Charlie Munger is the Vice Chairman of Berkshire Hathaway, which is led by Warren Buffett, and is currently the world's sixth-largest publicly traded company. In 2007, Munger gave a speech at the USC Law School, in which he shared his insights and wisdom on a wide range of topics, from business and investing to life and philosophy. He is one of the most successful businesses of all time, and he is full of wise advice.
Keep reading to get Charlie's top life principles from his 2007 commencement address to the USC law graduates, as well as flashcards with the 10 key life principles distilled so you can remember them forever. We highly recommend checking out his speech; it is full of wisdom and inspiration. If you want to remember Charlie Munger's ten key life principles to live by, you can apply these key principles in your life by revisiting these ideas using the power of spaced repetition with Thought Saver.
Charlie Munger's 10 Key Life Principles
Principle 1: To get what you want, deserve what you want.
"You want to deliver to the world what you would buy if you were on the other end. There is no ethos, in my opinion, that is better for any lawyer or any other person to have. By and large, the people who have this ethos win in life and they don’t win just money, just honors and emoluments. They win the respect, the deserved trust, of the people they deal with, and there is huge pleasure in life to be obtained from getting deserved trust."
Principle 2: There is no love that’s so right as admiration-based love.
Charlie Munger believes that admiration-based love is the most appropriate form of love. He argues that love that causes suffering, such as the type depicted in "Of Human Bondage," is unhealthy and should be avoided. According to Munger, true love is built on respect and admiration, and this includes love for the ideas and works of historical figures who continue to offer valuable insights. Munger calls this love for the "instructive dead."
Principle 3: Wisdom acquisition is a moral duty.
"Another idea that I got, and this may remind you of Confucius too, is that wisdom acquisition is a moral duty. It’s not something you do just to advance in life. Wisdom acquisition is a moral duty."
"And there’s a corollary to that proposition which is very important. It means that you’re hooked for lifetime learning, and without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know. You’re going to advance in life by what you’re going to learn after you leave here."
Warren Buffet was a learning machine, and this helped Berkshire Hathaway excel from one decade through to the next.
"If you take Warren Buffett and watched him with a time clock, I would say half of all the time he spends is sitting on his ass and reading."
Principle 4: Learn all the big ideas from the big disciplines and make them a part of your mental routine.
"And what I noted, since the really big ideas carry 95 percent of the freight, it wasn’t at all that hard for me to pick up all the big ideas and all the big disciplines and make them a standard part of my mental routines."
Charlie Munger also emphasized the importance of practicing and revisiting these ideas.
"Once you have the ideas, of course, they are no good if you don’t practice. You don’t practice; you lose it."
This is where spaced repetition comes in; you can continue to revisit these ideas and integrate them into your life using the power of spaced repetition.
Charlie Munger also advises not offending people by helpfully being right in a way that causes somebody else to lose face.
"to learn sometimes to keep your light under a bushel."
"Your duty under any circumstances is to behave in such a way that the client thinks he’s the smartest person in the world."
Principle 5: Invert, always invert.
"problems frequently get easier and I would even say usually are easier to solve if you turn around in reverse. In other words, if you want to help India, the question you should ask is not, “How can I help India?” You think, “What’s doing the worst damage in India? What would automatically do the worst damage and how do I avoid it?”"
What are seven things Charlie Munger says you should avoid in life?
1) Sloth & 2) Unreliability
Why do you want to avoid sloth and unreliability in life?
"But to use a little inversion now, “What will really fail in life? What do you want to avoid?”"
"Such an easy answer: sloth and unreliability. If you’re unreliable, it doesn’t matter what your virtues are, you’re going to crater immediately. So doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability."
3) Intense ideology
What is Charlie Munger's method to prevent intense ideology?
"I have what I call an “iron prescription” that helps me keep sane when I naturally drift toward preferring one ideology over another. And that is I say, “I’m not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it.” I think only when I reach that stage am I qualified to speak."
4) Self-serving bias
According to Charlie Munger, what is a self-serving bias, that you want to avoid?
"Thinking that what’s good for you is good for the wider civilization and rationalizing all these ridiculous conclusions based on the subconscious tendency to serve one’s self. It’s a terribly inaccurate way to think and, of course, you want to drive that out of yourself because you want to be wise, not foolish."
Why do you also need to consider the self-serving bias of everybody else?
"most people are not gonna remove it all that successfully, the only condition being what it is. If you don’t allow for self-serving bias in your conduct, again, you’re a fool."
"envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia, and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity."
6) Perverse incentives
Why do you not want to be in a perverse system of incentives?
"a perverse incentive system that’s causing you to behave more and more foolishly or worse and worse. Incentives are too powerful a controller of human cognition and human behavior."
"you particularly want to avoid working directly under somebody you really don't admire"
7) Influences that will compromise your objectivity
Munger emphasized the importance of objectivity maintenance routines:
"Well, we all remember that Darwin paid special attention to disconfirming evidence, particularly to disconfirm something he believed and loved."
Principle 6: Get the power to the people who actually have the knowledge, not the people who pretend to have knowledge.
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, just because it's so boring 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 he 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.”"
According to Charlie Munger, what is Planck knowledge?
"Planck knowledge—the people who really know. They've paid the dues, they have the aptitude."
According to Charlie Munger, what is Chauffeur knowledge?
"Chauffeur knowledge—they have learned to prattle the talk and they have a big head of hair. They may have fine timbre in the voice. They really make a hell of an impression. But in the end, they've got chauffeur knowledge. I think I've just described practically every politician in the United States."
Principle 7: You're more likely to be really good at something if you have a natural interest in it.
"Another thing that I found is an intense interest of the subject is indispensable if you are really going to excel."
Principle 8: You need to have assiduity and discipline.
"Another thing you have to do, of course, is have a lot of assiduity. I like that word because it means “sit down in your ass until you do it.”"
During a specific phase of Charlie Munger's life, his partners abided by the following rule:
"Two-man partnership. Divide everything equally. Here’s the rule: Whenever we're behind in our commitments to other people, we will both work 14 hours a day until we're caught up."
Principle 9: Prepare now for trouble in the future.
Munger says he’s gone through his entire life preparing for trouble ahead, and that has helped him immensely. There is a little poem from Houseman that Charlie Munger fondly remembers to remind him to prepare now for trouble in the future.
The little poem went something like this...
"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."
Principle 10: The highest form that civilization can reach is a seamless web of deserved trust.
"Not much procedure, just totally reliable people correctly trusting one another. That's the way an operating room works at the Mayo Clinic. If a bunch of lawyers were to introduce a lot of process, the patients would all die. So never forget, when you're a lawyer, that you may be rewarded for selling this stuff, but you don't have to buy it. In your own life, what you want is a seamless web of deserved trust. And if your proposed marriage contract has forty-seven pages, my suggestion is you not enter."
Empower yourself by never forget Charlie Munger's key life principles, using the science of spaced repetition. We have all Charlie's key life principles in flashcard format so you can retain these ideas forever.