Tell a true story that truly changed Munger's investment perspective. In the early morning of 1963, Munger received a call. On the other end was a small businessman he met a year earlier on a golf course. The person wasn’t in the hospital because he was sick; he was too excited to sleep. He said one sentence: Charlie, the oil lease we invested $1,000 in has generated $40,000 in cash flow in 18 months.

Munger was stunned because that year, he himself, working as a lawyer, worked 60 hours a week, earning only $40,000 a year, and that $1,000 in 18 months earned him a year's worth of life. That night, Munger didn’t sleep, not because of the money, but because he suddenly understood one thing: small capital can slip into gaps that big capital can never reach.

What happened to that investment later? The $1,000 continued to generate about $70,000 in cash flow for Munger every year over the next 60 years. Note, not a total of $70,000, but $70,000 annually. Over 60 years, the total return exceeded $1 million. And now, Charlie Munger can no longer make such investments, not because he’s not smart, not because opportunities have disappeared, but because his capital size has barred him from these opportunities.

This is a truth in the financial world that no one is willing to say openly: once money grows, opportunities tend to decrease. The $5,000 in your hand is a chip of fate; for someone managing hundreds of billions, it’s not even worth building a folder for. Warren Buffett once publicly said: If I only managed $1 million now, I am confident I could achieve a 50% annual return. Why? Because small funds can go places big funds cannot. Small funds can invest in small companies, overlooked local industries, private businesses that retiring owners want to sell, local businesses that institutions find troublesome. Big funds can only go to Apple, Coca-Cola, indexes, government bonds—safe but mediocre places—not because they are the best, but because they can only hold those.

In reality, 90% of ordinary people are wasting their only advantage with their own hands. What are they doing? They are trying to imitate people managing $500 billion with $5,000. Buffett buys Apple; he also buys 10 shares of Apple. Berkshire Hathaway buys Coca-Cola; he also buys 3 shares of Coca-Cola. This is not learning; it’s self-castration. What you learn is not the ability of giants, but the constraints they face.

Do you know what Buffett bought when he was young? Not blue-chip stocks, not index funds. He bought companies whose stock price was below cash, small businesses no one heard of, and cigar butts being liquidated. Those companies are meaningless to today’s Berkshire, but for young Buffett back then, they were leverage to change his destiny.

Charlie Munger summarized a very ruthless phrase: If the rules are against you, don’t prove yourself within the rules. Small funds should not play the big game. So, how should you play? Munger repeatedly emphasizes only three words: dislocated competition.

1. The first principle: go where elephants can’t go. Large institutions are like elephants—clumsy, slow to turn, requiring scale, compliance, and liquidity. You are a hunter; you can go to micro companies no one researches, overlooked local assets, small businesses with P/E ratios of 3 to 5, retiring owners with no successors. These places are not risky because they are dangerous; they are risky because no one comes.

2. The second principle: dare to bet once you understand. Most ordinary people’s biggest waste is not losing money but not daring to bet when opportunities come. Investing $200 out of $10,000 in the best opportunity, even if doubled, won’t change your life. Concentration is not recklessness; it’s rational after understanding.

3. The third principle: real safety comes from understanding, not diversification. Diversification is for those who don’t understand what they are buying. If you don’t understand, then what you diversify is ignorance. Munger once said: I’d rather fail in three opportunities I understand than survive in thirty I don’t.

So if you only have a few thousand dollars now, what you should do is not anxiety but calmly follow these five steps.

1. First, hunt where elephants can’t go. Institutions are elephants—clumsy, slow, requiring scale, compliance, and liquidity. You are a flexible hunter. Micro stocks no one covers, small businesses retiring owners want to sell, local assets institutions overlook—these are the places you should appear.

2. Second, truly good opportunities dare to bet on. Most people’s biggest waste is not losing money but not daring to bet when opportunities come. Investing $200 out of $10,000, even if doubled, won’t change your fate. Concentration is not reckless; it’s rational after cognition.

3. Third, don’t fear a seemingly undiversified portfolio. Diversification is for those who don’t understand what they buy; true safety comes from your understanding and depth of assets. Charlie said: Distributing ignorance across 30 targets is not risk control; it’s self-comfort.

4. Fourth, when opportunity arises, bet 25% to 50% of your capital.

5. Fifth, give time for compound interest; don’t be pushed off the table by short-term fluctuations.

When Charlie Munger was 99, he said this not to motivate or comfort the poor, but because the most profitable phase of his life happened precisely when he had the least money. And you are now standing at the door of that phase. What you should learn is not what they are doing now, but what they are doing when they have very little money.

Here I must add an important reminder: No one can perfectly replicate Charlie Munger’s or Warren Buffett’s success path. Different eras, environments, personal abilities. What you should learn is not a particular stock or case, but a mindset about scale and probabilistic advantage in investing.

What you have now is what Munger lost 40 years ago. Small funds have advantages, but only if you truly understand where they are advantageous. Freedom, flexibility, low barriers, room for mistakes—these are not for gambling but for learning how to build genuine investment cognition at small money stages. Remember, your small amount of money is not stingy; it’s your only chip to avoid being crushed by rules in this life. When you truly master it, destiny will start to make way for you. If you understand this, you are already ahead of many people.