If I know a person's role model, I can pretty well tell what kind of a person he is and what kind of a future he has. There is no reason also to look only for living models. Uh, the eminent dead are in the nature of things some of the best

models around, and uh, if it's a model is all you want, you're really better off not limiting yourself to the living. Some of the very best models are have been dead for a long time. Well, no doubt many of you are wondering why the speaker is so

old. Well, the answer is obvious, he hasn't died yet. Another idea that I got is that wisdom acquisition was a moral duty. It's not something you do just to advance in life. Wisdom acquisition is a moral duty, and and as a corollary to that

proposition, which is very important, it means that you're hooked for lifetime learning. And without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know. You're going to advance in life by what

you're going to learn after you leave here. If you take Berkshire Hathaway, which is certainly one of the best regarded corporations in the world, and it may have the best invest long-term investment record in the entire history of civilization, the

skill that got Berkshire through one decade would not have sufficed to get it through the next decade with the uh achievements made without Warren Buffett being a learning machine, continuous learning machine. The record would have been absolutely impossible. The same is true at lower walks of life. I constantly see

People rise in life who were not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up, and boy does that habit help, particularly when you have a

long, uh, run ahead of you. It just, it's amazing how much achievement there's been in civilization in these last 200 years, and most of it in the last 100 years. And what happens is, it's really interesting is with all this enormous increase in living

standards and freedom and diminishment of racial inequities and all the huge progress that has come, people are less happy about the state of affairs than they were when things were way tougher. And that has a very simple explanation: the world is not driven by

greed, it's driven by envy. The fact that everybody's five times better off than they used to be, they take it for granted. All they think about is somebody else having more now, and it's not fair that he should have it and they don't.

That's the reason that God came down and told Moses that you couldn't envy your neighbor's wife or even his donkey. It's weird for somebody my age because I was in the middle of the Great Depression when the hardship was unbelievable. I was safer walking around

Omaha in the evening than I am in my own neighborhood in Los Angeles after all this great wealth and so forth. I want to report to all of you that in my whole life I've never succeeded much in something I wasn't interested in, so I

Don't think you're going to succeed if what you're doing all day doesn't interest you. Now you've got to find something you're interested in because it's just too much to expect of human nature that you're going to be very good at something you deeply dislike doing.

And that's one big issue. And of course you have to play in a game where you've got some unusual talents. You do not want to play if you're 5 foot 1. You don't want to play basketball against the guy that's 6 foot 3. It's just too hard. And so you got

to figure out a game where you you have an advantage. And it has to be something you're deeply interested in. What are the core ideas that have helped me? Well luckily I got at a very early age the idea that the safest way to try and get

what you want is to try and deserve what you want. It's such a simple idea. That's the Golden Rule so to speak. You you want to deliver to the world what you would buy if you were on the other end. There is no ethos in my opinion that is better for

any lawyer or any other person to have by and large. The people who've had this ethos uh win in life. And they don't win just money, just honors and awards. They win the respect, the deserved trust of the people they deal with. And there is

huge pleasure in life to be obtained from getting deserved trust. Well, that's a wonderful question you've asked because Warren and I both know some very successful businessmen who have not one true friend on Earth. And rightly so. That's true. And that is no way to live a life. And if

If, by asking that question, you're asking how do I get the right friends, you are really on to the right question. Uh, and when you get with the right friends, if, if you've worked hard at becoming the right sort of fellow, I think you'll recognize what you have and

then all you have to do is hang on to the, the toxic people who are trying to fool you or lie to you, who aren't reliable, meeting their commitments. The great lesson of life is get them the hell out of your life. Y, and do it fast, do it

fast. I think you're asking for a lot if you want something simple way of not being taken in by the frauds of the world. If you stop to think about it, enormously talented people deliberately go into fraud, drift gradually into it because the culture

carries them there and the, the frauds get very sophisticated and they're very slickly done. Uh, I think it's part of the business of getting wisdom in life that you, uh, avoid getting taken by the frauds and so I think you're

asking a very good question, but I don't think there is any short answer. I think there are whole fields that you can just quit claim because it looks like there's too much fraud in it and, uh, I think we do a lot of that, don't we, Warren? Yeah.

How many times have we been defrauded in the last 20 years? H well, damn little. At weekend, it's amazing how little. Yeah, and I've always said that the guy who takes us is going to have a modest little office and modest demeanor and he'll

carry around Ben Franklin's autobiography I can tell you the kind of people who defraud us are are not going to be the kind of people who are defrauding everybody else well one of the reasons our audit costs are so low is we have this passion for

keeping everything simple we don't want to be difficult to audit and uh and we prefer our activities that are simple if you take the See's Candy Company the whole company goes to cash at the end of December every year as if it were a farm where the crop came

in and was sold in December I mean an idiot could audit the See's Candy Company without getting into trouble and and there's a lot in Berkshire that's like the See's Candy Company it would be it would be really hard to screw up problems frequently get

easy I I'd even say usually are easier to solve if you turn them around and reverse in other words if you want to help India the question you should ask is now how can I help India you think what's doing the worst damage in India what will automatically do the worst

damage and how do I avoid it you'd think they're logically the same thing they're not those of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve and in life unless you're more gifted than Einstein inversion will help you solve

problems that you can't solve another way let me use a little inversion now what will really fail in life what do we want to avoid such an easy answer sloth and unreliability if you're unreliable it doesn't matter what your virtues are

you're going to create her immediately so doing what you faithfully engaged to do should be an automatic part of your conduct you want to avoid sloth and unreliability another thing I think should be avoided is extremely intense ideology because it cabbages up one's

mind you've seen that and you see a lot of it you know in TV preachers for instance you know they've all got different ideas about Theology and and uh and a lot of them have minds that are made of cabbage and and but that can happen with

political ideology and if you're young it's easy to drift into loyalties and when you announce that you're a loyal member and you start shouting the orthodox ideology out what you're doing is pounding it in pounding it in and you're gradually ruining your mind so

you want to be very very careful with this ideology I've if you it's it's a big danger I have what I call an iron prescription that helps me keep saying when I naturally drift toward preferring one ideology over another and that is I say I'm not

entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it I think only when I've reached that state am I qualified to speak now you can say that's a too much of an

iron discipline it's not too much of an iron discipline it isn't even that hard to do it sounds a lot like the iron prescription of Ferdinand the great it's not necessary to hope in order to persevere that probably is too tough for most people I don't think it's too tough

for me, but it's too tough for most people. But this business of not drifting into extreme ideology is a very, very important thing in life if you want to have more correct knowledge and be wiser than other people. The heavy ideology is very likely to do you in. Another thing

of course that does one in is the self-serving bias to which we're all subject. You think the true little 'me' is entitled to do what it wants to do and for instance, why shouldn't the true little 'me' overspend my income? Well, there once was a man who became the

most famous composer in the world, but he was utterly miserable most of the time. And one of the reasons was he always overspent his income. That was Mozart. If Mozart can't get by with this kind of asinine conduct, I don't think you should

try in this world. We have two kinds of knowledge: one is plank knowledge, the people who really know, they've paid the dues, they have the aptitude. Then we got chauffeur knowledge. They have learned to prattle the talk and they have a big head of hair. They may have fine timber

in the voice, they really make a hell of an impression, but in the end they've got chauffeur knowledge. I think I've just described practically every politician in the United States. You know, the game in our kind of life is being able to recognize a good

idea when you rarely get it, and where it's rarely presented to you. And I think that's something you have to prepare for over a long period. What is the old saying? That opportunity comes to the prepared mind. And I don't think you can teach people

in two minutes how to have a prepared mind but that's the game yeah at a deeper level of generality if you have a passion, a past-time interest in knowing why things are happening, you always are trying to figure out the world in terms of why is this happening

or why is this not happening, uh that cast of mind kept over long periods gradually improves your ability to to cope with reality uh and if you don't have that cast of mind I think you're you're destined probably for failure even if you've got a pretty high

IQ well some of the ideas were so simple we noticed that in city after city the Monopoly newspaper made more money every year and in some cities there were still two newspapers and one was slowly dying and so we bought the one that was sure to win

does it strike you as a complicated idea it's the new newspaper one time we did that with a Washington Post we made a billion dollars with 10 million so a lot of these things are perfectly obvious and you have to develop the act of using the knowledge you

have next it's a knack you have to work at it it won't it won't come in just over the transom because you'd like to have it and on opportunity cost going back to that the current freshman economics text which is sweeping the

country has right in practically the first page and it says all intelligent people should think primarily in terms of opportunity cost and that's obviously correct but it's very hard to teach business based on opportunity cost it's much easier to teach the capital assets pricing model

where you can just punch in numbers and outcome numbers and therefore people teach what is easy to teach instead of what is correct to teach. It reminds me of Einstein's famous saying. He says everything should be made as simple as possible, but no more simple. Write that down.

Well, I I think the Business Schools do a pretty good job when it comes to accounting or personnel management or there are a whole lot of subjects I think they do quite well with, but they miss one enormous opportunity. If you learn to think intelligently about how to invest

successfully in businesses, you'll become a much better business manager. So they're missing a huge opportunity to improve the management profession by doing such a lousy job in teaching investment. Yeah, see Charlie and I see CEOs all the time who who in a sense don't know how to

think about the value of businesses they're acquiring, and then you know, so they got out and and hire investment bankers and guess what the investment banker tells them? What to do? Tells them to do it because they get 20x if they do it and X if they don't do it. And guess

how the advice comes out. So I think what has happened at at Berkshire is just wonderfully for the good and I do think we have a perfectly marvelous board. What makes me sad, as I said earlier, is I don't see more of the same practice

followed elsewhere. A director getting $150,000 a year from a company who needs it is not an independent director. That director automatically becomes an inside director, and so it's a typical government intervention. It says it's doing one thing and it does another.

the correct system is the LA rot system, U rot, who had three different cabinet appointments, if I remember right, said no man was fit to hold public office who wasn't perfectly willing to leave it at any time. And if El you rot didn't approve of something the

government asked him to do, he could always go back and be the most sought-after lawyer in the world. He had an identity to go back to and he didn't need the government's salary. And I think that ought to be more the test in corporate

directorships. Uh, is a man really fit to make tough calls who isn't perfectly willing to leave the office at any time? My answer is no. The New York Times just interviewed and they asked me why are these people in China so interested in Berkshire Hathaway and Charlie Munger,

partly the book did it, but why do the Chinese like that book? I think the answer is it sounds confusion. China has a deep confusion ethos. They want people to act modestly even though they're rich and powerful. They want people to constantly keep learning and to behave

with dignity and reason and and improve as they get old and keep working. Those lessons are not confined to one country, but it just happens that Warren Buffett and I act like a bunch of people that take confusionism very seriously. That's why they like us. You're pretty active.

You've got a busy social schedule. You're on Zoom, you have breakfast and lunch. I like it that way. Yeah, that's my idea of a proper old age for me. And I didn't plan it, it just happened. I I am very good at recognizing unfair

advantages, and I got unfair advantages in old age the way I got unfair advantages in non-old age. And when they came, I just grabbed them, boom, boom, boom. I I basically believe in the in the soldier-on system. Lots of hardship will come, and and you're you got

to handle it well by soldiering through. And lots of a few where opportunities will come, you got to learn how to recognize them when they come.

Lasting Lessons From Charlie Munger (Highlights 1924-2023) [No Music]

Lasting Lessons From Charlie Munger (Highlights 1924-2023) [No Music]