Charlie Munger on THE MOST Important Quality in Life: RATIONALITY | Collection: Charlie Munger #308

[Transcript]

BECKY QUICK

Charlie, I spoke with a friend of yours yesterday and his question that he had for you is what quality has helped you the most in life?

CHARLIE MUNGER

Well, that’s easy, rationality. If you’re just not crazy, you have a big advantage over 95% of the people because most people have all kinds of crazy patches. And if you just are consistently not crazy, you got a big advantage in life. And if you're patient and gratification-deferrer, in addition to being not crazy, then it's practically a cinch. And then if you’re exceptionally good at satisfying your commitments to other people, then you’ve got — you just automatically improved your resources and your chances in life enormously. And it’s so simple. And why don’t more people do it? It’s an interesting question. I don’t think you can educate your children to do it automatically. I think if you have 10 children, you’ll have some that are a lot better than others in doing this.

BECKY QUICK

Is it harder with success, age, wealth to hold on to rationality?

CHARLIE MUNGER

I think it’s — It’s always hard, but you get better at it if you get good at it young and keep practicing. But it’s never easy. That question somebody asked, what one stock would you buy if you had to just rely on that one stock only? For your sole living expenses, you weren’t allowed to have any income at all. You just had to invest $1 million and live on that one stock. How many people would give an intelligent answer to that question in America? I don’t think it’s 1 in 100. They wouldn’t even know how to begin.

BECKY QUICK

I think one of my favorite things that I've heard you say, and it’s something I repeat often to a lot of people is "Whatever you are, age and wealth makes you more so." You came up with that a while ago. What led you to that —

CHARLIE MUNGER

Yes, of course.

BECKY QUICK

— and do you have any, I guess addendum to that?

CHARLIE MUNGER

No, I think that’s true that we all tend to — We all tend to get a little more so in every way. I thought of that when I woke up this morning and put on my trousers. You know, I really economize in buying those trousers. Why am I economizing in my trouser buying? (Laughs) But the habit is just so ingrained that I can’t stop. (Laughs)

(Source: https://www.youtube.com/live/9VVPO3KWj3A?feature=share)

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[YAPSS Takeaway]

If you want to have big advantage over 95% of the people, be rational and start young.