Warren Buffett loves teaching this '20-slot' rule at business schools—and it's not just about getting rich

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Warren Buffett loves teaching this '20-slot' rule at business schools—and it's not just about getting rich. (via CNBCMakeIt)

According to Munger, Buffett starts by telling MBA students, "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 punch through the card, you couldn't make any more investments at all."

Under those rules, Buffett explains, "you'd really have to think carefully about what you did, and you'd be forced to load up on what you really think about. So you'd do much better." Munger expressed that this concept had always seemed like a no-brainer to him and Buffett. "To me, it's obvious that the winner has to bet very selectively," he told the students. "It's been obvious to me since very early in life. I don't know why it's not obvious to many other people."at the University of Florida, in which he told MBA students that they shouldn't just assume they're going to get 20 great ideas in their lifetime.

They can bet on 20 ideas, but only "three or five or seven" might make them rich, he said. "But what you can't do is get rich by trying one new idea every day."Buffett's 20-slot rule can be applied to all aspects of life, and not just money, because what it really drives at is the importance of focus. And the billionaire has hinted at this advice several times in the past.

 

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