Warren Buffett’s ‘20 Slot’ Rule: How to Simplify Your Life and Maximize Your Results

James Clear
Feb 27, 2018 · 4 min read
Image for post
Image for post
Source

Charlie Munger settled into his seat in front of the crowd at the University of Southern California.

It was 1994 and Munger had spent the last 20 years working alongside Warren Buffett as the two men grew Berkshire Hathaway into a billion-dollar corporation.

Today, Munger was delivering a talk to the USC Business School entitled, “A Lesson on Elementary Worldly Wisdom.” (1)

About halfway through his presentation, hidden among many fantastic lessons, Munger discussed a strategy that Warren Buffett had used with great success throughout his career.

Here it is:

When Warren lectures at business schools, he says, “I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches — representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all.”

He says, “Under those rules, you’d really think carefully about what you did and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”

Again, this is a concept that seems perfectly obvious to me. And to Warren it seems perfectly obvious. But this is one of the very few business classes in the U.S. where anybody will be saying so. It just isn’t the conventional wisdom.

To me, it’s obvious that the winner has to bet very selectively. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.

The Underrated Importance of Selective Focus

The key point is this:

Your odds of success improve when you are forced to direct all of your energy and attention to fewer tasks.

If you want to master a skill — truly master it — you have to be selective with your time. You have to ruthlessly trim away good ideas to make room for great ones. You have to focus on a few essential tasks and ignore the distractions. You have to commit to working through 10 years of silence.

Simplify and Go All In

Rather than researching carefully and pouring themselves into a goal for a year or two, most people “dip their toes in the water” and chase a new diet, a new college major, a new exercise routine, a new side business idea, or a new career path for a few weeks or months before jumping onto the next new thing.

In my experience, so few people display the persistence to practice one thing for an extended period of time that you can actually become very good in many areas — maybe even world-class — with just one year of focused work. If you view your life as a 20-slot punchcard and each slot is a period of focused work for a year or two, then you can see how you can enjoy significant returns on your invested time simply by going all in on a few things.

My point here is that everyone is holding a “life punchcard” and, if we are considering how many things we can master in a lifetime, there aren’t many slots on that card. You only get so many punches during your time on this little planet. Unlike financial investments, your 20 “life slots” are going to get punched whether you like it or not. The time will pass either way.

Don’t waste your next slot. Think carefully, make a decision, and go all in. Don’t just kind of go for it. Go all in. Your final results are merely a reflection of your prior commitment.


James Clear writes at JamesClear.com, where he shares self-improvement tips based on proven scientific research. You can read his best articles or join his free newsletter to learn how to build habits that stick.

This article was originally published on JamesClear.com.


FOOTNOTES

  1. You can read Munger’s full talk here: “A Lesson on Elementary Worldly Wisdom.” Munger does the title of his talk justice and provides an incredibly useful foundation for building worldly wisdom.
  2. For further reading on the importance of commitment, see “If You Commit to Nothing, You’ll Be Distracted By Everything.”

Mission.org

A network of business & tech podcasts designed to…

Sign up for Mission Daily

By Mission.org

Mission Daily Newsletter Learn more

Create a free Medium account to get Mission Daily in your inbox.

James Clear

Written by

I’m the author of Atomic Habits: atomichabits.com. I write about habits, decision making, and continuous improvement.

Mission.org

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org

James Clear

Written by

I’m the author of Atomic Habits: atomichabits.com. I write about habits, decision making, and continuous improvement.

Mission.org

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store