Charlie Munger's Secret: Avoid Stupidity Before Chasing Success - Andy Tanner, Del Denney

Welcome back to Rich Dad Stockcast. I'm your host Del Denny and today we're talking about one of the greatest financial minds of all time. That's Charlie Munger. Now, while Warren Buffett often got the spotlight, many people believe Charlie Mer was the deeper thinker behind some of Birkshshire Hathway's greatest ideas. And Munger didn't just understand investing, he understood human behavior, decision-making, disciplined, and how wealth is really built over time. And today, Rich Dad expert Andy Tanner is joining me to break down what Charlie Mer understood about wealth that most people completely miss. Before we do that, speaking of wisdom, stockcastbonus. com. Great resources there. Uh what do our listeners receive when they go there? — You know, that's the site that we uh that we point people to when they're wanting to get their hands dirty and their feet moving. And so when we do the podcast, that's one of the main promos we do uh on a weekly basis. We change it from time to time what's there, but there's always free stuff there. Uh, as of this recording, we've got great download audio book or uh, ebook. Uh, pick it up. Really, uh, you know, first of all, these things are free. And then second of all, they help get you organized, get you moving, so you can balance your consumption of content and say, "Oh, that's neat. That's neat. " And start doing stuff with the content where I say, "Hey, I'm going to do this, do this. " you actually get it done because it's the action that makes the money. It starts with saying, "Hey, this is a good idea, but it actually, you know, good ideas feel good to contemplate about. That's why people love to scroll. It feels good to have ideas, but it doesn't get much done. " So, if you want to get some stuff done, go there and uh let's start working together and let's get some stuff done. — All right. Love it.

Get some stuff done. — Now, let's focus on good old Charlie. Charlie Bunger. What makes Charlie different from the average investor or even the average wealthy person? Uh, one of the things that Warren Buffett and Charlie Munger share, and this is my opinion, is they not only are brilliant, but they have an investor temperament is what I would call it, is they approach life with a different type of control over emotions than maybe the uh, you know, there's they're not only smarter than the average bear, they control their emotions better. And just before I go down that a little further, a little note about my feelings about him generally there, you know, there's been people in my life, we all lose people that we know. You know, uh you look at your parents and I often say this, you know, when a person loses a parent, there's not an event that is more universal in planet Earth. Everyone loses their parents one way or another. And yet when it happens to you, it feels like the most unique uh passing, right? Someone close to you. So, everyone loses their parents, but uh it's a unique experience when that happens. Well, in my life, as I've looked at some of the mentors who have passed away, some of them hit me harder than I thought. Uh when my basketball coach Rick Majeras passed away, you know, he had players a lot closer to him than me, like Keith Van Horn. He was godson to Keith's kids, right? Or godfather to Keith's kids. Uh cuz Keith lost his dad and Coach Merish became like a father figure. Uh and so when he passed, I caught myself shedding tears. I thought, well, gee, you know, I knew I'd be sad, but my gosh. And part of it because I love my coach and he shaped my life. And the other part was this unimaginable, indescribable, comprehensive encyclopedia of basketball knowledge was now closed forever. We couldn't open that book again. That's how I felt when uh Charlie Munger passed. And it's how I will likely feel when Warren Buffett uh to you when it's his turn. Um Charlie was just phenomenal. And uh it's that temperament that they often talk about that I think is as important as their ability to evaluate a company. Uh Warren Buffett calls it the vicissitudes of the market. You know, the ups and downs and the panics and the emotions and the gambling and all of the human foibless that are a default setting to most of us automatic processes of fear and greed and panic and action and all that. The Charlie Munger just had an ability to sit there and eat seas candies and not care. He just he knew what he knew what was up and he just sat there and eat seized candies and drink Coke and not worry about this ups and downs and he certainly had the gift of not caring of what anybody thought of him. I mean he would state his opinion readily. So he was I would say that's the long answer to your question is I would say of a long list of things uh beyond the brilliance I say temperament takes the the cake on that is the next important but aside from his brilliance temperament — and I have to work on my temperament.

— What would you say you know as you've studied Warren Buffett and studied Charlie what's the difference between the two? Well, you know, I think that'd be better for Buffett to answer than me. Um, certainly their personalities are different, but I think they're I don't think they've had an argument. You know, uh, Charlie talks about this. And one time the reporter said, "If you and Warren ever had an argument, you know, do you have arguments? Do you hash it out? " And, uh, you know, in in particular Charlie Fashion, I probably can't quote it right, but he'd say something like this. He'd say, "You know what? uh we're aligned on most things and if there's a little thing, what the hell do I care? You know, that's kind of the way you say, you know, it's that temperament against what do I care? It's not worth fighting on. And they had uh I wouldn't even say disagreements. I think they'd have difference of view, not even opinion, just a difference of view, and they would come together. I'll give you an example of where uh I think Charlie had the biggest influence on Buffett in terms of investing is we talked about this the previous podcast I think but it's worth bears repeating is Warren Buffett would you know look at cigars that he thought he had a couple more puffs left and you look at a company that's kind of on its last leg almost now that doesn't sound like Buffett a moat to me company that's going to be around for 50 years you know cigar about that has two puffs left. I mean, what? That doesn't sound Buffettesque at all, does it? But Buffett would say, "Well, it's cheap because they're in trouble, but maybe they got a little run left in them before they die, less effort, that last before you fall. " And he make a little money out of that. And uh Munger came to him. He says, "Look, this is cute and you're making money, but it's you're we're never going to get big. compound well over time if we're just picking up the next cigar butt and then it dies, you know, and we sell it before it dies. And he I think we could credit Buffett said this, but I think we can credit to Munger where he says, look, it's a lot better to buy a really good company at a fair price than just a fair company at a really good price. And that's when they started buying things with moes and saying, you know, in our list of attractiveness, what companies do we really think have some staying power that we can stick with for a longer term instead of picking up the last cigarette butt? And I think that's probably the biggest thing that Munger brought to their partnership in terms of the change in uh how Warren Buffett approached things, which you know made sense because that's more in line with what Benjamin Graham would have taught. — I see. Now going along the lines of

that, what did Charlie understand about avoiding and I like the way he phrases things. He he's very uh blunt in his words. Uh avoiding stupidity instead of chasing brilliance. Uh why is avoiding big mistakes often more important than making huge wins? Well, he, you know, he actually talked a lot about what you just said is he would study I I don't want to misquote him here, but reporters would interview him often at Warren's side with, you know, the two of them together, and he'd say, "Look, I study what goes wrong with people, and I have this exact I'm glad you brought this up because I have this exact philosophy. I just explain it in a different way when I teach. So, let me put it this way. Um, and I and I'll invoke some Robert Kiasaki, so I hope this isn't too long-winded, but I think the payoff I think the juice is worth the squeeze when we get this all squzing out here. Uh, in 2005 or six, somewhere around in there, so this is 20 years ago, I had my first event with Robert Kiasaki. First one, it was called the psychology of winning. And the very first lesson I remember him giving me personally, not in the book Rich Dad Poor Dad or Cashful Quadrant or Rich Dad Guide to Investing or you know any of the others where he was on stage and he had a easel and he wrote things and he wrote down the root word of education a root word uh aduce e du d I think it was aduce and he said that means you pull something out not put something in and he said something I'll paraphrase that you know school is about I'm a professor I'm going to take my knowledge and put it into your head that's not a deuce means you're going to draw it forth so there's something inside of us you know there's a neurosurgeon inside of me that never made it out you know or I hit organic chemistry and you know that was all over right uh there's a pianist inside me that sort of's coming out Still, there's a drummer inside me that kind of came out. Uh, the comedian's trying to come out and failing constantly, but there's an airline pilot inside of me. And there's a, you know, there's all types of roles that are potentially mine inside and it's just which ones get drawn out, if that makes sense. — I mean, if you think of your life, you could have been anything and what got drawn out is who you are. It was wasn't what was put in. It was what potential was drawn out. Well, Michelangelo uh is rumored, it's probably a procal, but he was rumored to have said, "Well, I saw the mar I saw the angel in the marble and I just set him free. " Uh I just cut away the stuff that wasn't an angel and uh I didn't really carve the angel. I just took what wasn't the angel away. So when I teach investors, I start off in this way. I'll say, 'Look, I've I'm not Bon Joy, but in my travels with Robert, I've seen a million faces, and I watched Robert rock them all, not me, but I've seen a million faces, and not all million people became millionaires. So when I look at that, I says, well, they all have the same information. I taught my kids this in Argentina when we were with Robert when they were young. I said, "Now, how many of those people we spoke today are going to go out and be millionaires? You think all of them? " They said, "Well, no. " And I said, "Well, they all got the same information. " And I said, "It's it's what's causing them to fail that we should focus on cuz all of them were given what they needed to succeed. " And I said, "The number one thing that stops an investor from be coming out of the marble is when they decide to quit. " That's number one. Quitting is not part of the investor process. The second thing is deprioritization of your own goals where they become subordinate to someone else. In other words, what is urgent sucks you away from what's important. And instead of going to class or going to Menor Club or reading rich that poor dad or playing the cash flow game, something else comes that seems more urgent even though it's less important like having a job. Well, it's more important that I get a paycheck and build pay my bills today. No, it isn't. It's more important that you learn those things so you don't have to have that paycheck anymore. So you're you have emancipation from it. So I have a list of things that when I teach students I say okay this is the marble we're going to cut away. Well Munger coming full circle hope the juice is worth the squeeze here. Munger would say, "I study failure and I find the criteria for failure and the causations and the coexistence and the coincidences and I study failure in such a way that I say, "Okay, I'm not doing that. " Right? It's like the screw tape letters from CS Lewis, right? If I were the devil, how would I think about this? How would I keep someone from going to heaven? And if you take that screw tape letter that that mirror image, that antagonist image, well, maybe it's not what I'm supposed to do. It's what I'm, you know, it's the sins of omission or sins of commission, right? So Mer would say, I'm going to study why people fail and say, okay, I'm not going to do that. So I do the same thing. Why doesn't the investor come out? Well, they quit. So that's off the table. I ain't quitting. Not me. Not an option, right? Not in the never never never give up. Right? Never ever ever give up. Second prioritization. Well, I got this thing over here pulling me away. No, I'm going to write my covered calls. I'm going to, you know, I'm going to get my cash flow. I'm going to have my weekly meeting uh with my wife, right? And that's where the failure comes is when stuff encroaches over that that's urgent and takes the place of stuff that's important. So Munger was brilliant that way in that he would probably look less at success. And he says, you know, if I eliminate the failure problems, success is probably the natural order of things. It's probably normal to be successful if I can get the failure stuff out. I think that was great stuff. So I probably butchered that. [clears throat] I wish that's why we we're sad he's not with us because he can say that stuff better than I can. So, I just do my best. — No, I love how you landed the plane there. And I would say personally for me, I think the biggest topic that I learned from him was, and again, I'll butcher it, but just using one word from his phrasing is inverse. Whatever it was, I inverted it. So, if whatever the failure was, do the opposite of it. Just do the oppos. I gave that big lawn saliloquy and Robert and Duce and Marbles and Michelangelo and you said, "Yeah, he just looked at the inverse. " Well, there you go. could have saved 20 minutes. — Very good. Well, let's do this. Let's

take a quick break. We Let's talk about the inverse here in just a moment, but uh you know, as we understand, Charlie Munger, he understood something most investors never fully grasp and wealth is often uh less about complexity and more about just discipline. So, when we come back, Andy's going to break down how investors can apply Munger's principles in today's world and why his thinking matters now more than ever. And don't forget to go to stockcastbonus. com. Download your free resources. That's where you start building real wealth and real investing intelligence. Stick around. We'll be right back. — So far, it's been great. I needed a source where I could really enrich my education through stocks. I didn't really have an avenue for it, and it's helped me a lot. The simplicity has really gotten me on the track to where I enjoy the learning as well as it's really solidifying in my mind. Like, they're not just trying to sell you something. They really care about the people that are in the course. and they really do care about you and your personal goals and what you want to do is to help you and your family and whatever your goals are in life through that. So, it's really been great. — All right, welcome back to Rich Dad's

Stockcast. Andy, let's talk application. Now, if someone wants to uh not do the failure stuff, you know, what should they what habits or principles should they start adopting immediately? Then, so if we're not quitting, what are we doing? I don't know if this is good advice or not. I try this and sometimes it works for me and sometimes I fail, but I I love taking guys like Munger and the Pope and Yoda and Superman or the Devil or whatever. And when I'm perplexed and I hit a roadblock, I'll often say, "Well, how would Superman solve this? " Or I'll Yoda go about this? " Or I'll say, you know, how would the devil go about this? Or how would Jesus go about this? You know, that what would Jesus do stuff. Munger is a great one. You know, what would Munger say about this? And as you track into that and you see what he would do, it almost lays out the path of, okay, well, this is how I should do it, right? And there's something about that neurologically that you tap into someone's brilliance by simply saying, "Well, if I handed him this problem, how would he likely solve it? " Uh, you know, Munger would say, "Well, let's see, like we just talked about in the last segment, he'd say, well, let's take away the failures. " And so then I superimpose that in my life and say, "All right, well, what are the things that are stopping me? Am I de pritori deprioritizing? Am I quitting? How are my emotions? " And then you emulate as best you can. Uh there was this big I don't know I have this friend who's a very famous hypnotist you know Yan Letterman and all that stuff and he had a name for this and I'm going to probably butcher but I think he called it psycho neurodeduplication where you take a person's psyche and their neuology and you try to duplicate it in your own life which is a fancy word for saying go copy that dude and if I start to act like that person and I start to copy that person. All of a sudden, I look around like, "Wow, I've kind of duplicated that. My neurology is changing. My neuroplasticity is changing and becoming like that person, right? I'm duplicating that person. " And so, I don't take on everyone's traits. I still have my own personality and my warp sense of humor that I don't know how that changes, but I think that's one way to take a guy like Buffett and a guy like Munger or Jim Simon or whatever trading you want to do. You know, you go read Jack Swagger's book and look at all the turtle traders or whoever and you start duplicating how they think. And I think that's a great step is uh is to say, "All right, well, I'm going to copy him. " You know, pretty simple. How do you imple what Munger does? Well, start acting like he does. Now, I don't know that I could talk like he does because he's a little more crass, but you know, don't you love Mer just like he doesn't care? And you know there's that uh you know that subtle art of not caring about stuff. I think that's similar title. You know the subtle art of not caring about things. — Yeah.

— I think Bunger like he like I said he eats the seas candies like you remember the Bitcoin thing like they don't like Bitcoin. Now that doesn't mean you don't get to like Bitcoin. It's just not their preference. I mean there's certain types of music I just don't like. Right. Might be great music. But if you ask Buffett about Bitcoin, this is what he'll say. Well, you know, if if you gave me uh you know, 20% of the farmland and said uh it was going to be this x billions of dollars, I'd write a check because I' it produced something. I'd have something that would produce a crop. And he said, "If you gave me, you know, x percentage of all the real estate, uh I'd write you a check cuz I could rent it and you'd create something. But if you gave me all the Bitcoin, I wouldn't give you a dime for it because if I had it all, well, now I wouldn't produce anything, you know? So, I would have to buy it for me. And if I had it all, then there'd be no confidence in it anyway, right? And so that's Warren Buffett on Bitcoin. He says, "Now, what do you think, Charlie? " And Charlie just say this. He goes, "Bitcoin's a turd. " And Buffett's like, "We're having a meeting. " You know, Buffett's like, Buff's like, "This is our shareholder meaning, you know, and uh Monger's sitting there eating seas. " He's like, "I don't care. " You know, that's what I think. And it it's just endearing, you know, just that he did not. This guy didn't care. I guess when you got that kind of coin, who cares? You can say what you want and, you know, who cares? So I love that about Mer um you know wit wisdom and just he very blunt you know he did not loved it. Yeah. And it's almost like Buffett looks over like, man, I wish I could have said that, but I'm more than Buffett. They can't say that, but you can, you know, like Charlie, really? So good. — They made such a good one-wo punch and I got to luckily I mean, I would say it's such a highlight, you know, of my lifetime. I got to go to a Birkshshire Hathway shareholder meeting, see both of them. I was 11 rows away, you know, got to see Warren and Charlie and talk for I don't know how long was 6 hours, 8 hours, whatever it was. — But there was one moment where Charlie fell asleep in the middle of it on stage, and that was the I don't give a you know what. — Yeah, that's happened more than

once. You know, I have a uh I don't know how much time we have, but I have uh three quotes and I they're huge on my wall. And you know, when I look at, you know, with the way my I'm not a neurotypical thinker, meaning that I'm disabled. I don't think, you know, I time blind, — neuro divergent, ADHD. — My executive functions aren't the best. So what I have to do in my life is have a like I was talking about Marcy I go if I don't set my external cues you know a day will go by and I don't know where the time went. I have to have cues to remind me externally of what's happening with time. So I surround myself rather with paintings of you know mountains or paintings of the beach or whatever. I surround myself with external cues to keep my mind on so it doesn't go all over. And I have three. I have one from uh Steve Jobs and Warren Buffett Charlie Munger. Those are the [snorts] three biggest pieces of artwork that I have in my office. I mean the one of Jobs is 6 feet wide and 4 feet high. I mean they're big quotes in my wall. And the one about Munger that I just love, uh, talks about being a business owner and not just being tr shrewd, you know, and he says, you know, if you're just successful and, you know, you grow rich by buying little pieces of paper, uh, that's failed life. Uh, success is more than wealth accumulation. And when you go to that Birkshshire meeting, you'll notice the pride they have in their brands. I mean, they're not just selling their wares. They can sell their wares, but they have those Seas Candies on the stage, that Coca-Cola on the stage, and the Hines Ketchups all over the place. and they are very proud of Dairy Queen Blizzards and Duracell Batteries and you know RC Willie Furniture uh and Geico Insurance because they're like we're making a difference in people's lives and people forget about that. They think about Jeff Bezos and he's got you know 17 houses each with a swimming pool and they go well no one needs that. Look what that dude did for us. Look at jobs, you know, how do you try to go build try to invent one iPad? That's one thing. Then build 300 million of them in less than a year to be distributed. How what does it take to come up with one and then build 300 million of anything, you know? And so these guys are forced to be wealthy because of what they give and because of how they help and because of the value that they offer. the work that's done on the cash flow jack in the box is where the moat is because you know they own Burlington Northern Santa Fe that's you know 40% of the North America's freight is rail and they have the biggest rail so if you want food to eat they're going to put that on your plate and if you want lumber to build they're going to put that on the job site you know if you want heat to keep you warm they're going to put the coal in that uh railroad and get it to you. And so these guys have and and you know Arbuck Mr. Fuller had a generalized principle that Robert turned me on to called the more people that I serve the more effective I become. There is no way to reach more people so fast than to buy a share of Coca-Cola because now you're selling two billion beverages a day. and you can't help but have that money pile up because you're serving so many people. And so when he says, you know, this is not about shrewdness of just buying little pieces of paper, that's just a failed life. uh owning a company you're proud of and doing work or owning work uh and guiding work and funding the work in initial public offering is funding to advance work um to bless the lives of more people. That's capitalism. Capitalism is when you have an inequality that they don't get. They think the inequality is well they got more money than me. The inequality lasts here. And I taught my kids this when they were five freaking years old. I said, "Here's the inequality. They've got 50 cents and you've got a glass of lemonade and you've got to give them more than that 50 cents is worth or they won't give it to you. " And so you always have to give more than you receive. And my sons wouldn't have thought this that young, but an adult would say, "Well, if I'm always giving more than I receive, how can I ever make a profit? " And the answer is synergy and the quality work you do and serving more people to scale. — Uh the synergy is where the work is worth more than the sum of its parts by being assembled well. And uh and so it makes it worth more than the 50 cents. So you're in the business of saying how can I bless people's lives more than the two bits can somewhere else and earn that 25 cents and Buffett and Munger especially I think you know I elaborate on that quote but you know if all you do you know in life is become rich that's a failed life you know life is more than being shrewd uh if you know if all you do is find success by buying little pieces of paper. That's a failed life. Uh life is much more than just wealth accumulation. It's serving other people. Uh so, you know, Mer got it, man. I mean, he was that's a lot of ground actually. You know, inverse thinking, take away the failure, serving people is the way the wealth comes, not just getting the wealth. I mean, he's a stud, man. — He great stuff. — Very much so. Now I want to come full

circle and you know I always like to end with an action step something that our people can do that are listening to this and bringing up duplicating you know channeling someone else copying how they think I if someone wanted to start developing that kind of thinking that that Mer had what's the first step they should take this week? Well, I think that's a we could just do a call back to copy him and start acting like he acts and do what he did. So, one of the things that he and Buffett did every day is they learn uh it's the most important activity of their day. Buffett was at Colombia with Gates talking to a bunch of their uh MBA students and one of the MBA students asked a question said, "What's the most important thing you do every day? " And both of them absolutely without hesitation said learn. Buffett spends most of his time learning, reading, investigating, asking questions. He spends his life as a student more than a teacher. Robert is the same. Does a lot more. I mean, you see that guy tear apart books, man. That dude, that dude is crazy. When I mean, that book's going to be Look, it looks like it's been hit by a train and, you know, rough. I mean, it's got it's packed with notes and postits and he just is insatable. So, the ability to buy a copy of the book Rich Dad Poor Dad and start reading or buy a cash flow game and start learning or better yet start paper trading is just say what percentage of my day is dedicated to learning something and you can do that by reading. You can do that. Now, I always say as an author I want to sell my books. So, I'm going to say something like this to sell my books. I say, you know, people who are interested in success, they read books. And if they're interested in success, they're going to read books. Now, people are committed to success though, they get mentors. There's a difference. You want to read about swimming, you're interested, read about swimming. You want to win a gold medal, better get a coach to really put you in the water because you don't learn everything from reading a book. You learn things by getting in the water and swimming. And that's how you learn to swim by doing it, not by reading about it. So yeah, stockcastbonus. com start reading and then we can help you start doing, you know, imagine this. We have a mentor club every week where we do it. We, you know, here's the stocks, we find them, boom, buy it. Sometimes we make money, sometimes we lose money, and the whole thing. And we do it once a week where people can do a weekly trade and just follow along in their paper account to learn by doing you know that cone of learning idea you know simulate the real experience or do the real thing either trade some money or get a paper trade account and do it. Imagine where a person is at the end of a year as opposed if that year went by without learning. So, how do you do what Munger did? Start saying a certain percentage of my day every day is going to be learning about wealth. Imagine that. A guy's 100 years old, you know, darn near, and he gets up in the morning, says, "Well, I got to learn some stuff today. " — I love that. — Not what he has in hand. It's what I need to put more in the tank. Man, it's crazy. You think at age 90 you say, "Yeah, I think I got a handle on this stuff. " Nope. Better read. Better study, better interview, better practice. — After multiple billions, I got this. I'm good. Nope. Still reading. — And that should be the crown though. jewel because to them, it's just a game. Buffett's given all his money away. He says it. He's Buffett's like, "Money has no utility to me. What am I going to do with all this? " That's why he's giving it all away. His life was like, "Okay, how many people can I serve? that's going to give me a whole bunch of money and at the end well I'll give this money back out to everybody. It was really a fun experiment to see how many people I could serve but after a while that's you know the money I got well that's just too much so I'll give that away too. You serve and get the wealth then you give the wealth back to serve. gee in Christmas. What a lie. I'll capitalists are bad people, huh? Okay. Well, I'll let someone argue that. And the best thing you could do with a guy like, you know, the like that mayor in the guy they got in New York or whatever. Best thing you could do is just let that guy talk. I mean, just let him talk. He's good at it. And the more he talks, the more you'll be like, "Okay. " Yeah. That's where that is. I'm a capitalist, man. — Serve as 30 people as you can. get a pile of cash, then give the money away. That's pretty good life, isn't it? — I think that's I think it's a fantastic life. Well, Andy, thank you so much. You

know, listeners, Charlie Mer understood that wealth is built through thinking, through discipline, through patience, and avoiding unnecessary mistakes. And in a world obsessed with speed and hype and AI, and you know, his principles may be more valuable today than ever. And again, big thank you to Andy Tanner for breaking this down for us. Now, if you want to become more disciplined and an intelligent investor, go to stockcastbonus. com. You'll find free tools and resources designed to help you to think smarter and invest with confidence. And if this episode gave you value, make sure you like it, hit that thumbs up button, subscribe, share it with someone who wants to think differently about wealth, you're not here by accident. You're building something that most people won't. So, stay smart, stay invested, and we'll see you next time. This podcast is a presentation of Rich Dad Media Network.