Collection: Charlie Munger - #107 'Be Modest'


Video Link: https://youtu.be/IpH-4smFTrk


In this episode, Charlie Munger was asked did he ever make a bad business decision? And do smart people predict the future better than others?


In this episode, you’ll learn:

  • How to live a successful life?

  • Why should we be modest?

To check out all Collection: Charlie Munger <click here>

[Transcript]

(Source: https://youtu.be/WaDU1J91hY8)

INTERVIEWER 00:00

So the one from Dr. John Victor, who was a bachelor of science in chemical engineering in 1971, and he has two questions. The first is, he has a theory that really smart people foresee the future better than others, and so we can ask, what did you think about that? And then his second question is, did you ever make a bad business decision?


CHARLIE MUNGER 00:23

Well, the answer for the second one is, of course, I’ve made bad business decisions. You can’t live a successful life without taking some, doing some difficult things that go wrong. That’s just the nature of the game. And you wouldn’t be sufficiently courageous if you tried to avoid every single reverse. And what was the first question?


INTERVIEWER 00:51

Do smart people predict the future better than others?


CHARLIE MUNGER 00:55

Well, that is a very interesting question. You could argue that both ways. A lot of smart people think they’re way smarter than they are, and therefore they do worse than dumb people, if you ask me. And it’s very common to be utterly brilliant and to think you're way the hell smarter than you are. I think Warren and I have been pretty good at avoiding that one. We’re pretty modest about how – I know what my mental capacity is, and it’s pretty low compared to the best it could possibly be.


When I was at Caltech, I took this course in thermodynamics from Homer Joe Stewart. And one thing I learned – by the way, a lovely human being and gifted beyond compare, and one thing I learned was that no matter how hard I would try, I could never be as good at thermodynamics as Homer Joe Stewart. And I think that is a very useful lesson. I knew what I could do and I couldn’t, and I never even considered trying to compete with the Homer Joe Stewarts in the world of thermodynamics.

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