“Acquire wisdom and change your behavior. If your new behavior gives you a little unpopularity with your friends… then to to hell with them.” – Charles T. Munger
Charlie Munger’s wisdom comes from using a series of mental models – math, physics, psychology, chemistry, and economics – to solve real world problems. He says that the big ideas from these fields can be used to solve real life problems but you have to know how to apply them. It’s more important to understand and apply the main principles from a subject than to understand the esoteric ideas.
For example, the economics principle that “There is No Free Lunch Principle” means there is a cost to every task such as watching a YouTube video since we lose our time and energy whenever we do this task.
Munger mentions this idea of the Lollapallooza effect which is defined as “something great that happens when a series of factors or mental biases reinforce each other such as in nuclear fission or open outcry auctions. For Charlie, he says that his own achievements were created out of “self-criticism, preparation, perseverance, patience, curiosity.”
- Inversion – This idea comes from a mathematician Jacobi. He says one way to solve the hard problems in life is to invert. Ask “What is the worst case scenario?” and then “How can I prevent this scenario from happening?”
- “It’s amazing how much long-term advantage people can gain from being consistently not stupid instead of trying to be very intelligent.”
- Don’t ask “How can I help India become a better nation?” instead ask “What are the top three problems that India is suffering from?”
On Dealing with Hardship
Life will have terrible blows, horrible blows and unfair blows. Some people recover and others don’t. The attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and your duty was not to be submerged in self-pity.
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