Everyday we face problems either in personal, social, mental, etc. We always feel like we are getting chewed by things we cannot control. Inversion takes a problem, flips it upside down, and runs it forwards and backwards until the solution spills out in front of you. As Charlie’s partner, Warren Buffett, said, it’s “like singing country western songs backward. That way you can get your house back, your auto back, your wife back, and so forth.” Inversion turns bad things into good things.

For a real life example, take the State Lottery. It’s unquestionably the worst government program ever, bringing unfounded hope and endless disappointment to our poorest citizens, even if the profits end up in State coffers. How could we turn the State Lottery from the worst government program to the best?

Invert it. First, make it involuntary and assign everyone a number, rich or poor. Reduce the prize money to reasonable amounts. Delay the drawing until every player is old or sick. Make every player a winner, not just one lucky soul who might well be destroyed by the windfall. What you get: Social Security, the government program hardly anyone hates.

If inversion still isn’t clear, let’s go to the movies. In the beloved classic It’s A Wonderful Life, selfless, tempest-tossed George Bailey is saved from suicide by guardian angel Clarence, the heavenly clockmaker. Simple but rational Clarence just inverts George’s life: “You’ve been given a great gift, George. The chance to see what the world would be like without you.” George is horrified by the misery he finds for friends and family in a George-less world, and begs to return to his former life. Everyone he ever helped rushes in to repay him.

Here are four ways you can use inversion to help your financial future:

Invert the thrill of individual action into the power of mass action.

As individual humans, we evolved to like and enjoy other individual humans. Our most popular war movies—Star Wars and Casablanca—are really not about massed armies at war, but the character and actions of a few individuals caught up in war. Just as we prefer individuals to the mass of humanity, we prefer individual stocks to the broad market. People love to pick their own stocks. But as Humphrey Bogart says at the close of Casablanca, individuals “don’t amount to a hill of beans in this crazy world.” Most individual stocks don’t, either. Quit focusing on individual stocks. Accepting the counterintuitive wisdom of diversification will protect the bulk of your portfolio from ruin, and assure your fair share of market gains. No one would make a movie about low-cost index funds, but they work. Even the best hedge funds are “closet indexers!” The S&P 500 returned 10% for the past fifty years. Have you?

Invert the delight in risk into the security of making a safe bet.

James Bond and Indiana Jones take awesome risks, win their bad bets all the time, and earn our undying love and admiration. Nature leads us to admire and emulate risk-takers. Risk-taking may benefit humankind, but not the individual taking the risk. That’s why so many portfolios crash or never even get off the ground. As the Wall Street maxim goes, “There are bold investors and old investors, but no old, bold investors.” Invert that primal urge for risky bets and seek the best bet, not the worst. No one would write a song about the heroes of compound interest and long-term investing, but that’s where the money is.  And it’s money we’re after, not just adrenaline.

Invert the urge to keep betting and keep trading into thinking long-term.

“Place your bets, ladies and gentlemen!” cries the croupier. But the croupier serves the house — and the house wants you to bet again and again. Why not? The odds are in their favor: the more you bet the more you lose to the house. Since the 17th century, we’ve known that frequent stock trading leads to investor losses. The only ones to get rich from frequent trading are the financial industry and the pundits who encourage it. Charlie Munger says this about betting: “To me it’s obvious the winner has to bet very selectively.  It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.” It’s not obvious because we are not evolved to think long-term, but to peck at a lever like a trained pigeon. Instead, invert: Bet rarely, and only when the odds are with you.

Invert the bad into the good: Vice into Virtue, Gambling into Investing.

Remember: Gambling is a vice. Like “smoking, drinking, never thinking of tomorrow,” as the Duke Ellington and Michael Parrish lyrics for “Sophisticated Lady” go. Gambling is making bad bets in the mathematically unlikely hope of a big win. The more bad bets you make, the more likely you’ll lose your fortune and your future. Give up gambling, and invest instead. Stick to the good bets and the sure bets. Build virtue instead of vice. Isn’t that what you really wanted to do all along?

Like many simple concepts, inversion can evade your common sense until you absorb it and practice it. Then, like riding a bike, the skill never leaves you. How often should you invert? Carl Jacobi, the 19th-century German mathematician who invented inversion, loved to preach, “Invert, always invert!

Invert all the time. Gift it to others and it will keep right on giving to you. Just thank Carl and Charlie. In German, you can thank them both at once: they’re both Carls.

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