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Rupert Hargreaves
Rupert Hargreaves
Articles (632)  | Author's Website |

Charlie Munger: 5 Tips to Succeed in Life

Buffett's right-hand man shares some reflections

November 08, 2018 | About:

Charlie Munger (Trades, Portfolio) is best known for being the right-hand man of Warren Buffett (Trades, Portfolio) at Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), and his investment acumen has helped him achieve the billionaire status he has today.

He is also one of the world's most revered thinkers. His various essays and lectures on how to construct mental models and think about the world around you are highly insightful and required reading for almost everyone, whether you are an investor or not.

Munger gave one of his greatest speeches to graduates of the Harvard School in June 1986. This speech focused on how to live a good life, not how to be a good investor, but how to construct a life that enables you to be your best and, as a result, achieve the best investment results.

How to live a good life

In the speech, Munger laid out what he called the five "prescriptions for sure misery." He started the speech by telling the attending students that he had actually taken the idea from a Johnny Carson speech, "specifying Carson’s prescriptions for guaranteed misery in life." He told the students that he had "decided to repeat Carson’s speech but in expanded form with some added prescriptions of my own."

So here, without further ado are Munger's five tips for living a good life.

  1. Ingesting chemicals in an effort to alter mood or perception.
  2. Envy and resentment.
  3. Unreliability.
  4. Letting life get you down.
  5. Learning from past mistakes.

In his speech, Munger added some meat to each of these points. On the topic of avoiding drugs, he provided a real-world example of why he is so against taking any form of substance, including alcohol:

"The four closest friends of my youth were highly intelligent, ethical, humorous types, favored in person and background. Two are long dead, with alcohol a contributing factor, and a third is a living alcoholic -if you call that living. While susceptibility varies, addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken."

He concludes this section with the observation: "I have yet to meet anyone, in over six decades of life, whose life was worsened by over fear and over avoidance of such a deceptive pathway to destruction."

Munger then went on to talk about how important it is to avoid envy or resentment in life. He said these traits only ever cause misery and do not produce any positivity. On the topic of resentment, Munger said, "I cannot recommend it highly enough to you if you desire misery." Then added, "life is hard enough to swallow without squeezing in the bitter rind of resentment."

Next, Munger talked about unreliability. If you are unreliable, you will be distrusted and excluded from the best human contribution and company. He said that if you master this one habit, "you will more than counterbalance the combined effect of all your virtues, howsoever great." 

He then went on to say: "Master this one habit and you can always play the role of the hare in the fable, except that instead of being outrun by one fine turtle you will be outrun by hordes and hordes of mediocre turtles and even by some mediocre turtles on crutches."

Moving on to his fourth point, Munger said his prescription is for "misery is to go down and stay down when you get your first, second, third severe reverse in the battle of life." There is so much adversity out there, even for the lucky and wise. If you let life get you down, you will never succeed. It is a guarantee that you will never succeed. Optimism is the key.

And finally, we have "learning from past mistakes." This isn't limited to just your mistakes. Learning from the mistakes of others is also vital if you want to succeed in life.

"You can see the results of not learning from others’ mistakes by simply looking about you. How little originality there is in the common disasters of mankind -drunk driving deaths, reckless driving maimings, incurable venereal diseases, conversion of bright college students into brainwashed zombies as members of destructive cults, business failures through repetition of obvious mistakes made by predecessors, various forms of crowd folly, and so on. I recommend as a memory clue to finding the way to real trouble from heedless, unoriginal error the modern saying: 'If at first you don’t succeed, well, so much for hang gliding.'"

Disclosure: The author owns shares of Berkshire Hathaway.

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About the author:

Rupert Hargreaves
Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.

Visit Rupert Hargreaves's Website


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