CHARLIE MUNGER'S 7 IRON LAWS:
Charlie Munger has been the biggest COGNITIVE INFLUENCE on my life so far.
Here are a list of my favourite PRINCIPLES from the eccentric billionaire.
THREAD...
Charlie Munger has been the biggest COGNITIVE INFLUENCE on my life so far.
Here are a list of my favourite PRINCIPLES from the eccentric billionaire.
THREAD...
MUNGERS LAW #1 - IF IN DOUBT, INVERT.
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Avoiding stupidity is easier than seeking excellence, yet nobody does it.
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Avoiding stupidity is easier than seeking excellence, yet nobody does it.
His golden piece of advice is two-fold:
1. Avoid being lazy
2. Avoid being unreliable
No matter how connected, well-read or talented you are - if you don't avoid these two, you are destined to fail.
1. Avoid being lazy
2. Avoid being unreliable
No matter how connected, well-read or talented you are - if you don't avoid these two, you are destined to fail.
A young man once asked Charlie - "What advice do you have for someone like me to succeed in life?"
Most gurus would respond with "Follow your passion" or "Find your why"
Munger quipped back:
"Don't do cocaine. Don't race trains to the track. And avoid all AIDS situations."
Most gurus would respond with "Follow your passion" or "Find your why"
Munger quipped back:
"Don't do cocaine. Don't race trains to the track. And avoid all AIDS situations."
Inversion is useful for wooly problems like happiness.
Instead of asking "How do I become happy?"
Ask, "How do I become depressed?"
1. Poor sleep
2. Shit diet
3. Meaningless work
4. No exercise
5. Boring friends
Avoid those 5 and you've figured out 95% of hapiness.
Instead of asking "How do I become happy?"
Ask, "How do I become depressed?"
1. Poor sleep
2. Shit diet
3. Meaningless work
4. No exercise
5. Boring friends
Avoid those 5 and you've figured out 95% of hapiness.
MUNGERS LAW #2 - UNDERSTAND INCENTIVES
“It’s much easier to decode life when you view events as an emerging property of underlying systems” - @danielgross
And all human systems can be explained by ONE THING - Incentives.
“It’s much easier to decode life when you view events as an emerging property of underlying systems” - @danielgross
And all human systems can be explained by ONE THING - Incentives.
Fed Express tried every management technique to get their workers to move all packages into one central location each night.
It was "Impossible".
One day they decided to pay workers by the SHIFT instead of by the HOUR.
Miraculously, they never had the problem again.
It was "Impossible".
One day they decided to pay workers by the SHIFT instead of by the HOUR.
Miraculously, they never had the problem again.
"Show me the incentives and I will show you the outcome" - Munger
"If you have a dumb incentive system, you get a dumb outcome" - Munger
"If you have a dumb incentive system, you get a dumb outcome" - Munger
MUNGERS LAW #3 - BE VERY CAREFUL WITH YOUR IDENTITY
What you shout out to other people, you pound into your own psyche.
Your identity is a proxy between your consciousness and reality.
Identity distorts your sense making apparatus.
What you shout out to other people, you pound into your own psyche.
Your identity is a proxy between your consciousness and reality.
Identity distorts your sense making apparatus.
"Self-image is the prison. Other people are the guards." - @naval
The biggest danger of mental models is that you begin to identify as a "smart person who understands cognitive biases"
This is the ultimate trojan horse.
The biggest danger of mental models is that you begin to identify as a "smart person who understands cognitive biases"
This is the ultimate trojan horse.
You become too scared to make mistakes - the guy who has it all figured out can't make mistakes.
If you can't make mistakes, you can't iterate.
If you can't iterate, you can't win.
Ironically, identifying publicly as an idiot frees you.
(PS. I'm not smart - I'm a moron.)
If you can't make mistakes, you can't iterate.
If you can't iterate, you can't win.
Ironically, identifying publicly as an idiot frees you.
(PS. I'm not smart - I'm a moron.)
If decision making theory was the sole requirement to do great things, psychology professors would be running the world - not classrooms.
I call this "The Instagram Paradox":
The desire to identify how successful and happy you are to others is the thing that prevents you from being successful and happy.
Irony.
You can't present an image of you as an expert and co-exist in begginers mind at the same time.
The desire to identify how successful and happy you are to others is the thing that prevents you from being successful and happy.
Irony.
You can't present an image of you as an expert and co-exist in begginers mind at the same time.
MUNGERS LAW #4 - KNOW THE OTHER SIDE BETTER THAN THEY KNOW IT
Charlie never allows himself to have an opinion on a subject unless he can state the opposing argument better than the opposition can.
Don't create STRAW MAN arguments, create STEEL MAN arguments.
Charlie never allows himself to have an opinion on a subject unless he can state the opposing argument better than the opposition can.
Don't create STRAW MAN arguments, create STEEL MAN arguments.
If you're a marxist, you should know the benefits of consumer capitalism better than Adam Smith.
In every debate, be like @BretWeinstein moderating @SamHarrisOrg & @jordanbpeterson.
State the strengths of your opposition and the weakness of your own.
In every debate, be like @BretWeinstein moderating @SamHarrisOrg & @jordanbpeterson.
State the strengths of your opposition and the weakness of your own.
STEEL MANNING is Antifragile.
You either prove your theory correct or end up with a better idea. Win-Win.
STRAW MANNING is Fragile.
You spend years emotionally attached to the first idea that got in your head. Lose-Lose.
You either prove your theory correct or end up with a better idea. Win-Win.
STRAW MANNING is Fragile.
You spend years emotionally attached to the first idea that got in your head. Lose-Lose.
MUNGERS LAW #5 - YOU GET WHAT YOU DESERVE
"The safest way to get what you want is to earn what you want" - Munger
(How to find a romantic partner?) - "Be worthy of a worthy mate" - Munger
"The safest way to get what you want is to earn what you want" - Munger
(How to find a romantic partner?) - "Be worthy of a worthy mate" - Munger
Instead of having grandeur fantasies about how people will one day realise your genius, just focus on becoming that person.
The ultimate cheat code to life is to realise that there are no cheat codes.
The ultimate cheat code to life is to realise that there are no cheat codes.
MUNGERS LAW #6 - KNOW YOUR CIRCLES OF COMPETENCE
“Knowing what you don’t know is more useful than being brilliant.” - Munger
“Acknowledging what you don’t know is the dawning of wisdom.” - Munger
“Knowing what you don’t know is more useful than being brilliant.” - Munger
“Acknowledging what you don’t know is the dawning of wisdom.” - Munger
Whenever I hear a novice speak arrogantly about an area of my expertise, I get a smug feeling that lasts for about 5 seconds.
I then sink into panic and think about subjects I have confident opinions in yet no experience.
The Dunning-Kruger effect can only be seen in others.
I then sink into panic and think about subjects I have confident opinions in yet no experience.
The Dunning-Kruger effect can only be seen in others.
Best till LAST...
MUNGERS LAW #7 - AVOID SELF PITY
"Whenever you think that some situation or some person is ruining your life, it’s actually you who are ruining your life. It’s such a simple idea. Feeling like a victim is a disastrous way to make go through life." - Munger
MUNGERS LAW #7 - AVOID SELF PITY
"Whenever you think that some situation or some person is ruining your life, it’s actually you who are ruining your life. It’s such a simple idea. Feeling like a victim is a disastrous way to make go through life." - Munger
Munger had a friend that carried a big stack of index cards.
Whenever this friend heard someone feel sorry for themselves, he would sarcastically give them one that read:
“Your story has touched my heart, never have I heard of anyone with as many misfortunes as you”.
Whenever this friend heard someone feel sorry for themselves, he would sarcastically give them one that read:
“Your story has touched my heart, never have I heard of anyone with as many misfortunes as you”.
"I suggest that every time you find you’re drifting into self pity, I don’t care what the cause — your child could be dying of cancer — self-pity is not going to improve the situation. Just give yourself one of those cards." - Munger
I always thought the "YOUR CHILD COULD BE DYING OF CANCER" line was a bit crass for a billionaire to advise people.
Then I did a bit of research into Charlie's life...
Then I did a bit of research into Charlie's life...
When Charlie was 29, his wife divorced him and he lost everything - including his home.
Shortly after the divorce, he found out his 9 year old son Teddy had leukemia.
Charlie spent his remaining pennies paying for his son's medical bills...
Shortly after the divorce, he found out his 9 year old son Teddy had leukemia.
Charlie spent his remaining pennies paying for his son's medical bills...
He used to leave the appointments walking the streets crying.
At the age of 30, Charlie Munger was:
1. Broke
2. Divorced
3. Burying his dead child
He had every excuse to give into self pity.
We live in a better place because he didn't.
At the age of 30, Charlie Munger was:
1. Broke
2. Divorced
3. Burying his dead child
He had every excuse to give into self pity.
We live in a better place because he didn't.
Later in his life, Charlie was told he was going to lose sight in his remaining eye.
Charlie's NUMBER ONE hobby is reading.
This news should've DESTROYED him.
How did he respond?
“It’s an opportunity for me to learn braille.” - Charlie told friends.
The ultimate reframe
Charlie's NUMBER ONE hobby is reading.
This news should've DESTROYED him.
How did he respond?
“It’s an opportunity for me to learn braille.” - Charlie told friends.
The ultimate reframe
SUMMARY:
1. Avoid sloth and unreliability
2. Incentives are a superpower
3. Be careful with your identity
4. Steelman arguments
5. Be worthy of a worthy mate
6. Dunning-Kruger effect is easier to see in others
7. Where is the opportunity for you to learn braile?
1. Avoid sloth and unreliability
2. Incentives are a superpower
3. Be careful with your identity
4. Steelman arguments
5. Be worthy of a worthy mate
6. Dunning-Kruger effect is easier to see in others
7. Where is the opportunity for you to learn braile?
I talk about mental models and my admiration for Charlie Munger more in depth in this podcast with @ChrisWillx from Modern Wisdom below.
podcasts.apple.com/gb/podcast/mod…
podcasts.apple.com/gb/podcast/mod…
Video version now live on YouTube
