Charlie Munger USC Law Commencement Speech – May 2007

Key Takeaways

  •  The safest way to get what you want is to try and deserve what you want
    • Deliver to the world what you would buy if you were on the other side
      • If you do this, you’ll earn respect, trust, and love from others
  • Acquire new wisdom daily
    • You want to be a lifelong learner, only then will you be successful in life
      • “You are not going to get very far in life based on what you already know” – Charlie Munger
  • Study history
    • Be aware of what happened before you were alive to get a sense of where things are now
  • Live below your means
    • Mozart spent more money than he made and lived a miserable life because of i
  • Avoid working under people who you don’t admire or want to be like
    • You want to work under people you admire so you follow into their footsteps
  • Have a checklist routine
    • If there’s a process or procedure you perform often, have a checklist of each step to avoid errors
  • If you want to become successful in a specific domain, you must have an intense interest in that area
    • The only way to be really good in something is to be obsessed with it
      • “An intense interest of the subject is indispensable if you are really going to excel” – Charlie Munger
  • Live a life in which your heroes would be pleased with your actions

Intro   

  • Charlie Munger is the vice-chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett
    • This is a commencement speech given by Charlie in May of 2007 to the graduating class of USC Law

Life Advice From Charlie

  • The safest way to get what you want is to try and deserve what you want
    • Deliver to the world what you would buy if you were on the other side
      • If you do this, you’ll earn respect, trust, and love from others
  • Acquire new wisdom daily
    • You want to be a lifelong learner, only then will you be successful in life
      • “You are not going to get very far in life based on what you already know” – Charlie Munger
        • Warren Buffett is successful because he is a learning machine and spends about half his day reading
  • Study history
    • Be aware of what happened before you were alive to get a sense of where things are now
      • Cicero is famous for saying, “A man who doesn’t know what happened before he was born goes through life like a child.”
  • Learn the big ideas in your domain and other disciplines
    • Then interweave them in a mental latticework so you can use them in everyday situations
  • Live below your means
    • Mozart spent more money than he made and lived a miserable life because of it
  • Appeal to interest, not to reason
    • If you want to persuade someone, appeal to their interests
  • Avoid working under people who you don’t admire or want to be like
    • You want to work under people you admire so you follow into their footsteps
  • Have a checklist routine
    • If there’s a process or procedure you perform often, have a checklist of each step to avoid errors
  • There are 2 types of knowledge: 
    • Planck knowledge: people who really understand the subject 
    • Chauffeur knowledge: people who can just repeat what they have heard
      • A lot of politicians have chauffeur knowledge
  • If you want to become successful in a specific domain, you must have an intense interest in that area
    • The only way to be really good in something is to be obsessed with it
      • “An intense interest of the subject is indispensable if you are really going to excel” – Charlie Munger
  • Have a lot of assiduity
    • Sit down on your ass until you accomplish what you’re set out to do
      • Look for partners that have an assiduity mindset
  • View every mischance as an opportunity to behave well and learn something
    • “Your duty was not to be submerged in self-pity, but to utilize the terrible blow in a constructive fashion” – Charlie Munger
  • Live a life in which your heroes would be pleased with your actions
  • Go through life anticipating trouble and be ready to perform adequately when it arrives 
  • Be a person people can trust

Mental Models

  • Inversion: Reverse the idea or task to get a new perspective on it
    • For instance, it’s hard to answer the question “what does it take to be successful in life?” but it’s easy to answer the question “what does it take to fail in life?”
  • Iron prescription: Avoid extreme ideologies and don’t be entitled to have an opinion on a subject unless you can state the arguments against your position better than the people do who are supporting it
  • Avoid self-serving bias: You should not believe that you are entitled to do whatever you want to do
  • Avoid self-pity: Self-pit is disastrous behavior and should be avoided
  • Avoid perverse incentives system: Structure your incentives incredibly carefully or you will get undesired outcomes
  • Avoid perverse associations: Don’t work for people you don’t admire
    • We are all subject to the control of authority figures so try and figure out how to work under people you really admire
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Notes By Alex Wiec

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