Collection: Charlie Munger - #34 'Mistakes'


Video Link: https://youtu.be/QSGz4Y8CP2I


In this episode, Charlie Munger shared his mistake that could have double the Mungers present net worth and Mozart mistakes in life. And what can we learn from it?


In this episode, you’ll learn:

  • What are the life mistakes you should avoid?

  • What can we learn from Mozart and his life?

  • What is the secret to wealth?

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

[Transcript]

CHARLIE MUNGER 00:08

In my life, to give another example, the Mungers would have twice the assets they now have if I hadn’t made one mistake of omission back in nineteen 70s. And…really stupid. I blew an opportunity that would have doubled my present net worth. That is a normal life. You get one or two. And how things work out…


We all know people that are out married, I mean their spouses are so much better. Think of what a good decision that was for them. (Laughter) And what a lucky decision. Way more important than money. And a lot of them did it when they were young, they just stumbled into it. Now you don’t have to stumble into it, you can be very careful. A lot of people are wearing signs, “Danger. Danger. Do not touch.” And people just charged right ahead. That’s a mistake. Well you can laugh but it’s still a horrible mistake.


It’s been fun for the people on this board to know one another and work on these oddball things and handle life’s vicissitudes. Of course it’s very peculiar that we’re so old. I mean imagine a place where Gary Wilcox is one of the young men. The guy’s wife is still in golf champion. But that’s not because she’s good when she’s old. I mean it’s an amazing group. That’s an interesting example too. Imagine me as an old and as impaired as I am and having a pretty good time. How does that happen? Well you…That is another story.


I’ll tell a couple of other stories too because you like stories. Here’s an apocryphal story that is very instructive. A young man comes to visit Mozart. And he says, “Mozart” he says, “I want to write symphonies”. And Mozart says, “How old are you?” The man says, “I’m 23.” And Mozart says, “You’re too young to write symphonies.” And he says, “But Mozart you were writing symphonies when you were 10 years old.” And Mozart says, “Yes but I wasn’t asking other people how to do it.” (Laughter)


Now there’s another Mozart story. Here’s the greatest musical talent maybe that ever lived. And what was his life like? Well he was bitterly unhappy and he died young. That’s the life of Mozart. What the hell did Mozart do to screw it up? Well he did two things that are guaranteed to create a lot of misery. He overspent his income scrupulously, that’s number one. That is really stupid.


And the other thing was he was full of jealousies and resentments. If you over-spend your income and be full of jealousy and resentments, you’re going to have a lousy unhappy life and die young. All you’ve got to do is learn from Mozart. You can also learn from that young man who was asking Mozart how to write symphonies. The truth of the matter is that not everybody can learn everything. Some people are way they hell better. And of course no matter how hard you try there’s always some guy who achieves more. Some guy or gal. My attitude is ‘so what?’. Does any of us need to be the very top of the whole world? It’s ridiculous.


Another thing that people do that I regard as amazing is they build these enormous mausoleums. I think they figure they want people to walk by that mausoleum and say, “Gosh I wish I were in there!”. (Laughter)


Anyway. You can see we’ve have had some fun as we go along and it’s worked so well. But if you actually figure out how many decisions were made in the history of the Daily Journal Corporation or the history of Berkshire Hathaway it wasn’t very many per year that were meaningful. It’s a game of being there all the time and recognizing the rare opportunity when it comes and recognizing that the normal human allotment is to not have very many.


Now it’s a very competent bunch of people who sell securities who act as though they’ve got an endless supply of wonderful opportunities. Well those people are the equivalent of the race track tout. They’re not even respectable. It’s not a good way to live your life to pretend to know a lot of stuff you don’t know and pretend to furnish a lot of opportunities you’re not furnishing. And my advice to you is avoid those people, but not if you’re running a stock brokerage firm. You need them. But it’s not the right way to make money.


This business of controlling the costs and living simply, that was the secret. Warren and I had tiny little bits of money. We always underspent our incomes and invested. And if you live long enough you end up rich. It’s not very complicated.


Now there is a part of life which is, how do you scramble out of your mistakes without them costing too much? And we’ve done some of that too. If you look at Berkshire Hathaway, think of its founding businesses. A doomed department store, doomed New England textile company, and a doomed trading stamp company. Out of that came Berkshire Hathaway. Now we handled those losing hands pretty well when we bought into them very cheaply. But of course the success came from changing our ways and getting into the better businesses. It isn’t that we were so good at doing things that were difficult. We were good at avoid things that were difficult. Finding things that are easy.


By the way, when we bought the Daily Journal that was easy. What we’re doing now in this software business is difficult. But due to the accident of these good associations and the fact that these old colleagues have lived so long, we’re doing pretty well in the new business. It has potential. And it’s fun to do. How many declining newspapers have hundreds of millions of marketable securities lying around and a new business with some promise? We’re like the last of the Mohicans. (laughter)


Oh he is giving to somebody important. Well, I’ll take some questions now.

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