10 Ways You Can Think and Succeed like Charlie Munger by John Szramiak was originally published on Vintage Value Investing
In 2007, Charlie Munger gave the commencement speech at the graduation ceremony for the USC Gould School of Law.This commencement address is one of his most famous and most popular speeches. You can listen to it below via YouTube or download a nice PDF transcript of the speech right here.
Talk of inflation has been swirling for some time amid all the stimulus that's been pouring into the market and the soaring debt levels in the U.S. The Federal Reserve has said that any inflation that does occur will be temporary, but one hedge fund macro trader says there are plenty of reasons not to Read More
In his speech, Charlie Munger listed 10 ideas that have helped him succeed in life.
Here they are:
2016 Letter: Seth Klarman Is Not Only A Value Investor, He Is ...
1. To get what you want, deserve what you want.
This is such a simple idea. Charlie Munger says this is essentially the golden rule, and there is no ethos that is better for any person to have. You want to deliver to the world what you would buy if you were on the other end.
2. There is no love that’s so right as admiration-based love
According to Charlie Munger, “there is no love that’s so right as admiration-based love.” He says that the love that torments you and causes misery – like the love in “Of Human Bondage” – is a sick kind of love and should be eliminated. It’s all about love based on respect and admiration. And, Munger says, that includes love of what he calls the instructive dead – in other words, the great thinkers and writers of the past who have written works that you can learn from today.
3. Wisdom acquisition is a moral duty
Charlie Munger says that becoming wiser is something that is your moral duty, not something that you do just to advance in life.
And as a corollary to that, it means that you’re hooked for lifetime learning. Munger says he constantly sees “people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines, they go to bed every night a little wiser than when they got up and boy does that help, particularly when you have a long run ahead of you.”
4. Learn all the big ideas from the big disciplines and make them a part of your mental routine
Charlie Munger is famous for using a “latticework of mental models” in his head. What he does, is he studies all the big ideas from fields outside of finance and outside of law – engineering, physics, history, philosophy, etc. – and he uses those big ideas and applies them to new situations and new problems he faces.
According to Munger, this interdisciplinary mental model approach to thinking has “made life more fun, it’s made me more constructive, it’s made me more helpful to others, it’s made me enormously rich, you name it, that attitude really helps.”
Charlie Munger continues: “If you do that I solemnly promise you that one day you’ll be walking down the street and you’ll look to your right and left and think, “My heavenly days! I’m now one of the few most competent people of my whole age cohort.””
5. Invert, always invert
Charlie Munger says that sometimes the best way to solve complex problems is to turn them around in reverse. For example, instead of thinking “what are the characteristics that will lead to a great life?” ask yourself “what are the characteristics that can do the most harm in life?”
Munger says there are seven things you should avoid in life:
- Intense ideology
- Self-serving bias
- Perverse incentives
- Perverse associations
- Influences that will compromise your objectivity
6. Get the power to the people who actually have the knowledge, not the people who pretend to have knowledge
Baupost “Spinoff” Finds Perfect Distressed Debt Play In Irrational ...
Charlie Munger frequently tells the story of:
“Max Planck when he won the Nobel prize and went around Germany giving lectures on quantum mechanics, and the chauffeur gradually memorized the lecture and he said, “Would you mind Professor Planck, because it’s so boring just staying in our routines, would you mind if I gave the lecture this time and you just sat in front with my chauffeur’s hat?” And Planck said, “Sure.”
And the chauffeur got up and gave this long lecture on quantum mechanics after which a physics professor stood up in the rear and asked a perfectly ghastly question and the chauffeur said, “Well, I’m surprised that in an advanced city like Munich I get such an elementary question, I’m going to ask my chauffeur to reply.”
The point of that story, according to Charlie Munger, is that there are tow types of knowledge in the world:
- Planck knowledge: These people truly have the knowledge and have paid the dues and have the aptitude
- Chauffeur knowledge: These people have learned to prattle the talk, they have a big head of hair, and a nice voice, and they make “a heal of an impression,” but in the end they just have chauffeur knowledge.
It’s important to get the opportunities and the power to make decisions into the hands of people with Planck knowledge, and out of the hands of people with chauffeur knowledge.
7. You’re more likely to be really good at something if you have a natural interest in it
According to Charlie Munger, an intense interest in the subject is indispensable if you are really going to excel. Munger says he “could force myself to be fairly good in a lot of things, but I couldn’t be really good in anything where I didn’t have an intense interest.”
So you want to drift into doing something in which you really have a natural interest.
8. You need to have assiduity and discipline
“Assiduity” means showing great care and perseverance. Charlie Munger says he likes the word assiduity because it means “sit down on your ass until you do it.”
Munger also says that life will have terrible, horrible, unfair blows in it. You have to find the silver-lining in those blows, avoid self-pity, and carry on.
9. Prepare now for trouble in the future
Charlie Munger says he always thinks of this poem from A. E. Housman:
“The thoughts of others
were light and fleeting,
of lovers’ meeting
or luck or fame.
Mine were of trouble,
and mine were steady;
So I was ready
when trouble came.”
Munger says he’s gone through his entire life preparing for trouble ahead, and that has helped him immensely.
10. The highest form of civilization is not reliant on process and procedure, but on a seamless web of deserved trust.
Finally, Charlie Munger believes that “the highest form which civilization can reach is a seamless web of deserved trust. Not much procedure just totally reliable people correctly trusting one another.”
He says this is how the operating room works at the Mayo Clinic. If a bunch of lawyers were to introduce a lot of processes and procedures, then the patients would all die.
So, what you want in your own life is a seamless web of deserved trust. And if your proposed marriage contract has 47 pages, Munger’s suggestion is do not enter.
USC GOULD SCHOOL OF LAW, COMMENCEMENT SPEECH, MAY 13, 2007 – CHARLIE MUNGER
Download a transcript of the speech right here or read on below.
As Baupost Waits For Market Uncertainty To Take Its Toll, Klarman ...
Charlie Munger USC Law School Commencement Speech Transcript: