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Charlie Munger: I Got RICH When I Understood THIS | Collection: Charlie Munger #260



[Transcript]

AUDIENCE MEMBER

Warren and you are known for saying that you worked with a small sum of capital, maybe like even 10 million dollars. Warren publicly said that he could guarantee that he compound that at 50 percent a year.


So my question is can you provide some examples, and then I would kindly ask that you provide as many examples as possible, and be as specific as possible. Thank you. (Laughter)


CHARLIE MUNGER

Well, the minute I hear somebody that really wants to get rich at a rapid rate with specifics, that is not what we’re trying to do here.



You want to leave some mystery so that you yourself can amuse yourself, finding your own way. You know, the ideas that I’ve had in my life are quite few, but the lesson I can give you is a few, is all you need and don't be disappointed.


When you find the few of course, you’ve got to act aggressively, that’s the Munger system, and I learned that indirectly from a man I never met, which was my mother’s maternal grandfather.


He was a pioneer when he came out to Iowa and fought in the Black Hawk War and so on, and eventually after enormous hardship... well, he was the richest man in town and he owned the bank and so on.


As he sat there in his old age, my mother knew him because she’d go to Algona, Iowa, where he lived, had the big house in the middle of town, iron fence, capacious lawns, big barns. What Grandpa Ingham used to tell her is, there’s just a few opportunities you get in a whole life.


This guy took over Iowa when the land was black topsoil in Iowa was cheap, but he didn’t get that many opportunities. It was just a few that enabled him to become prosperous. He bought a few farms every time there was a panic, you know, and he'd lease them to thrifty Germans, you couldn’t lose money with leasing a farm to a German in Iowa, but he only did a few things, and I’m afraid that’s the case.


You’re not going to find a million wonderful ideas. These people with the computer algorithms do it, but they have a computer sifting the whole world. It’s like placer mining, and of course every niche they’re in, if somebody else comes in, the niche starts leaching away, and I don’t think it’s that honorable to make a living that way.


I would rather make my money in some other way than outsmarting the trading system, so I have a little computer algorithm that just leaches a little out of everybody’s trade. I always say that those people have all the social utility of a bunch of rats in a granary. It’s not that great a way to make money.


I would say that if you make your money that way that you should be very charitable with it because you’ve got a lot to atone for. (Laughter)


I don’t think it’s an ambition we should encourage, and the rest of us who aren’t just leaching a little off the top because we’re great at computer science, and that’s what this room is full of, and if you’re not finding it harder now, you don’t understand it.


That’s my lesson.



 

[YAPSS Takeaway]

There are only a few opportunities in life and don't be disappointed.



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