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In 1994, Charlie Munger addressed an audience at the University of Southern California, sharing insights from his two decades of collaboration with Warren Buffett in building Berkshire Hathaway into a billion-dollar empire.
During his talk, titled “A Lesson on Elementary Worldly Wisdom,” Munger revealed a powerful strategy employed by Buffett with remarkable success.
Warren Buffett’s “20-Slot” Rule
Munger explained:
“When Warren lectures at business schools, he often says, ‘I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it. Each slot represents one investment you can make in your lifetime. Once you’ve punched through all 20 slots, you can’t make any more investments.’
Under these conditions, you’d be compelled to think very carefully about each investment, focusing on those you have thoroughly considered. Consequently, you’d achieve far better results.”
Munger continued, noting that while this approach seems obvious to him and Buffett, it is rarely taught in business schools. He emphasized the importance of selective betting for success, a principle he recognized early in life but found puzzlingly absent from conventional wisdom.
The Underrated Importance of Focused Effort
Warren Buffett’s “20-Slot” Rule extends beyond financial investments; it’s an effective strategy for time management too. What stood out to me about Buffett’s approach was the concept of “committing fully” to fewer endeavors.
The main takeaway is this:
Your chances of success increase when you concentrate all your energy and attention on a limited number of tasks.
To truly master a skill, you must be judicious with your time. You need to eliminate merely good ideas to make space for exceptional ones. Focus on a handful of critical tasks and disregard distractions. Commit to enduring years of dedicated, uninterrupted effort.
Simplify and Commit Fully
Take a moment to observe those around you, and you’ll see that very few people dedicate themselves entirely to mastering a single skill or achieving a specific goal over an extended period of time.
Instead of thoroughly researching and committing to a goal for a year or two, most people dabble in various pursuits—a new diet, a different college major, an exercise regime, a side business idea, or a career change—only to abandon them after a few weeks or months in favor of the next new thing.
From my observations, the lack of persistence is so common that dedicating a year of focused effort to one endeavor can set you apart and make you very proficient—possibly even world-class—in that area. If you imagine your life as a 20-slot punch card, with each slot representing a year or two of dedicated work, you can understand how significant returns can come from committing fully to just a few things.
Conclusion
The essential point is that everyone possesses a “life punch card,” and considering the finite number of things one can master in a lifetime, there aren’t many slots available. These slots will get punched as time passes, whether you make deliberate choices or not.
Don’t squander your next slot. Reflect carefully, make a decisive choice, and commit entirely. Don’t just half-heartedly pursue your goals. Go all in. Your ultimate achievements will mirror the depth of your commitment.
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