Yahoo Finance Charlie Munger Swore By Following 'Grandma's Rule' Of Eating Your Carrots Before Dessert If You Want Success in Life — Here's What He Meant
Charlie Munger, Warren Buffett’s longtime business partner and an accomplished investor in his own right, left an indelible mark on the investment community before passing away at 99. His sharp wit and profound insights continue to inspire and educate, offering valuable lessons for life and business.
Don't Miss:
Elon Musk and Jeff Bezos are bullish on one city that could dethrone New York and become the new financial capital of the US. Investing in its booming real estate market has never been more accessible.
Can you guess how many retire with a $5,000,000 nest egg? – How does it compare to the average?
The Power of "Grandma’s Rule"
Munger introduced "Grandma’s Rule" during his famous 1994 speech at the University of Southern California (USC) Business School. He used this analogy to structure his lecture, saying:
"I’m going to play a minor trick on you today — because the subject of my talk is the art of stock picking as a subdivision of the art of worldly wisdom. That enables me to start talking about worldly wisdom. This much broader topic interests me because I think all too little of it is delivered by modern educational systems, at least in an effective way."
He explained, "Some of you may find it interesting that Berkshire Hathaway is now the most successful investment operation in the world ... And I can teach you a lot about how that was done. However, I can’t do it if I don’t first teach you about a few basic notions."
Munger likened his approach to "Grandma’s rule," stating, "The carrot part of this talk is about the general subject of worldly wisdom, which is a pretty good way to start. After all, the theory of modern education is that you need a general education before you specialize. And I think to some extent, before you’re going to be a great stock picker, you need some general education."
Trending: Many are surprised by Mark Cuban’s advice for lotto winners: Cash or annuity?
This concept of eating your carrots before dessert translates in business to tackling difficult but necessary tasks before indulging in more enjoyable activities. Munger advised, "The business version requires that executives force themselves daily to first do their unpleasant and necessary tasks before rewarding themselves by proceeding to their pleasant tasks."
This approach emphasizes:
Discipline: Prioritizing important work over immediate gratification
Long-term thinking: Investing effort now for future rewards
Personal growth: Embracing discomfort as a pathway to improvement
Trending: Mark Cuban believes “the next wave of revenue generation is around real estate and entertainment” — this new real estate fund allows you to get started with just $100.
The Importance of Worldly Wisdom
In the same USC lecture, Munger stressed the significance of "worldly wisdom," which involves having a wide-ranging understanding of various subjects.
He suggested that one should develop "multiple mental models," meaning frameworks or ways of thinking drawn from different fields. Munger believed that by integrating experiences, both observed and personal, within these diverse models, individuals can better understand and navigate complex situations. He advocated for a broad, interdisciplinary approach to thinking and problem-solving.
Key Principles for Success
Munger’s wisdom extends beyond investment strategies:
Continuous learning: "I think a life properly lived is just learn, learn, learn all the time."
Avoiding negative behaviors: "You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful despite your troubles."
Understanding incentives: "Never, ever think about something else when you should be thinking about the power of incentives."
Embracing mathematics: "First, there’s mathematics. You’ve got to be able to handle numbers and quantities — basic arithmetic. And the great useful model, after compound interest, is the elementary math of permutations and combinations."
By applying these principles, individuals can cultivate success in various aspects of life, from personal development to professional achievements. Munger’s enduring wisdom, as exemplified by "Grandma’s Rule" and his emphasis on worldly wisdom, continues to provide valuable guidance for both investors and those seeking personal growth.
Read Next:
Gen Z and Millennial millionaires couldn't care less for stocks and bonds — Here's what they're buying instead.
The average American couple has saved this much money for retirement — How do you compare?
"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
This article Charlie Munger Swore By Following 'Grandma's Rule' Of Eating Your Carrots Before Dessert If You Want Success in Life — Here's What He Meant originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
