No. of Recommendations: 15
Here are my favourite Charlie Munger quotations:
It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. Charlie Munger
The whole concept of dividing it up into 'value' and 'growth' strikes me as twaddle. It's convenient for a bunch of pension fund consultants to get fees prattling about and a way for one advisor to distinguish himself from another. But, to me, all intelligent investing is value investing. Charlie Munger
It’s generally quite smart to copy very successful investors. Charlie Munger
Some people seem to think there's no trouble just because it hasn't happened yet. If you jump out the window at the 42nd floor and you're still doing fine as you pass the 27th floor, that doesn't mean you don't have a serious problem. I would want to address the problem right now. Charlie Munger
All intelligent investing is value investing – to acquire more than you are paying for. Investing is where you find a few great companies and then sit on your ass. Charlie Munger
Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns – for example, See’s usually loses money in two quarters of each year – and some terrible businesses can have steady results. Charlie Munger
Virtually every investment expert’s public assessment is that he is above average, no matter what is the evidence to the contrary. Charlie Munger
Over the long term, it’s hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you’re not going to make much different than a six percent return – even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you’ll end up with one hell of a result. Charlie Munger
In my whole life, I have known no wise people who didn't read all the time – none, zero. You'd be amazed at how much Warren reads, at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out. Charlie Munger
Practically everybody overweighs the stuff that can be numbered, because it yields to the statistical techniques they’re taught in academia, and doesn’t mix in the hard-to-measure stuff that may be more important. That is a mistake I’ve tried all my life to avoid, and I have no regrets for having done that. Charlie Munger
We don’t care about quarterly earnings (though obviously we care about how the business is doing over time) and are unwilling to manipulate in any way to make some quarter look better. Charlie Munger
You must know the big ideas in the big disciplines, and use them routinely – all of them, not just a few. Most people are trained in one model, economics for example, and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems. Charlie Munger
Understanding how to be a good investor makes you a better business manager and vice versa. Charlie Munger
When we bought See's Candies, we didn't know the power of a good brand. Over time we just discovered that we could raise prices 10% a year and no one cared. Learning that changed Berkshire. It was really important. Charlie Munger
I constantly see people rise in life who are not the smartest – sometimes not even the most diligent. But they are learning machines; they go to bed every night a little wiser than when they got up. And, boy, does that habit help, particularly when you have a long run ahead of you. Charlie Munger
Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions. Charlie Munger
If you buy a business just because it's undervalued, than you have to worry about selling it when it reaches its intrinsic value. That's hard. But if you can buy a few great companies, then you can sit on your ass. That's a good thing. Charlie Munger
Extra care in thinking is not all good but also introduces extra error. But most good things have undesired 'side effects', and thinking is no exception. Charlie Munger
I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.” Charlie Munger
If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounce on them with vigor. Charlie Munger
We just throw some decisions into the ‘too hard’ file and go onto the others. Charlie Munger
A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past. Charlie Munger
The number one idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage. Charlie Munger
The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you. Charlie Munger
Another very simple effect I very seldom see discussed either by investment managers or anybody else is the effect of taxes. If you're going to buy something which compounds for 30 years at 15% per annum and you pay one 35% tax at the very end, the way that works out is that after taxes, you keep 13.3% per annum. In contrast, if you bought the same investment, but had to pay taxes every year of 35% out of the 15% that you earned, then your return would be 15% minus 35% of 15% or only 9.75% per year compounded. So the difference there is over 3.5%. And what 3.5% does to the numbers over long holding periods like 30 years is truly eye-opening. If you sit back for long, long stretches in great companies, you can get a huge edge from nothing but the way that income taxes work. Charlie Munger
Almost all good businesses engage in 'pain today, gain tomorrow' activities. Charlie Munger
I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart. Charlie Munger
People chronically misappraise the limits of their own knowledge; that’s one of the most basic parts of human nature. Knowing the edge of your circle of competence is one of the most difficult things for a human being to do. Knowing what you don’t know is much more useful in life and business than being brilliant. Charlie Munger
Above all, never fool yourself, and remember that you are the easiest person to fool. Charlie Munger
Having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success. Charlie Munger
If you don't allow for self-serving bias in the conduct of others, you are, again, a fool. Charlie Munger
It's kind of a snare and a delusion to outguess macroeconomic cycles ... very few people do it successfully and some of them do it by accident. When the game is that tough why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides? Charlie Munger
When any guy offers you a chance to earn lots of money without risk, don't listen to the rest of his sentence. Follow this, and you'll save yourself a lot of misery. Charlie Munger
I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them. Charlie Munger
Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won. Charlie Munger
