Charlie Munger: 10 Rules for a Successful Life

There once was a man who became the most famous composer in the world, but he was utterly miserable most of the time. One of the reasons was he always overspent his income. That was Mozart. If Mozart can't get by with this kind of asinine conduct, I don't think you should try.

What are the core ideas that have helped me? Well, luckily, I got at a very early age the idea that the safest way to try and get what you want is to try and deserve what you want. It's such a simple idea; it's the golden rule, so to speak. 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've had this ethos win in life, and they don't win just money or just honors in a million months. 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.

The way to get it is to deliver what you'd want to buy if the circumstances were reversed. Occasionally, you find a perfect rogue of a person who dies rich and widely known, but mostly these people are fully understood by the surrounding civilization. When the cathedral is full of people at the funeral ceremony, most of them are there to celebrate the fact that the person is dead. That reminds me of the story of the time when one of these people died, and the minister said, "It's now time for someone to say something nice about the deceased."

Nobody came forward. Nobody came forward. Finally, one man came up and he said, "Well, his brother was worse!" That is not where you want to go. That's not the kind of funeral you want to have. You'll leave entirely the wrong example.

Another idea that I got, and this may remind you of Confucius too, is that wisdom acquisition was 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. Without lifetime learning, 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.

If you take Berkshire Hathaway, which is certainly one of the best-regarded corporations in the world, it may have the best long-term investment record in the entire history of civilization. The skill that got Berkshire through one decade would not have sufficed to get it through the next decade. Without the achievements made due to Warren Buffett being a learning machine, continuous learning machine, the record would have been absolutely impossible.

The same is true at lower walks of life. I constantly see people rise in life who were not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up, and boy, does that habit help, particularly when you have a long run ahead of you.

Alfred North Whitehead said at one time that the rapid advance of civilization came only when man invented the method of invention. Of course, he was referring to the huge growth in GDP per capita and all the other good things that we now take for granted, which started just a few hundred years ago, when before that all was stasis.

So, if civilization can progress only when it invents the method of invention, you can progress only when you learn the method of learning. I was very lucky; I came to law school having learned the method of learning, and nothing has served me better in my long life than continuous learning.

If you take Warren Buffett, if you watched him with a time clock, I would say half of all the time that he spends is just sitting on his ass and reading. A big chunk of the rest of the time is spent talking one-on-one, either on the telephone or personally with highly gifted people whom he trusts and who trust him. In other words, it looks quite academic, all this worldly success.

Another idea that was hugely useful to me was that I listened in law school when some wag said, "A legal mind is a mind that, when two things are all twisted up together and interacting, it's feasible to think responsibly about one thing and not the other." Well, I could see from that one sentence that that was perfectly ridiculous, and it pushed me further into my natural drift, which was into learning all the big ideas and all the big disciplines.

So I wouldn't be a perfect damn fool who was trying to think about one aspect of something that couldn't be removed from the totality of the situation in a constructive fashion. What I noted since then is that the really big ideas carry 95% of the freight. That wasn't hard for me to pick up all the big ideas in all the disciplines and make them a standard part of my mental routines.

Once you have the ideas, of course, they're no good if you don't practice. If you don't practice, you lose it. So I went through life constantly practicing this multi-disciplinary approach. I can't tell you what that's done for me. It's 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.

Now, there are dangers in it because it works so well that if you do it, you will frequently find you're sitting in the presence of some other expert, maybe even an expert that's superior to you supervising you, and you will know more than he does about his own specialty— a lot more. You'll see the correct answer when he's missed.

That is a very dangerous position to be in; you can cause enormous offense by helpfully being right in a way that causes somebody else to lose face. I never found a perfect way to solve that problem. I was a great poker player when I was young, but I wasn't a good enough poker player, so people failed to sense that I thought I knew more than they did about their subjects. It gave a lot of offense.

Now I'm just regarded as eccentric, but there was a difficult period to go through. My advice to you is to learn sometimes to keep your light under a bushel. I'm really following a very key idea of the greatest lawyer of antiquity, Marcus Tullius Cicero. Cicero is famous for saying, "A man who doesn't know what happened before he's born goes through life like a child." That is a very correct idea of Cicero's, and he's right to ridicule somebody so foolish as not to know what happened before he was born.

However, if you generalize Cicero, as I think one should, there are all these other things that you should know in addition to history. Those other things are the big ideas in all the other disciplines. It doesn't help you just to know them enough so you can prattle them back on an exam and get an A. You have to learn these things in such a way that they're in a mental latticework in your head, and you automatically use them for the rest of your life.

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 you'll think, "My heavenly days, I'm now one of the few most competent people of my whole age cohort!" If you don't do it, many of the brightest of you will live in the middle ranks or in the shallows.

Another idea that I got, and it was encapsulated by that story the dean recounted about the man who wanted to know where he was going to die, and he wouldn't go that way, highlights the profound truth in his hand. The way complex adaptive systems work and the way mental constructs work, problems frequently get easier—I’d even say usually are easier to solve—if you turn them around.

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 will automatically do the worst damage, and how do I avoid it?" You’d think they’re logically the same thing; they’re not. Those of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve.

In life, unless you're more gifted than Einstein, inversion will help you solve problems that you can't solve another way. Let me use a little inversion now: What will really fail in life? What do we want to avoid? It's such an easy answer: sloth and unreliability.

If you're unreliable, it doesn't matter what your virtues are; you're going to create havoc 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.

Another thing, of course, that does one in is the self-serving bias to which we're all subject. You think the true little me is entitled to do what it wants to do. For instance, why shouldn't the true little me overspend my income? Well, there once was a man who became the most famous composer in the world, but he was utterly miserable most of the time. One of the reasons was he always overspent his income. That was Mozart. If Mozart can't get by with this kind of asinine conduct, I don't think you should try.

Generally speaking, 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.

I have a friend who carried a big stack of Lenin cards, about this thick. When somebody would make a comment that reflected self-pity, he would take out one of the cards, take the top one off the stack, and hand it to the person. The card said, "Your story has touched my heart; never have I heard of anyone with as many misfortunes as you."

Well, you can say that's witty, but I suggest that every time you find you're drifting into self-pity— I don't care what the cause, your child can be dying of cancer—self-pity is not going to improve the situation. Just give yourself one of those cards.

It's a ridiculous way to behave, and when you avoid it, you get a great advantage over almost everybody else because self-pity is a standard condition, and yet you can train yourself out of it. You also have to allow for the self-serving bias of everybody else because most people are not going to remove it all that successfully. The human condition being what it is, if you don't allow for self-serving bias in your conduct, again, you're a fool.

I watched the brilliant Harvard Law Review-trained general counsel of Solomon lose his career. What he did was, when the CEO was aware that some underling had done something wrong, the general counsel said, "Gee, we don't have any legal duty to report this, but I think it's what we should do; it's our moral duty."

Understand the general counsel was totally correct, but of course, it didn't work. It was a very unpleasant thing for the CEO to do, and he put it off and put it off, and in due course, that thing eroded into a major scandal and down went the CEO and the general counsel with him. The correct answer in situations like that was given by Ben Franklin. He says, "If you would persuade, appeal to interest, not to reason."

The self-serving bias is so extreme; if the general counsel had said, "Look, this can erupt; it's something that will destroy you, take away your money, take away your status; it's a perfect disaster," it would have worked. You want to appeal to interest. You want to do it with lofty motives, but you should not avoid appealing to interest.

Perverse associations also need to be avoided, and you particularly want to avoid working directly under somebody you really don't admire and don't want to be like. It's very dangerous; we're all subject to control, to some extent, by authority figures, particularly authority figures that are rewarding us. That requires some talent.

The way I solved that is I figured out the people I did admire, and I maneuvered cleverly, without criticizing anybody, so I was working entirely under people I admired. A lot of law firms will permit that if you're shrewd enough to work it out, and your outcome in life will be way more satisfactory and way better if you work under people you really admire. The alternative is not a good idea.

Another thing that I found is that an intense interest in the subject is indispensable if you're really going to excel in it. I can 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, to some extent, you're going to have to follow me in, if at all feasible, you want to drift into doing something in which you have a natural interest.

Another thing you have to do, of course, is to have a lot of assiduity. I like that word because it means sit down on your ass until you do it. I've had marvelous partners all my life. I think I got them partly because I tried to deserve them, partly because I was wise enough to select them, and partly maybe it was some luck. Two partners I chose for one little phase of my life created a little design-build construction team.

They sat down and said, "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." Well, needless to say, that firm didn't fail. The people died honored and rich. It's such a simple idea; it's such a simple idea.

Another thing, of course, is that life will have terrible blows, horrible blows, unfair blows. It doesn't matter, and some people recover, and others don't. There, I think the attitude of Epictetus is the best. He thought that every missed chance in life was an opportunity to behave well.

Every missed chance in life was an opportunity to learn something, and your duty was not to be submerged in self-pity but to utilize the terrible blow in a constructive fashion. That is a very good idea, and you may remember the epitaph which Epictetus left for himself: "So here lies Epictetus, a slave named in body and the ultimate in poverty and favorite of the gods."

Well, that's the way Epictetus is now remembered. He's had big consequences, and he was favored by the gods; he was favored because he became wise, and he became manly. A very good idea.