Leadership

Why billionaire Charlie Munger says 'it's important to review your past stupidities'

While Warren Buffett’s business partner and right-hand man Charlie Munger is worth an estimated $1.7 billion, he has also made his fair share of mistakes. But Munger argues that failing is a sign that you’re doing something right.

When a shareholder asked the Berkshire Hathaway vice chairman about how to recover from a big missed opportunity during an annual meeting of the Wesco Financial Corporation, Munger quoted the late Nobel Prize-winning poet Rudyard Kipling. “You know what Kipling said? Treat those two impostors just the same — success and failure,” Munger said, paraphrasing a line from the poem “If.”

“Of course, there's going to be some failure in making the correct decisions. Nobody bats a thousand,” Munger said. “I think it's important to review your past stupidities so you are less likely to repeat them, but I'm not gnashing my teeth over it or suffering or enduring it.”

“I think the tragedy in life is to be so timid that you don't play hard enough so you have some reverses,” he added.

Munger has said that “the most extreme mistakes in Berkshire’s history have been mistakes of omission,” according to “Poor Charlie’s Almanack,” author Peter Kaufman’s collection of Munger's speeches and talks. “These opportunity costs don’t show up on financial statements but have cost us many billions."

In May, for example, Munger said that he regretted that Berkshire Hathaway had not bought more Apple stock. Though the company had $43 billion worth of shares at the time, he told CNBC's "Squawk Box," that wasn't enough: “I wish we owned more of it. I think we've been a little too restrained.”

Although Munger considers some of these missed opportunities “huge mistakes,” he still believes the best reaction is to learn from them and move forward. As the exec once advised college graduates, "life is hard enough to swallow without squeezing in the bitter rind of resentment." Choosing to let life knock and keep you down "will guarantee that, in due course, you will be permanently mired in misery."

Munger is not alone in believing that mistakes can ultimately help you achieve your goals. Here is how billionaires Bill Gates, Mark Cuban and Richard Branson embrace failure to boost their success.

Like this story? Subscribe to CNBC Make It on YouTube!

Don't miss: Kylie Jenner, 20, may soon be the world's youngest self-made billionaire