How to guarantee you will never build wealth.

March 21, 2024

Work Optional Tip

Charlie Munger was a big fan of using inversion to solve a problem. Instead of asking, "How do I create X?", turn the question backward and ask, "How do I create non-X?".

This is the key to solving hard problems.

So, instead of asking yourself, "How do I create a happy life?" you'd ask yourself, "How do I create a miserable life?".

Charlie Munger addressed this question in his speech delivered to Harvard in 1986.

Charlie Munger's tips to guarantee a life of misery:

First, Johnny Carson prescribed 3 ways to guarantee a life of misery, which Charlie Munger repeats adding his commentary:

  1. Ingest chemicals in an effort to alter mood or perception. Munger shares a story of four close friends he grew up with who were intelligent, funny, and ethical. Two are long dead, with alcohol a contributing factor, and a third is a living alcoholic -if you call that living. While susceptibility varies, addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken.
  2. Envy. Envy, of course, joins chemicals in winning some sort of quantity price for causing misery. It was wreaking havoc long before it got a bad press in the laws of Moses.
  3. Resentment. Johnson spoke well when he said that life is hard enough to swallow without squeezing in the bitter rind of resentment.

Munger goes on to add four prescriptions of his own for a life of misery:

  1. Be unreliable. Master this one habit and you can always play the role of the hare in the fable, except that instead of being outrun by one fine turtle you will be outrun by hordes and hordes of mediocre turtles and even by some mediocre turtles on crutches.
  2. Do not learn from others. Learn everything you possibly can from your own experience, minimizing what you learn vicariously from the good and bad experiences of others, living and dead. The prescription is to become as non-educated as you reasonable can.
  3. Go down and stay down. Because there is so much adversity out there, even for the lucky and wise, this will guarantee that, in due course, you will be permanently mired in misery.
  4. My final prescription to you for a life of fuzzy thinking and infelicity is to ignore a story they told me when I was very young about a rustic who said: “I wish I knew where I was going to die, and then I’d never go there.” Most people smile (as you did) at the rustic’s ignorance and ignore his basic wisdom. If my experience is any guide, the rustic’s approach is to be avoided at all cost by someone bent on misery.

My prescriptions to never build wealth:

  1. Spend everything you make, then spend a little more.
  2. Refuse to make short-term sacrifices for long-term rewards.
  3. Follow investing trends.
  4. Zoom in. Always zoom in.
  5. Change your plan frequently.
  6. Never take risks.
  7. Play status games.

What I'm Reading

📗 Book: Elon Musk by Walter Isaacson

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