Great Grandfather's Rule (Seize Rare Opportunities Boldly)
Charlie Munger's great grandfather believed that truly life-changing opportunities are rare, and when one appears, you must seize it boldly and fully rather than hesitantly. Munger adopted this rule and credits it as a key to his success.
THE IDEA
Charlies Grandfather. As His Role Model
Mr. Brown: “Help yourself, Charlie. Could you tell us where you were born and raised? I want to know everything! You interest me greatly.”
Charlie: “I think you count on more booms and busts over your remaining lifetime. How big and with what cyclicality I can’t tell you. I can tell you the best way of coping, which is just to put your head down and behave credibly every day. I will say something about life generally. I was lucky. I had an ancestor who I never met. My mother’s grandfather was a pioneer who came out to Iowa and lived in a small house with his young wife. It was a cave. He literally was a pioneer coming from nothing and rose to control the leading bank in the town. He would give away nothing by himself, but my great grandmother made him a generous man, and he gave a lot back to society. Having wrested this success from troubles and struggles, he had this theory looking back at his long life. He owned farms at the end, and he leased them to Germans. You can’t lose money leasing to Germans. He believed that real opportunities that come to you are few. Most people just get a few times to make a difference, when you find one and you can clearly recognize it. Seize it boldly and don’t do it small. My mother transmitted this to me as part of family quirks, though she wasn’t interested in finance. Of course, this guy was my soul mate - the great grandfather I never knew. I have totally adopted his point of view, I must say it has worked wonderfully. So I quit claim my great grandfathers’ rule to you - assume your really major opportunities in life are going to be few and when you get a lollapalooza for god’s sake don’t hang by like a timid little rabbit. Don’t hang back - there aren’t that many of the really big good ones xxiv”.
When to use it
When evaluating an investment, examining whether the evidence and potential downside justify a larger commitment.
In a career, recognizing an unusually good offer and making a timely decision after checking its terms and fit.
When starting a business, deciding whether an opportunity warrants substantial resources and what evidence supports that decision.
In a relationship, following through on a considered commitment rather than repeatedly postponing it.
FROM THEORY TO EVERYDAY LIFE
In practice
The Great Grandfather's Own Success
In Munger’s account, his great grandfather rose from poverty as a pioneer to control a leading local bank. Munger recounts the lesson he took from that family story: major opportunities may be rare, so recognize them carefully and be prepared to commit.
A MOMENT TO REFLECT
Put it to work.
What major opportunities in your life have you hesitated to seize fully?
How can you distinguish a true 'lollapalooza' from a mere mediocre opportunity?
What would it mean to 'behave credibly every day' while waiting for a rare opportunity?
CONTINUE THE CONVERSATION
Source texts
- The Art of Being Rational Charlie Munger