Charlie Munger's Commencement Address at USC

Full talk here.

  • The sacrifice and the wisdom and the value transfer that comes from one generation to the next can never be underrated. . . All of my life I have admired Confucius. I like the idea that there are values and duties that are learned. All of that should be passed onto the next generation. [0:55]

  • I scratched out some notes about some ideas and attitudes that have worked for me. I think many of them are can’t fail ideas. [2:00]

  • The safest way to try to get what you want is to try and deserve what you want. You want to deliver to the world what you would buy if you were on the other end. [2:30]

  • Think about the type of funeral you want. There is a story about a person who died. The minister said it is now time to say something nice about the deceased. Nobody came forward. After a long time a person came up and said, “His brother was worse.” That is not the kind of funeral you want. [4:00]

  • Wisdom acquisition is a moral duty. It is not just something you do to advance in life. This means you are hooked for lifetime learning. Without lifetime learning you people are not going to do very well. You will not get very far in life based on what you already know. [5:20]

  • Berkshire Hathaway may have the best long term investment record in the history of civilization. The skill that got Berkshire through one decade would not get it through another decade without Warren Buffet being a continuous learning machine. [6:00]

  • I constantly see people rise in life who were not the smartest and not the most diligent. But they are learning machines. They go to bed a little wiser than they were when they got up. Boy does that habit help when you have a long run ahead of you. [6:30]

  • If you watched Warren Buffett half of all the time he spends is sitting on his ass and reading. The other half of the time he is talking one on one with highly gifted people. It looks quite academic. [8:30]

  • My advice to you is sometimes to keep your light under a bushel. [Some people don’t like that you know more than they do.] Charlie tells the story of a friend who worked at a law firm. He knew too much and showed it. He was told: Your duty is to behave in such a way that the client thinks he is the smartest person in the world. Then you make your senior partner think he is the smartest person in the world. I didn’t do this. I always obeyed the drift of my nature. If other people didn’t like it well I don’t need to be adored by everybody. [12:50]

  • Cicero is famous for saying A man who doesn’t know what happened before he was born goes through life like a child. [14:21]

  • The way complex adaptive systems work is that problems are usually easier to solve if you turn them around and reverse [Always invert!] [16:15]

  • What do you want to avoid in life: Sloth and unreliability. [17:23]

  • Avoid extremely intense ideology. It turns your brain to cabbage. [17:45]

  • Do not overspend your income. There once was a man who became the most famous composer in the world. But he was utterly miserable most of the time. He always overspent his income. If Mozart can’t get by with this asinine conduct, I don’t think you should try it. [20:21]

  • Generally speaking envy, resentment, revenge, and self-pity are disastrous modes of thoughts. . . It is a ridiculous way to behave. When you avoid it you get a great advantage over everyone else. [21:00]

  • Something Charlie learned from Ben Franklin: If you wish to persuade appeal to interest, not to reason. [Human self-service bias is so extreme.] [23:40]

  • Incentives are a too powerful a controller of human cognition and behavior. [24:24]

  • Avoid working with someone you don’t admire and don’t want to be like. [25:00]

  • Two types of knowledge: (1) Plank knowledge: The people who really know. (2) Chauffeur knowledge: They know how to sound like they know. I just described every politician in the United States. [29:30]

  • Intense interest in a subject is indispensable if you want to excel in it. [Follow your natural drift.] [30:39]

  • Life will have terrible blows in it. Horrible, unfair blows. It doesn’t matter. Some people recover and others don’t. The attitude of Epictetus is the best. He thought every mischance in life is an opportunity to behave well and learn something. He thought you should utilize the terrible blow in a constructive fashion. That is a very good idea. [32:00]

  • You could say who wants to go through life anticipating trouble? I did. All my life I have gone through life anticipating trouble. I have had a favored life. It didn’t make me unhappy. It didn’t hurt me. It helped me. [35:00]