“Invert, always invert.”
I learned about mental models by listening to Charlie Munger’s speech. It was the best thing I had learned in many years. We will discuss many of his mental model in this post.
In 2000 annual Berkshire Hathaway meeting, someone asked Warren and Charlie their views on speculation and potential fallout in general economy.
“If you mix the mathematics of the chain letter or the Ponzi scheme with some legitimate development like the development of the internet, you are mixing something which is wretched or irrational or has bad consequences with something that has very good consequences. But you know, if you mix raisins with turds, they’re still turds” said Charlie.
“That’s why they had me write the annual letter,” quipped Warren as the crowd burst into laughter at Charlie’s remark.
That was Charlie’s style — never holding back, telling exactly what he believed in the most succinct and comical way. Charles T. Munger, the vice chairman of Berkshire Hathaway and longtime partner of Warren Buffet, died on November 28, 2023. There is so much to learn from Charlie’s life.
In the commencement speech at USC, he talked about some of his core ideas:
Deserve What You Want
“The safest way to get what you want is to deserve you want”
Be Hooked To Lifelong Learning
“ There is no love that is so right as admiration based love and that love should include the instructive dead.”
“Wisdom acquisition is a moral duty.”
Inversion
“Another idea that I got — and it was encapsulated by that story the Dean recounted about the man who wanted to know where he was going to die and he wouldn’t go there — that rustic let that idea have a profound truth in his hand.”
Avoid Resentment, Revenge and Self Pity
“Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia…Every time you find your drifting into self-pity, I don’t care what the cause, your child could be dying from cancer, self-pity is not going to improve the situation. It’s a ridiculous way to behave.”
Dealing With Adversity
“Another thing, of course, is life will have terrible blows, horrible blows, unfair blows. Doesn’t matter. And some people recover and others don’t. And there I think 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, but to utilize the terrible blow in a constructive fashion. That is a very good idea.”
Charlie was a living example of how to learn from misfortunes in life.
Charlie, at 29, got divorced from his wife. His wife also got almost everything after the divorce, including the house.
A year later, Charlie’s 8-year-old son was diagnosed with leukemia (blood cancer). In those days, there were no medical expenses, and Charlie had to pay everything out of his pocket.
According to one of his friends, he would take his son to the hospital for checkups while taking care of his other two children. Charlie would go to the hospital to see his son, whom he was “losing inch by inch,” hold him for a while, then go out walking the streets of Pasadena crying. His son would pass one year after the diagnosis.
In 1978, Charlie lost one of his eyes during cataract surgery. He never blamed the doctor; instead, he taught himself Braille. He later realized that he could read and drive. He drove his own car until his 90s.
In conclusion, I would leave you all with my favorite quote from Charlie, which is a great mental model to apply in life.
“Invert, always invert: Turn a situation or problem upside down. Look at it backwards. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there?”
“Tell me where I’m going to die so I don’t go there.”
Thank you for reading!
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