I just got back from a world tour...

First I did my TED talk in Luxembourg (thanks to you for all the help and feedback on planning my talk). The talk will be released in a month or so.

Then I went to Turkey and Transylvania, Romania to see Count Dracula's castle. Check it out below.

Kings of Money

Check out this picture from the annual Berkshire Hathway conference: it's the "world's richest selfie" with Buffett, Munger, Gates - total net worth $143 billion.
 

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Let me share the key takeaways I learned from listening to these guys in person:

1. Charlie Munger said competence is relative and what you really want to do is compete against idiots. 

Munger said when he was in college he realized one kid, Homer, was always going to be better at him in science and engineering. So Munger switched majors so he didn't have to compete against people like Homer.

So he advised the crowd to find an industry that's not full of smart people. He said, "Luckily idiots are in large supply"... Haha


2. Keep large cash reserves. Buffett said he keeps $20 billion minimum so that he never has to 'rely on the kindness of strangers' (a little outside my budget right now) haha.

When the time comes and you need cash you will find it a nightmare to have to get others to invest in you or lend you money.


3. Munger said, "Focus on ignorance removal", i.e. each year get less dumb. He is 90 years old and figures it will take another 20 years to remove all of his business ignorance.


4. Buffet says only play in something you know you can win at. Stay in your competence. Sit down at poker games you know you will win and stand up and leave when you know you will lose.

He said if you don't know your competence ask your friends for their honest opinion. But don't be surprised if the truth stings a little bit.


5. Munger said its easier to know your competence than most people think. If you weigh 100 lbs. don't try to play pro football.


6. Buffett said if you don't know what you should do for a career, find a subject you have a lot of curiosity in and visit the top ten companies in that industry. Then ask the owners of those companies tons of questions and eventually what you should do will become obvious.

He says the key is to find something you have tremendous curiosity in.


7. Buffett said at some point more money is not helpful. But you need to make enough to live comfortably. So you have to find the optimal point where more money doesn't decrease your happiness.

He said he buys everything he wants, like his private jet. But he doesn't mind living in the same house he bought in 1954 because he thinks owning a ton of houses will just complicate his life and make him less happy.


8. Scramble quickly out of your failures. Don't wait. Munger said he and Buffett started out by investing a bad business, a textile company, but realized it quickly and changed the business model.

He said, "Just imagine what we would have been able to do if we had started out right."


9. Munger said bad parents and a bad childhood is hard to recover from. The way I take that is that some people will have to work twice as hard to get the same result. It's not fair but it's true. If you don't come from a background of success just study harder and you should turn out okay.


10. Someone asked Munger what he thought about the education system. He said he thinks college is the most inefficient part of the modern education system and that most business schools are teaching outdated, idiotic ideas.


11. I was amazed at how fast Buffett and Munger's minds are. One guy got up to the microphone and asked a super hard mathematical question on the intrinsic valuation of one of the companies. The guy had obviously rehearsed for a week beforehand. 

But Buffett calmly stopped him and said, "You had all the math right until the last part." And then he proceeded to completely destroy the guy's math. 

He had done all the super complex calculations in his head in the few seconds the guy was asking the question.

The moral of the story is keep your mind sharp and learn the 'language of money.'

That language is math. It reminds me of the famous philosopher Descartes, who said, "I think therefore I am". Descartes said the only thing you can ever be sure of in life is math.

I always advise entrepreneurs to break out the flash cards and do at least one math problem a day. It will rewire your brain and teach it the language of success and money.


12. Munger said to find a good spouse you have to deserve a good spouse. He said no one likes to listen to that old-fashioned advice but he says it's gospel truth.

Stay Strong, 
Tai

>>Click Here For The Audio Version With Show Notes and Download Link

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Question: What is the biggest area of ignorance you need to remove? (Leave your answer in the comments below)