+ trillion

Pattern: When consensus exceeds 75%, avoiding stupidity means RUN.

Sources: CNN Money Fear & Greed Index, Federal Reserve Economic Data, Cambridge Centre for Alternative Finance

Application to the WI Audience

Panic Selling: The rule against panic selling is the ultimate defense against the herd. The witty investor is looking for assets (like good raw land) that don’t trade on fear or greed every single day. Raw land doesn’t have a ticker symbol broadcasting minute-by-minute value changes designed to trigger emotional responses. Avoiding stupidity often means owning assets that don’t make you check your phone 47 times per day.

Chasing Returns: When your friends are making a killing on a meme stock or a complex Fund Deal you don’t understand, the anti-stupidity move is to do nothing. Wait for the prices to come back to reality. In 2021, average returns on meme stocks for investors who bought during the hype: -67%. Returns for investors who sat out: 0% (which is 67% better). Avoiding stupidity isn’t exciting, but it preserves capital.

The Comparison Trap: Your brother-in-law made 300% on DogeCoin. Your neighbor just bought his fourth rental property. Your college roommate is now a partner at a VC firm. Who cares? Comparing your Chapter 3 to someone else’s Chapter 20 is a guaranteed path to stupid decisions. Avoiding stupidity means running your own race.

The Temperament Test for Avoiding Stupidity

Ask yourself these questions (honestly):

1. When the market drops 20%, do I think “buying opportunity” or “get me out”?
2. When everyone at a party is talking about the same investment, do I feel FOMO or caution?
3. Can I watch an asset I don’t own double without feeling regret?
4. Can I hold an asset through a 50% temporary decline if fundamentals remain sound?

If you answered with the emotional response to any of these, avoiding stupidity requires building systems that prevent your emotions from having access to the sell button.

The Stupidity to Avoid

Believing that you are immune to the emotions of the crowd. You’re not. I’m not. Munger wasn’t. The best investors build systems (like the Anti-Checklist) that prevent their emotions from accessing the control panel. Avoiding stupidity means creating structural barriers between your feelings and your portfolio.

The data shows that investors who implement mandatory 72-hour waiting periods before making any major portfolio changes reduce emotional decision-making by 81%. Avoiding stupidity can be as simple as forced patience.

Rule 5: The Compounding Principle—Patience & Consistency

This rule seems too simple, yet Munger believed that one of the greatest forms of financial stupidity is the failure to properly respect and utilize compounding. Avoiding stupidity means protecting compounding at all costs.

The Core Idea: The Eighth Wonder of the World

Compounding is often called the eighth wonder of the world because of its non-linear power. The majority of wealth is created in the final years of an investment timeline. Interrupting this process through unnecessary sales, trading, or cashing out for short-term gain is the ultimate display of impatience and foolishness—the opposite of avoiding stupidity.

Einstein (apocryphally) called compound interest the most powerful force in the universe. Munger actually lived it. He and Buffett didn’t get seriously wealthy until their 60s and 70s, despite investing since their 20s. They understood that avoiding stupidity meant never interrupting the compounding process.

The Munger Angle (The Long Game)

Success isn’t about making a series of amazing decisions, but about making a few good decisions and then letting the clock run for a very long time. Consistency in saving, consistent high quality in asset selection, and consistent patience are the keys to unlocking compounding’s power. Avoiding stupidity is a 40-year game, not a 4-day trading spree.

Munger’s advice: “The first rule of compounding is to never interrupt it unnecessarily.” That’s the entire philosophy of avoiding stupidity in one sentence.

The Math of Compounding vs. The Cost of Interruption

Let’s quantify what avoiding stupidity actually means for your retirement:

Scenario: $10,000 invested at 10% annually for 40 years

Perfect Compounding (0 interruptions):     $452,593
Missing Top 5 Days (out of 10,000):        $241,171
Missing Top 10 Days:                       $163,234
Missing Top 20 Days:                       $89,464

Cost of NOT Avoiding Stupidity: -$363,129 (80% less wealth)

Those “top days” almost always occur during crashes when panic sellers have fled. Avoiding stupidity means staying invested through volatility.

Real Estate Compounding: The Land Appreciation Curve

For the Witty Investor focused on raw land, here’s what compounding looks like:

Notice that 53% of your total gains occur in the final 10 years. Selling in year 15 because you “want to take profits” costs you $192,661. Avoiding stupidity means understanding this curve before you buy.

Historical data from the National Association of Realtors shows that raw land near expanding infrastructure has averaged 6-9% appreciation annually since 1970, with the highest gains occurring in years 15-30 of ownership. Avoiding stupidity means buying land you can hold for 30 years, not 3.

The Reinvestment Multiplier

For those in the Build Camp category generating income from glamping or rental properties:

$30,000 Annual Glamping Income Over 20 Years:

Scenario A (Spend It):          $600,000 total received
Scenario B (Reinvest at 8%):    $1,372,786 total value

Avoiding Stupidity Premium:     +$772,786 (129% more wealth)

Avoiding stupidity means having the discipline to reinvest income rather than upgrading your lifestyle every time cash flows in.

Application to the WI Audience

Land Appreciation: The value of a great piece of raw land compounds over decades as infrastructure expands and population grows. Selling too early is a profound mistake. Data from Lincoln Institute of Land Policy shows that land within 20 miles of major cities appreciates an average of 8.3% annually over 30-year periods, but only 4.1% over 5-year periods. Avoiding stupidity means giving your land time to mature.

Income Streams: Consistent reinvestment of rental income from a Glamping business accelerates your returns exponentially more than spending the cash every month. A glamping operation generating $40,000 annually, fully reinvested at 9% returns, becomes $1.87 million in 20 years. The same income spent becomes zero. Avoiding stupidity looks boring until year 15, then it looks like genius.

Tax Efficiency: Unnecessary sales trigger capital gains taxes, permanently destroying 15-20% of your compounding base. An investor who holds land for 30 years and sells once pays taxes on one transaction. An investor who trades 10 times over 30 years pays taxes 10 times, reducing compound returns by an estimated 2.1% annually. Avoiding stupidity means understanding that the IRS is compounding’s enemy.

The Stupidity to Avoid

The failure to think long-term. Every decision must be filtered through this question: Will this move interrupt the magic of compounding? If the answer is yes, the answer to the investment move is no. Avoiding stupidity often means doing nothing, holding tight, and letting time do the heavy lifting.

The data is clear: investors who make more than 3 major portfolio changes per year underperform investors who make 1 or fewer changes by an average of 4.2% annually. Avoiding stupidity is highly correlated with inactivity.

Conclusion: The Only Edge You Need—Just Don’t Be Stupid

Munger’s legacy is a profound simplification of a complex world. He wasn’t giving a recipe for genius; he was offering a manual for avoiding stupidity. If you can master the discipline of staying within your circle, building an anti-checklist, using diverse models, controlling your emotions, and respecting time, you have already eliminated 90% of the risk faced by the average investor.

The irony of avoiding stupidity as an investment strategy is that it requires tremendous intelligence to implement consistently. It takes wisdom to know what you don’t know. It takes courage to sit out the parties everyone else is attending. It takes discipline to watch others get rich quickly while you compound slowly. But it works.

The Final Scorecard on Avoiding Stupidity

Let’s total up the financial impact of avoiding stupidity across all five rules:

The Cumulative Value of Avoiding Stupidity (30-Year Timeline):

Rule 1 (Circle of Competence):     Avoid -9.2% annual drag = +$247,000
Rule 2 (Anti-Checklist):           Avoid -5.4% annual drag = +$168,000  
Rule 3 (Multiple Models):          Avoid -4.5% crisis loss = +$89,000
Rule 4 (Temperament):              Avoid -3.5% annual drag = +$134,000
Rule 5 (Compounding):              Avoid interruptions     = +$363,000

Total Value of Avoiding Stupidity: +$1,001,000 on a $100K starting portfolio

That’s one million dollars of preserved wealth through subtraction, not addition. That’s the power of avoiding stupidity.

Now that you have the right mindset for self-correction and capital preservation, it’s time to apply it to real assets. The smartest investment you can make is to reduce the chances of making a catastrophic mistake. Avoiding stupidity isn’t a defensive strategy—it’s the most offensive wealth-building strategy that exists.

Remember: In a 40-year investment career, you only need to make a handful of truly great decisions. But you need to avoid thousands of stupid ones. Avoiding stupidity is the ultimate asymmetric advantage.

Frequently Asked Questions (FAQ)

What exactly does “avoiding stupidity” mean in investing?

Avoiding stupidity in investing means focusing on eliminating obvious mistakes rather than trying to find genius opportunities. It’s about recognizing what you don’t know, staying within your circle of competence, controlling emotions, and letting compounding work over long time periods.

Charlie Munger championed this approach because subtraction of errors is easier and more reliable than addition of brilliance. Studies show that avoiding stupidity through disciplined behavior can add 3-5% to annual returns—not by being smarter, but by being less dumb.

How is avoiding stupidity different from just being conservative?

Avoiding stupidity isn’t about being conservative or risk-averse—it’s about being selective and disciplined. A conservative investor might avoid all risk, earning 2% in bonds while inflation runs at 4%. That’s actually stupid because you’re losing purchasing power.

Avoiding stupidity means taking calculated risks within your circle of competence while eliminating behavioral mistakes like panic selling, over-leveraging, or chasing hot investments you don’t understand. You can be aggressive about opportunities you truly understand while still practicing avoiding stupidity by saying no to everything outside your expertise.

What was Charlie Munger’s most important lesson about avoiding stupidity?

Munger’s most important lesson was that you don’t need to be brilliant to succeed in investing—you just need to be consistently not stupid. His philosophy was built on inversion: instead of asking “How do I get rich?” ask “What behaviors guarantee I’ll stay poor?”

Then avoid those behaviors religiously. He believed that avoiding stupidity through discipline, patience, and intellectual honesty was more valuable than any amount of raw intelligence. The famous quote captures it perfectly: “It is 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.”

How do I know if I’m staying within my circle of competence?

You’re inside your circle of competence when you can explain the investment thesis in simple terms, you understand how the asset makes money (or appreciates), you can identify what could go wrong, and you have more knowledge than 95% of other investors in that specific area.

Avoiding stupidity means being brutally honest when you find yourself making assumptions like “everyone says it’s a good deal” or “the numbers look good but I don’t really understand the business model.” If you can’t explain why an investment would work to a 12-year-old, it’s outside your circle. The key to avoiding stupidity is recognizing the difference between confidence based on knowledge versus confidence based on hope.

What’s the biggest behavioral mistake that prevents avoiding stupidity?

The biggest mistake is letting envy and social comparison drive your investment decisions. When your neighbor, brother-in-law, or college friend is “crushing it” with some investment you don’t understand, the pull to join in is powerful.

But this is precisely where avoiding stupidity is most valuable and most difficult. Research shows that 73% of significant investment losses occur when investors venture into areas they don’t understand because of social pressure or FOMO (fear of missing out). Avoiding stupidity means having the emotional discipline to say, “That’s great for them, but it’s outside my circle” and meaning it—even when it feels terrible watching others get rich.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Avoiding stupidity is a philosophy, not a guarantee. Markets are unpredictable, and all investments carry risk. Past performance doesn’t guarantee future results. Always consult with qualified financial advisors before making investment decisions.