Charlie Munger Quotes & Sayings

One of the first big bubbles, of course, was the huge and horrible South Sea Bubble in England. And the aftermath was interesting. Many of you probably don't remember what happened after the South Sea Bubble, which caused an enormous financial contraction, and a lot of pain. They banned publicly traded stock in England for decades. — Charlie Munger

A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business — Charlie Munger

Show me the incentive and I will show you the outcome — Charlie Munger

It's a rare business that doesn't have a way worse future than it has a past. — 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

People like the robber barons assumed that the doctrine of the survival of the fittest authenticated them as deserving power. You know, "I'm the richest. Therefore, I'm the best. God's in his heaven, etc." And that reaction of the robber barons was so irritating to people that it made it unfashionable to think of an economy as an ecosystem. But the truth is that it is a lot like an ecosystem. And you get many of the same results. — Charlie Munger

Black-Scholes works for short-term options, but if it's a long-term option and you think you know something [about the underlying asset], it's insane to use Black-Scholes. — Charlie Munger

I never allow myself to have an opinion on anything that I don't know the other side's argument better than they do. — Charlie Munger

Anyone with an engineering frame of mind will look at [accounting standards] and want to throw up. — Charlie Munger

When we were young, there weren't very many smart people in the investment world. You should have seen the people in the bank trust departments. Now, there are armies of smart people at private investment funds, etc . If there were a crisis now, there would be a lot more people with a lot of money ready to take advantage. — Charlie Munger

Most people are too fretful, they worry to much. Success means being very patient, but aggressive when it's time. — Charlie Munger

I think democracies are prone to inflation because politicians will naturally spend [excessively] - they have the power to print money and will use money to get votes. If you look at inflation under the Roman Empire, with absolute rulers, they had much greater inflation, so we don't set the record. It happens over the long-term under any form of government. — Charlie Munger

I believe Costco does more for civilization than the Rockefeller Foundation. I think it's a better place. You get a bunch of very intelligent people sitting around trying to do good, I immediately get kind of suspicious and squirm in my seat. — Charlie Munger

I think there's an awful lot of twaddle and bullshit on EVA. The whole game is to turn retained earnings into more earnings. EVA has ideas about cost of capital that make no sense. Of course, if a company generates high returns on capital and can maintain this over time, it will do well. But the mental system as a whole does not work. — Charlie Munger

A lot of people think if you just had more process and more compliance
checks and doublechecks and so forth
you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust. — Charlie Munger

Everybody engaged in complex work needs colleagues. Just the discipline of having to put your thoughts in order with somebody else is a very useful thing. — Charlie Munger

Good businesses can survive a little bad management. — Charlie Munger

Determine value apart from price; progress apart from activity; wealth apart from size. — Charlie Munger

Wall Street has too much wealth and political power. — Charlie Munger

The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form "efficient market" theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience. — Charlie Munger

Spend each day trying to be a little wiser than you were when you woke up. — Charlie Munger

Mutual funds charge 2% per year and then brokers switch people between funds, costing another 3-4 percentage points. The poor guy in the general public is getting a terrible product from the professionals. I think it's disgusting. It's much better to be part of a system that delivers value to the people who buy the product. But if it makes money, we tend to do it in this country. — Charlie Munger

An idea or a fact is not worth more merely because it's more available to you. — Charlie Munger

It's a good habit to trumpet your failures and be quiet about your successes. — Charlie Munger

And maybe the cereal makers by and large have learned to be less crazy about fighting for market share-because if you get even one person who's hell-bent on gaining market share ... For example, if I were Kellogg and I decided that I had to have 60% of the market, I think I could take most of the profit out of cereals. I'd ruin Kellogg in the process. But I think I could do it. — Charlie Munger

People calculate too much and think too little. — Charlie Munger

I mean people are really crazy about minor decrements down. And then, if you act on them, then you get into reciprocation tendency, because you don't just reciprocate affection, you reciprocate animosity, and the whole thing can escalate. And so huge insanities can come from just subconsciously over-weighing the importance of what you're losing or almost getting and not getting. — Charlie Munger

You can hire your advisor and then just apply a windage factor, like I used to do when I was a rifle shooter. I'd just adjust for so many miles an hour wind. Or you can learn the basic elements of your advisor's trade. You don't have to learn very much, by the way, because if you learn just a little then you can make him explain why he's right. — Charlie Munger

It would be one of the most irritating experiences in the world to do a lot of work to uncover a fraud and then at have it go from X to 3X and at h the crooks happily partying with your money while you're meeting margin calls. Why would you want to go within hailing distance of that? — Charlie Munger

There's danger in just shoveling out money to people who say, 'My life is a little harder than it used to be.' At a certain place you've got to say to the people, 'Suck it in and cope, buddy. Suck it in and cope.' — Charlie Munger

Over the very long term, history shows that the chances of any business surviving in a manner agreeable to a company's owners are slim at best. — Charlie Munger

I regard it as very unfair, but capitalism without failure is like religion without hell. — Charlie Munger

As I continued through Cicero's pages, I found much more material celebrating my way of life ... — Charlie Munger

The tradition of always looking for the answer in the most fundamental way available - that is a great tradition, and it saves a lot of time in this world. — Charlie Munger

It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities. — Charlie Munger

Acknowledging what you don't know is the dawning of wisdom. — Charlie Munger

There are exceptional loyalties and there are old fashion ideas about how you get loyalties, and after all the auditorium is full of people who have co-owned shares with the managers for many decades, and in many cases they co-invested when everyone was young and obscure. Also when you come back to a place like that you are celebrating old loyalties, and of course the basic idea behind so much of Berkshire is the old fashioned idea that the best way to get loyalty is to deserve loyalty. — Charlie Munger

Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group then to hell with them. — Charlie Munger

I've heard that one-half of the students at elite schools want to go into private equity or hedge funds. They want to keep up with their age cohorts at Goldman. This can't possibly end well in terms of meeting these expectations. — Charlie Munger

Litigation is notoriously time-consuming, inefficient, costly and unpredictable. — Charlie Munger

We're partial to putting out large amounts of money where we won't have to make another decision. — Charlie Munger

Missing out on some opportunity never bothers us. What's wrong with someone getting a little richer than you? It's crazy to worry about this ... — Charlie Munger

The safest way to try to get what you want is to try to deserve what you want. It's such a simple idea. It's the golden rule. You want to deliver to the world what you would buy if you were on the other end. — Charlie Munger

Economic systems work better when there's an extreme reliability ethos. And the traditional way to get a reliability ethos, at least in past generations in America, was through religion. The religions instilled guilt ... And this guilt, derived from religion, has been a huge driver of a reliability ethos, which has been very helpful to economic outcomes for man. — Charlie Munger

[In picking stocks] You really have to know a lot about business. You have to know a lot about competitive advantage. You have to know a lot about the maintainability of competitive advantage. You have to have a mind that quantifies things in terms of value. And you have to be able to compare those values with other values available in the stock market. — Charlie Munger

Most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact. They become people of whom Philip Wylie observed: "You couldn't 't squeeze a dime between what they already know and what they will never learn." — Charlie Munger

Never, ever, think about something else when you should be thinking about the power of incentives. — Charlie Munger

If we've been a little more successful than other people, is because we always realised that the school of life was always open, and if you were not learning more you are falling behind. — Charlie Munger

And your brain doesn't naturally know how to think the way Zeckhauser knows how to play bridge. "for example," people do not react symmetrically to loss and gain. Well maybe a great bridge player like Zeckhauser does, but that's a trained response. Ordinary people, subconsciously affected by their inborn tendencies ... — Charlie Munger

Financial institutions make us nervous when they're trying to do well. — Charlie Munger

One metric catches people. We prefer businesses that drown in cash. An example of a different business is construction equipment. You work hard all year and there is your profit sitting in the yard. We avoid businesses like that. We prefer those that can write us a check at the end of the year. — Charlie Munger

It's human nature to extrapolate the recent past into the future, but it's terrible that managements go along with this. — Charlie Munger

If you have competence, you pretty much know its boundaries already. To ask the question (of whether you are past the boundary) is to answer it. — Charlie Munger

A great business at a fair price is superior to a fair business at a great price. — Charlie Munger

You need a different checklist and different mental models for different companies. I can never make it easy by saying, 'Here are three things.' You have to derive it yourself to ingrain it in your head for the rest of your life. — Charlie Munger

Here's one truth that perhaps your typical investment counselor would disagree with: if you're comfortably rich and someone else is getting richer faster than you by, for example, investing in risky stocks, so what?! Someone will always be getting richer faster than you. This is not a tragedy. — Charlie Munger

What matters most: passion or competence that was born in? Berkshireis full of people who have a peculiar passion for their own business. I would argue passion is more important than brain power. — Charlie Munger

There has never been a master plan. Anyone who wanted to do it, we fired because it takes on a life of its own and doesn't cover new reality. We want people taking into account new information. — Charlie Munger

We only want what success we can get despite encouraging others to share our general views about reality. — Charlie Munger

The liabilities are always 100 percent good. It's the assets you have to worry about. — Charlie Munger

Avoid evil, particularly if they're attractive members of the opposite sex. — Charlie Munger

The game of life is the game of everlasting learning. At least it is if you want to win. — Charlie Munger

Our approach has worked for us. Look at the fun we, our managers, and our shareholders are having. More people should copy us. It's not difficult, but it looks difficult because it's unconventional - it isn't the way things are normally done. We have low overhead, don't have quarterly goals and budgets or a standard personnel system, and our investing is much more concentrated than average. It's simple and common sense. — Charlie Munger

For years I have read the morning paper and harrumphed. There's a lot to harrumph about now. — Charlie Munger

I find it quite useful to think of a free-market economy - or partly free market economy - as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well. — Charlie Munger

It would be nice if this [finding really cheap stocks] happened all the time. Unfortunately, it doesn't. — Charlie Munger

We don't claim to have perfect morals, but at least we have a huge area of things that, while legal, are beneath us. We won't do them. Currently, there's a culture in Americathat says that anything that won't send you to prison is OK. — Charlie Munger

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving 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

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

Even in pure mathematics they can't remove all paradox, and the rest of us should also recognize we are going to have to endure a lot of paradox, like it or not. — Charlie Munger

No CEO examining books today understands what the hell is going on. — Charlie Munger

Like the stocks of both Berkshire and Wesco to trade within hailing distance of what we think of as intrinsic value. When it runs up, we try to talk it down. That's not at all common in Corporate America, but that's the way we act. — Charlie Munger

When someone takes their existing business and tries to transform it into something else - they fail. In technology that is often the case. Look at Kodak: it was the dominant imaging company in the world. They did fabulously during the great depression, but then wiped out the shareholders because of technological change. — Charlie Munger

The total amount paid out in dividends is roughly equal to the amount lost in trading and investment advice, so net dividends to shareholders are zero. This is a very peculiar way to run a republic. — Charlie Munger

I'm used to people with very high IQs knowing how to recognize reality, but there's a huge human tendency where it may be instructive to think that whatever you're doing to succeed is all right. — Charlie Munger

Economists get very uncomfortable when you talk about virtue and vice. It doesn't lend itself to a lot of columns with numbers. But I would argue that there are big virtue effects in economics. I would say that the spreading of double-entry bookkeeping by the Monk, Fra Luce de Pacioli, was a big virtue effect in economics. It made business more controllable, and it made it more honest. — Charlie Munger

Every business tries to turn this year's success into next year's greater success. It's hard for me to see why Microsoft is sinful to do this. If it's a sin, then I hope all of Berkshire Hathaway's subsidiaries are sinners. Someone whose salary is paid by U.S.taxpayers is happy to dramatically weaken the one place where we're winning big?! — Charlie Munger

You don't want to be like the motion picture exec who had so many people at his funeral, but they were there just make sure he was dead. Or how about the guy who, at his funeral, the priest said, "Won't anyone stand up and say anything nice for the deceased?" and finally someone said, "Well, his brother was worse." — Charlie Munger

[GEICO] got to thinking that, because they were making a lot of money, they knew everything. And they suffered huge losses. All they had to do was to cut out all the folly and go back to the perfectly wonderful business that was lying there. — 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

Economics is in many respects the queen of the soft sciences. It's expected to be better than the rest. It's my view that economics is better at the multi-disciplinary stuff than the rest of the soft science. And it's also my view that it's still lousy ... — Charlie Munger

It never ceases to amaze me to see how much territory can be grasped if one merely masters and consistently uses all the obvious and easily learned principles. — 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." Investment managers are in the position of that fishing tackle salesman. — Charlie Munger

No wise pilot, no matter how great his talent and experience, fails to use his checklist. — Charlie Munger

We have found in a long life that one competitor is frequently enough to ruin a business. — Charlie Munger

If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet. — Charlie Munger

You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long, time. — Charlie Munger

It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a mispriced bet - that they can occasionally find one. And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don't. It's just that simple. — Charlie Munger

I think you'll make more money in the end with good ethics than bad. Even though there are some people who do very well, like Marc Rich-who plainly has never had any decent ethics, or seldom anyway. But in the end, Warren Buffett has done better than Marc Rich-in money-not just in reputation. — Charlie Munger

In my life there are not that many questions I can't properly deal with using my $40 adding machine and dog-eared compound interest table. — Charlie Munger

If you get into the mental habit of relating what you're reading to the basic structure of the underlying ideas being demonstrated, you gradually accumulate some wisdom. — Charlie Munger

I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I've seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not. — Charlie Munger

In my whole life, I have known no wise people who didn't read all the time - none ... ZERO. — Charlie Munger

The theory of modern education is that you need a general education before you specialize. And I think to some extent, before you're going to be a great stock picker, you need some general education. — Charlie Munger

I don't spend much time regretting the past, once I've taken my lesson from it. I don't dwell on it. — Charlie Munger

There is bound to be a regression toward the mean. — Charlie Munger

It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling to parlay their existing advantage into dominance on the Internet. But it is way less sure [that this will occur] than the certainty 20 years ago that the basic business would grow steadily, so there's more downside risk. The perfectly fabulous economics of this business could become grievously impaired. — Charlie Munger

We're guessing at our future opportunity cost. Warrenis guessing that he'll have the opportunity to put capital out at high rates of return, so he's not willing to put it out at less than 10% now. But if we knew interest rates would stay at 1%, we'd change. Our hurdles reflect our estimate of future opportunity costs. — Charlie Munger

When it gets into these spikes, with shortages and uproar and so forth, people go bananas, but that's capitalism. — Charlie Munger

There are a lot of things in life way more important than money. All that said, some people do get confused. I play golf with a man who says, " What good is health? You can't buy money with it." — Charlie Munger