In 1954, on the streets of Pasadena, USA, a middle-aged man hugged his 9-year-old son with leukemia while crying. After the divorce, he raised the child alone and tried to fight for the child’s life with death. But in the end, he could not change the fate of his son.
30 years old, the heyday of a man but starting with a broken marriage, loss of children, bankruptcy, perhaps at this moment, he is also lamenting his unjust fate. However, when going through so much loss, he still told himself to become strong because if he continued to be weak or lamented his fate, it would only make tragedies continue to follow.
Five years later, he met a man named Warren Buffett at a friend’s party. It was also a fateful meeting, the beginning of a cooperative relationship that lasted more than half a century between the two. The man above is a brilliant thinker in today’s investment world, Charlie Munger.
“During the darkest time of my life, I pulled myself out of the abyss,” he said.
From his experience, this wise man believes that the best way to want to achieve something is to make yourself worthy of it. According to him, every misfortune is an opportunity to learn something more. And your job is not to wallow in self-pity or self-doubt but to make the most of that terrible event in a constructive way.
In particular, the 98-year-old great investor realized that a person who wants to be successful and rich also needs to have a secret. Munger himself has also mentioned more than once that a rich and happy life is indispensable for two points: One is to lower expectations, the other is to hide wisdom.
Why does Munger hold such views and how do he apply these?
1. Lower your expectations
In psychology there is a word called “disappointment index”. It is difficult for a person with a low frustration index to see the bright side of an issue, and it is easy to prolong the frustration of one thing into other aspects. As a result, negative emotions such as low self-esteem, jealousy, etc. come and bury you in a deep hole.
In Munger’s view, these are irreversible tragedies. Only by letting go of disappointment in yourself and saving yourself can you get over it. A life that is too smooth is also not good, accepting the storms in life will train you to be more mature.
In 1956, Munger remarried. The couple had to bear the burden of 8 children. In the face of great financial pressure, Munger still resolutely implemented the iron rule inherited from his grandfather: “Focus on the current task, control spending”. The great investor shared: “Because I firmly believe that the secret to human success and happiness is lowering our goals, I immediately did so.”
Many times we know we need to lower our expectations, but we don’t know how to lower them properly. Munger’s approach is this: Don’t target small probability events, just like he never set a goal of “becoming a millionaire”. The correct approach is to set a goal within a small area of the “circle of competence”, and then go all out to achieve that goal.
Munger set very low goals for himself. And the wealth the 98-year-old investor is today is the result of things going beyond his plans. At Berkshire Hathaway’s annual shareholder meeting, the two founders sit side by side, and Warren Buffett is always the first to answer questions. Whenever he turned his head to Munger beside him, he always received a statement: “I have nothing more to say”.
At this point, Munger was happy to play “a supporting role”. Many people think he behaves like a subordinate in front of Buffett, but for Munger, it helps him see better sides of others than himself. This type of working style is not innate, but has to be honed through. Munger himself when he was young was also very arrogant, liked to show his understanding, always offending others.
2. Concealing wisdom
According to Munger, it is necessary to hide wisdom in life because we are not as smart as we think. He once said, “There isn’t a smart person I know who doesn’t read or learn every day.”
In an interview with a Chinese reporter in 2018, Munger said that he reads 20 books a week. Munger was 95 years old then, but he could still read and absorb knowledge every day. Munger’s reading method has two caveats: One is not to read only one type of book and only be interested in knowledge in one field, but should be diverse to easily see the problem. Second: Read more biographies of famous people to learn more from them.
Munger is a biographer who believes that being able to make friends with “great people” can have a completely positive impact on one’s life. Since then, your thoughts or thinking will also change more positively. The most important thing about reading is to break the boundaries of oneself and bring more outstanding ideas into one’s life.
In 2021, Charlie Munger is 98 years old. When asked about the secret to longevity, he laughed and replied: “No envy, no complaints, no waste; even when faced with difficulties, optimistically cope.” As for the secret to success, great investors believe that following the simplest principles and keeping life as simple as possible will help you stay on the right track and not go astray. Only then will success be easy.