"In 1974, I was 50 years old and bankrupt. It’s not a metaphor; it’s true bankruptcy."
This is a rarely publicized recording of Charlie Munger in his later years. At 99, he calmly said this sentence, sending chills down my spine.
A person who is revered by the whole world, 50 years old, with nothing.
The fund he managed lost 53% in a year. The clients' money was halved, his own money was halved, and he is still in debt.
That Christmas, he passed by a gas station and saw a weary gas station attendant, and he felt envy—at least that person didn't lose money for those who trusted him.
He cried. 50 years old, crying in the office.
But the most explosive part of this story is not the bankruptcy, but —
It took him 16 years to earn back the money he lost.
16 years.
If it were today, a blogger who goes bankrupt and doesn't recover in three months would be deemed 'done'. A fund manager who loses 50% and doesn't come back the next year would be criticized as 'washed up'.
But Munger took 16 years.
What did he do in those 16 years?
It's not about waiting for luck, it's about changing your mindset.
He reviewed every investment from 1962 to 1974 and discovered three fatal mistakes of his own:
Bargain hunting— only buying low book-to-value ratio bad companies, which ended up going to zero.
Cheap things often end up being very expensive.Leverage— thinking they can add positions at a lower price, only to be forced to sell at the lowest point.
Leverage makes you lose the most important thing — time.Too shortsighted — checking accounts monthly, frequent trading, selling good companies before they rise.
Then he made a counterintuitive decision:
Stop chasing quick money, switch to buying 'good businesses', and then do nothing.
In 1977, he and Buffett bought See's Candies at a price-to-earnings ratio of 75, ridiculously expensive.
Everyone said they were crazy.
As a result, after 46 years, 30 million turned into 2 billion.
These are the three truths that Munger wanted to tell you in his later years:
1. Bankruptcy is not the end, it's a turning point.
Without the collapse in 1974, there would be no later 2 billion. Failure is an event, not a person.
2. The time required for success is much longer than you think.
From bankruptcy at 50 to a net worth of 1 billion at 86, 36 years.
Patience is not a virtue, it's a hard skill.
3. The most important thing is not how much you earn, but not losing money.
If you lose 50%, you need to gain 100% to recover. Not losing is the greatest compounding.
The last thing he said, I listened to five times:
If you are 30 and have achieved nothing, hit a bottleneck at 40, and go bankrupt like me at 50 —
Please remember: Life is long, long enough for you to fall, get up, fall again, get up again, and finally stand on the mountain top to watch the sunrise.
At 99, Munger said his life has just begun.
And you, who are in the valley —
The choice is in your hands.