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)
The other great secret
is that we're good at lifelong learning.
Warren is so much better in some ways
in his 70s and 80s than he was younger
that it's almost awesome.
If you keep learning all the time you have
a huge advantage.
And we both just like it.
And we have a wonderful group of friends.
Really wonderful.
From whom we can learn a lot
One of these guys at the Berkshire meeting
from one of the foreign publications said
Why a couple of guys in a little place in Omaha do so
much better than all these powerful minds
and great institutions?
And I said, "Well I think Warren and I know
"the edge of our competency better than other people do."
And that's humility and an umbrella sense
and that is a very important thing to know.
I say over and over again
it's not a competency if you don't know the edge of it.
You are a disaster if you don't know
the edge of your own competency.
Warren frequently says I'd rather deal with a guy
with an IQ of 130
who thinks it's 125.
Than the guy with the IQ of 180 who thinks it's 200.
(laughing)
That second guy will kill you.
(laughing)
And and so it is very important to
know the edge of your own competency.
Warren and I have not made our way in life
by making successful macroeconomic predictions
and betting on our conclusions.
Our system is to
swim as competently as we can
and sometimes the tide will be with us
and sometimes it will be against us.
But by and large we don't much bother with trying to predict
the tides because we plan to play the game
for a long time.
I recommend to you all of exactly the same attitude.
It's kind of a snare and a delusion to
outguess macroeconomic cycles.
Very few people do it successfully
and some of them do it by accident.
And the game is that tough why not adopt the other system
of swimming as competently as you can
and figuring that over a long life
you'll have your share of good tides and bad tides.
I think you can count on more booms and
busts over your remaining lifetime how
big and with what save cyclicality
I can't tell you I can tell you the best
way of coping which is just to put your
head down and behave creditably everyday
I will say something
about life generally I was very lucky and I had an
ancestor that I never met my mother's
grandfather was a pioneer he came out to
Iowa and they lived in a sock sod house
with his young wife that's a cave
through two winters and he literally
was a pioneer from nothing and he rose
finally where he controlled the leading
bank in the town and was a very
reputable citizen on a very charitable
man he joined Andrew Carnegie and gave
the town library to Algona
my grandfather made him do it my grandma
great-grandmother he never would have
done it by himself
and he made him put his giant tarpon in
the library as part of the gift heap so
always amused me to go by that library
and see this giant turbine so eccentrics
come naturally in my value at any rate
having rested the success from hardship
and danger in trouble when he was a
captain in the Black Hawk Horse I mean
he was literally a soldier and part of this
he had this theory looking back at
his long life was unusual success.
He owned a bunch of farms at the end that
he leased to Germans you couldn't lose
money leasing a farm to a German in Iowa
naturally was successful and
What he said over and over again to his
grandchildren including my mother
was the real opportunities that come to you
are few it's a very fortunate life that
has just bathed an opportunity all the way.
Most people just get a few times
when they can make a huge difference by
seizing a huge activity and he said when
you find one my dear grandchildren and
you can clearly recognize it he says
seize and boldly and don't do it small.
And my mother wasn't interested in finance
but like to talk a family she liked it
transmitted the family quirks
but of course, this guy was my soulmate.
The great-grandfather I never knew,
and of course I totally adopted his point of view.
And I must say that's worked
wonderfully and so I could claim my
great-grandfather Eames
assume that you're really major
opportunities in life are going to be few.
And when you get a Lollapalooza for
God sakes don't hang by
like a timid little rabbit that hang back.
They aren't that many of the really big good
ones if you take the whole history of
Berkshire Hathaway if you take out the
20 best transactions
our record is a joke.
Well 20 bets transactions over 40
some years that's one every two years
and we work at it all the time.
Life is not just bathing you and unlimited
opportunities even if you work at being
able to find them and seize them
As you look back on your life experience,
what's the most important piece of advice that
you would offer everyone in the room tonight
as they look forward and into their futures?
Charlie Munger: Well there are a few obvious ones.
They're all ancient.
Marriage is the most important decision you have - not your business career.
It'll do more for you good or bad than anything else.
Ben Franklin had the best advice ever given on marriage:
keep your eyes wide open before marriage,
and half shut thereafter.
[Laughter]
It's amazing how if you just get up every morning and keep plugging,
and have some discipline, and keep learning,
it's incredible how it works out okay.
And I don't think
I don't think it's wise to have an ambition to be President of the United States
or a billionaire or something like that,
because the odds are too much against you.
Much better to aim low. I did not intend to get rich,
I wanted to get independent. I just overshot.
[Laughter]
And by the way, while you're clapping, some of the overshooting was accidental.
You can be very deserving and very intelligent,
very disciplined...
but there's also a factor of luck that comes into this thing.
The people will get the outcomes that seem extraordinary are
the people who have discipline and intelligence and good virtue,
plus a hell of a lot of luck.
Why wouldn't the world work like that?
So you shouldn't give credit for the unusual.
A friend of mine said about a colleague of his in his fraternity:
he says old George was a duck sitting on a pond and they raised the level of a pond.
There are a lot of people would just walk into the right place
and rise and then and there are a lot of
very eminent people who have many advantages,
and they've got one little flaw or one bit of bad luck,
and they 're mired in misery all their lives.
But, that makes it interesting to have all this variation.