Surfing the wave

Charlie Munger, the vice chairman of Berkshire Hathaway and long-time partner of Warren Buffett, was known for his deep wisdom and unique perspectives on investing, business, and life.  One of his most insightful phrases, "surfing the wave," carries significant meaning and offers valuable lessons for anyone navigating the unpredictable waters of the business world.

What does "surfing the wave" mean?

In Munger's view, "surfing the wave" is about capitalising on opportunities that come your way.  It’s the art of recognising the right moment to ride the tide of success—when conditions align just right, and you have the tools, knowledge, and resources to make the most of it.  This philosophy isn’t about forcing progress or trying to create opportunities that aren’t there.  Instead, it’s about knowing when to act, when to wait, and when to leverage what the market (or life) is offering at any given time.

For Munger, the wave represents those times when everything aligns and things start to flow in your favour—whether that be the stock market, business conditions, or personal circumstances.  The key is to be prepared when that wave comes, and that preparation can often mean decades of hard work, learning, and patience.

The human tendency to mess up a good thing

There’s a natural tendency in human nature to mess up a good thing because of an inability to sit still.  Many people find it difficult to stay on course once they’re riding the wave.  This constant urge to act or “do something” often leads to decisions that undermine long-term success.  As Munger points out, the early birds—those who recognise opportunities early and have the patience to ride them—gain huge advantages.  However, the real challenge lies in staying on the wave.

Munger uses the metaphor of surfing to explain this.  In the surfing model, when a surfer gets up and catches the wave and just stays there, he can go a long, long way.  But if the surfer tries to get off the wave too early, he gets mired in the shallows and loses the momentum.

In business and investing, this concept applies directly.  If you’re able to ride a wave of success by remaining disciplined, patient, and focused, the rewards can be substantial.  Think of companies like Microsoft or Intel—these are examples of businesses that stayed on the wave for a long period, allowing their success to compound.  The ones that jump off too early or abandon their strategies can lose the momentum they’ve built.

Letting compounding take effect

A crucial aspect of "surfing the wave" that Munger often discusses is the power of compounding.  In the same way that a surfer must carefully wait for the wave to build and gain momentum, investors and businesspeople must let the process of compounding work its magic over time.  Munger frequently points out that the most successful investments and business strategies often come from letting small efforts grow exponentially.

Compounding is a slow, but incredibly powerful force.  Whether it’s returns on investments, reinvested earnings, or the accumulation of knowledge, compounding requires patience and time.  Munger’s famous partnership with Warren Buffett is a testament to this: their combined success didn’t happen overnight but was the result of decades of letting good decisions, backed by patience, accumulate and grow.

Munger often talks about how success is built on a foundation of small, incremental decisions.  In investing, this could be consistently making good choices, like holding quality businesses or reinvesting profits.  In business, it might mean making strategic, small improvements over time, rather than expecting immediate, explosive results.  Over time, those small changes accumulate, and the effects can be far greater than expected.

Just like a surfer waits for the right wave, they must also wait for the wave to crest, build momentum, and carry them forward.  In business, compounding rewards those who stay patient and consistent over the long haul, even when immediate results aren’t visible.

Timing is everything

The essence of surfing is timing.  A surfer must know when to paddle, when to catch the wave, and when to steer clear of dangerous waters.  Similarly, in business, the difference between success and failure often lies in timing.  Munger has consistently advocated for a long-term approach in investing and decision-making.  By staying focused on fundamentals and avoiding short-term distractions, you can increase your chances of recognising the wave when it arrives.

However, timing isn’t just about seizing the right moment—it’s also about understanding when not to act.  Munger often says that it’s just as important to recognise the things you shouldn’t do as it is to recognise the things you should.  Knowing when to refrain from taking action is as critical as knowing when to strike.  This is where his focus on avoiding unnecessary risks and staying within your circle of competence comes into play.

Surf school

Successful surfing doesn’t happen by accident.  It takes years of practice, understanding the ocean, and building the right skills.  The same holds true for success in business and investing.  Munger is a firm believer in lifelong learning.  He constantly read, thought, and applied his mental models across disciplines, all to ensure that he was prepared when the wave finally came.

To "surf the wave" in business, you must develop a strong foundation in the areas that matter most to you.  Whether it’s finance, technology, marketing, or any other field, building expertise and a robust skill set allows you to see opportunities that others might overlook.  The more you learn, the better your chances of spotting the wave when it’s coming.

Big wave surfing

Ultimately, "surfing the wave" is about preparation meeting opportunity.  Charlie Munger’s success wasn’t built on hoping for a big break.  Instead, it was the result of decades of preparing himself to recognise and capitalise on opportunities when they came his way.  By developing patience, discipline, and a commitment to lifelong learning, Munger has been able to ride the big waves of fortune with precision and grace.

And just as importantly, he allowed the power of compounding to work its magic, taking small, consistent decisions and turning them into monumental successes over time.  The beauty of compounding lies in its ability to turn the mundane into extraordinary over long periods.  Whether it’s wealth, knowledge, or experience, the small waves build up and carry you forward toward greater success.

Final thoughts

"Surfing the wave" isn’t about forcing success or chasing every opportunity.  Instead, it’s about recognising when the right wave is approaching and being ready to catch it.  By taking the time to prepare, develop your skills, and cultivate the right mindset, you can increase your chances of riding the waves that come your way.

Charlie Munger’s wisdom is a reminder that success often comes from quiet observation, careful preparation, and knowing when to act.  So, next time you’re facing an opportunity, ask yourself: Is this the right wave?  If it is, be ready to surf it with confidence—and let compounding work its magic over time.  But remember: once you’re on the wave, just stay there—don’t get off too early.  The best rides are the ones that keep going.