Charlie Munger: People are getting better and better in life and investment, not because they are smart or hardworking

This article is the transcript of Charlie Munger’s speech at the Southern California School of Law’s graduation ceremony in 2007. Munger shared with the graduates four universal principles that contain his life’s wisdom and philosophy:

Below I will introduce the principles and attitudes that are most useful to me. I don't think they're perfect for everyone, but I think a lot of them have universal value, and a lot of them are "tried and true" truths.

I was very lucky to understand a truth at a very young age: the surest way to get something you want is to make yourself worthy of it. This is a very simple truth, the golden rule.

In general, people with this spirit can win many things in life, and they win more than just money and fame. They also gain respect and, rightfully, the trust of those with whom they interact.

Sometimes, you will find that some villains died rich and famous, but most people around them thought that he died unjustly. If the church is full of funeral-goers, most of them are there to celebrate that the kid is finally dead.

This is not the outcome you want. A life that ends with such a funeral is not the life you want.

There is a very important truth, that is, you must persist in lifelong learning. Without lifelong learning, you will not achieve high levels of success. You won't get far in life just relying on the knowledge you already have.

The methods that allowed Berkshire Hathaway to make a lot of money in this decade may not work as well in the next decade, so Warren Buffett has to become a constant movie Learning machine.

Lower levels of life have the same requirements. I keep seeing some people getting better and better in life. They are not the smartest, or even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were that morning. This habit will serve you well, especially when you still have a long way to go.

Alfred North Whitehead once said something very correct. He said that only when humans have invented the "method of invention" can human society develop rapidly. He was referring to the huge growth in GDP per capita and many of the good things we have taken for granted today. Human society only experienced great development a few hundred years ago. Before that, the development in each century was almost zero.

Human society can only develop after inventing the "method of invention". In the same way, you can only progress after learning the "method of learning".

Take Warren Buffett, for example. If you observe him with a timer, you will find that he spends half of his waking time reading, and he spends most of the remaining time following some Very talented people having one-on-one conversations. Sometimes on the phone, sometimes in person, those are people he trusts and trusts him. If you look closely, Warren looks like a pedant, even though he was very successful in his worldly life.

Of course, after mastering these principles, you must use them through practice. It's like a piano player, if you don't practice consistently, you can't play well. So I continue to practice that interdisciplinary approach throughout my life.

This habit has helped me a lot, it has made life more interesting, it has allowed me to do more, it has made me more constructive, it has made me very rich, and this It can't be explained by talent.

But this habit can also be dangerous, because it is so useful that if you use it, you and other experts in the subject (or even your boss) can easily hurt you. You will often find that you have more knowledge than your boss and are better able to solve the problems he encounters. When he's at his wits' end, you sometimes know the right answer.

It is very dangerous to encounter such a situation, because your correctness makes people with status and status feel embarrassed, but I have not yet found a perfect way to avoid being hurt by this serious problem.

When I was young, I wasn't very good at hiding my thoughts. I didn't try very carefully to hide my thoughts, so I always offended people. I suggest you don't learn from me, it's better to learn to hide your wisdom.

I have a colleague who graduated at the top of his class from law school. He once worked on the U.S. Supreme Court and was a lawyer when he was young. At that time, he always showed that he was well-informed. look like. One day, the senior partner above him called him into the office and said, "Listen, Chuck, I'm going to explain something to you. Your job and responsibility is to make the client think he is the smartest person in the room." If you have any extra energy after completing this task, you should use it to make your senior partner appear to be the second smartest person in the room. Only after you have fulfilled these two obligations. Express yourself."

If you memorize a piece of knowledge so that you can do well on an exam, that knowledge won't do you much good. You must master a lot of knowledge, let it form a thinking framework in your mind, and be able to use it automatically in the following days.

If you can do this, I solemnly promise you that one day you will unconsciously realize: "I have become one of the most effective people among my peers." one". By contrast, without the effort to practice this interdisciplinary approach, many of your brightest minds will achieve only moderate success or even live in the shadows.

Another truth I discovered is contained in a story in which a country boy said, "If only I had known where I was going to die, I would never go there." The country boy said Although what he said sounds ridiculous, it contains a profound truth. As with complex adaptive systems and the human brain, problems often become easier to solve if you think backwards. If you think about the problem in reverse, you can usually think more clearly.

For example, if you want to help India, the question you should consider is not "How can I help India?" Instead, you should ask: "How can I harm India?" You should find What can do the most damage to India and then avoid doing it.

Let me use a little reverse thinking now. What causes us to fail in life? What should we avoid? Some answers are simple, for example, laziness and bad faith set us up to fail in life. If you do not keep your word, no matter how many advantages you have, you will not be able to avoid a tragic end. So you should develop the habit of keeping your word. Laziness and bad faith are obviously to be avoided.

I often tell a joke about Max Planck.

After Planck won the Nobel Prize, he went around Germany to give lectures. The content of each lecture was more or less the same, and they were all about the new quantum physics theory. Over time, his driver memorized the contents of the lecture. content. The driver said: "Professor Planck, it's quite boring for us to be like this all the time. Why don't we go to Munich and let me teach you? You wear my driver's hat and sit in the front row. What do you think?"

Planck said: "Okay." So the driver walked up to the podium and gave a long speech on quantum physics. Then a physics professor stood up and asked a very difficult question. The driver who gave the speech said: "Wow, I really didn't expect that I would encounter such a simple question in such an advanced city as Munich. I would like to ask my driver to answer it."

I tell this story , not to praise the protagonist for being smart. I think the knowledge in this world can be divided into two types: one is Planck knowledge, which belongs to the kind of people who really understand. They put in the effort and they have that ability. The other is driver knowledge. They have mastered the art of parroting, they may have nice hair, their voices are often beautiful, and they leave a lasting impression.

But in fact, what they have is driver knowledge disguised as real knowledge. If you go through life trying to be someone with Planck knowledge and avoid being someone with driver knowledge, you're going to run into this problem. There will be many huge forces against you at that time.

If you really want to excel in a certain field, then you must have a strong interest in it. I can force myself to do many things reasonably well, but I can't do anything very well at something I don't have a strong interest in. In a way, you are similar to me. So if you have the opportunity, you should find ways to do things that you have a strong interest in.

Also, you must be very diligent. I like hardworking people very much. The partners I have met in my life have been extremely hard-working. I think I was able to partner with them partly because I tried to be worthy of them, partly because I chose them shrewdly, and partly because I was lucky.

I had two partners in my early business who formed a joint venture for an architectural design and construction company during the Great Depression with a simple agreement: “If we don’t complete the work for the client, We both promised to work 14 hours a day, 7 days a week until it was completed. "Needless to say, you know, this company is very successful. My two partners are widely respected. Their simple, old-school approach will almost certainly deliver a great result.

You may be hit hard and unfairly in life. Some people make it through, some people don't. I think Epictetus' attitude leads people to the right response. He believes that every misfortune in life, no matter how unlucky, is an opportunity for exercise. He sees every misfortune as an opportunity to learn a lesson.

Rather than wallowing in self-pity, people should use every blow to improve themselves. His views were so correct that they influenced the greatest Roman emperor, Marcus Aurelius, and many others over the centuries.

Since there are a lot of procedures and red tape in the industry you will be working in, the last thing I want to tell you is that complex bureaucratic procedures are not the best system for a civilized society. The best systems are seamless, non-bureaucratic webs of trust. There aren't too many fancy programs. Just a reliable group of people who have the right amount of trust in each other.

So when you become a lawyer, never forget that although you must abide by procedures in your work, you do not have to always be led by the procedures. What you should pursue in life is to cultivate as seamless a web of trust as possible. If your proposed marriage agreement is 47 pages long, I would suggest that it is better for you not to get married.

Okay, enough talking about it at the graduation ceremony. I hope this old man nonsense is useful to you. Finally, I would like to end this speech with the only words that the swordsman of truth in John Bunyan's masterpiece "The Pilgrim's Progress" could say when he was old: "My sword passes to him who can wield it."