The Best Life Advice from Charlie Munger (It’s So Simple!) | Final Interview with CNBC 2023
[Transcript]
BECKY QUICK: Part of the advice that you give people in life is pretty basic stuff — but, if you follow it, it’s really excellent advice. I think your first one is have low expectations. The second one is have a good sense of humor. And the third one is surround yourself with the love of friends and family obviously.
CHARLIE MUNGER: Yeah. Sure.
BECKY QUICK: I have a hard time thinking of a time when you set your expectations low, though.
CHARLIE MUNGER: Well, I did.
BECKY QUICK: How so?
CHARLIE MUNGER: Well, let me give you an example — perfect. Here I am, a little boy growing up in Omaha. One of my father’s best friends is living two blocks away and he has two sons and I’m right in the middle of the age of his two sons. I’m a little older than one and a little younger than the other.
Eddie Davis Jr. is sort of a mechanical genius. He could take anything apart quickly and put it back together again perfectly — and he also reads books all the time. That’s practically all he ever does is sit around reading books. He’s a very bookish little genius with vast mechanical ability.
Eddie Davis Sr. — his father — was the son of the leading mathematics professor at the University of Nebraska. And he didn’t have any money in those days, but he had a huge family — and they didn’t die. It was very difficult supporting them on a professor’s income. And he went through all kinds of stratagems. He’d make his own raincoat out of a piece of oilcloth to save the money of buying a raincoat and so on. And nobody else did that, even by the standards of the ‘30s. But that’s the way he did it. But he was a very talented man who wrote math textbooks and so on. And Dr. Davis had enormous mechanical ability, as well as enormous mental ability and being physically dextrous. He could do anything. He saw things in three dimensions.
And it was quite obvious that for anything that required mechanical ability, I would not be as good as the two Davises. You know, I just — No amount of effort or work was ever going to do it, make me into a fly-caster like Dr. Davis was, or anything else. I just didn’t have that kind of ability.
And so I decided to stay the hell out of businesses where I would compete with people like Eddie Davis Jr. and Eddie Davis Sr. in their strong suit.
BECKY QUICK: Knowing your competencies.
CHARLIE MUNGER: Knowing your circle of competency, right. And that kept me away from those businesses — totally.
Source: https://youtu.be/H5Oom5Rjp_Y?si=ZEkkZkAN6WyOWcl9
[YAPSS Takeaway]
"Know what you're good at—and avoid competing where you're not."
Charlie Munger shares that he learned early on to stay away from areas where others clearly had more natural talent. Instead of trying to beat them at their game, he focused on his own strengths.