Munger Quotes & Sayings

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

People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts. — Charlie Munger

Your life must focus on the maximization of objectivity. — 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

Harvard and Yale concentrated with venture capitalists that got the best calls and brainpower. Very few firms made most of the money, and they made it in just a few periods. Everyone else returned between mediocre and lousy. When returns happened, envy rippled through institutional money management. The amount invested in venture capital went up 10 times post-1999. That later money was lost very quickly. It will happen again. I don't know anyone who successfully resists this stuff. It becomes a new orthodoxy. — Charlie Munger

The best thing a human being can do is to help another human being know more. — Charlie Munger

Most people will see declining returns [due to inflation]. One of the great defenses if you're worried about inflation is not to have a lot of silly needs in your life - you don't need a lot of material goods. — Charlie Munger

In investment management today, everybody wants not only to win, but to have a yearly outcome path that never diverges very much from a standard path except on the upside. Well, that is a very artificial, crazy construct. That's the equivalent in investment management to the custom of binding the feet of Chinese women — Charlie Munger

I think liberal art faculties at major universities have views that are not very sound, at least on public policy issues - they may know a lot of French however. — Charlie Munger

At most corporations if you make an acquisition and it turns out to be a disaster, all the paperwork and presentations that caused the dumb acquisition to be made are quickly forgotten. You've got denial, you've got everything in the world. You've got Pavlovian association tendency. Nobody even wants to even be associated with the damned thing or even mention it. At Johnson & Johnson, they make everybody revisit their old acquisitions and wade through the presentations. That is a very smart thing to do. And by the way, I do the same thing routinely. — Charlie Munger

'Crowd folly', the tendency of humans, under some circumstances, to resemble lemmings, explains much foolish thinking of brilliant men and much foolish behavior - like investment management practices of many foundations represented here today. It is sad that today each institutional investor apparently fears most of all that its investment practices will be different from practices of the rest of the crowd. — Charlie Munger

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

Opportunity comes to the prepared mind. — Charlie Munger

Hard work, honesty, if you keep at it, will get you almost anything. — Charlie Munger

Even bright people are going to have limited, really valuable insights in a very competitive world when they're fighting against other very bright, hardworking people. And it makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. — 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

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

A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc. — Charlie Munger

When you borrow a man's car, always return it with a tank of gas. — Charlie Munger

Life is given for wisdom, and yet we are not wise; for goodness, and we are not good; for overcoming evil, and evil remains; for patience and sympathy and love, and yet we are fretful and hard and weak and selfish. We are keyed not to attainment, but to the struggle toward it. — Thornton T. Munger

I think that one should recognize reality even when one doesn't like it; indeed, especially when one doesn't like it. — Charlie Munger

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

In business we often find that the winning system goes almost ridiculously far in maximizing and or minimizing one or a few variables - like the discount warehouses of Costco. — Charlie Munger

Part of [having uncommon sense] is being able to tune out folly, as opposed to recognizing wisdom. If you bat away many things, you don't clutter yourself. — Charlie Munger

Ben Franklin and Samuel Johnson, he credits their wisdom for his success. "They were both utterly brilliant men. And powerful communicators. Both have helped me all the way through life. Their lessons are easy to assimilate." — Charlie Munger

When you locate a bargain, you must ask, 'Why me, God? Why am I the only one who could find this bargain?' — Charlie Munger

Trying to prioritize among things we're unlikely to do is pretty fruitless. — Charlie Munger

Knowledge and personality make doubt possible, but knowledge is also the cure of doubt; and when we get a full and adequate sense of personality we are lifted into a region where doubt is almost impossible, for no man can know himself as he is, and all fullness of his nature, without also knowing God. — Thornton T. Munger

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

Those who will not face improvements because they are changes, will face changes that are not improvements. — Charlie Munger

The cash register did more for human morality than the Congregational Church. It was a really powerful phenomenon to make an economic system work better, just as, in reverse, a system that can be easily defrauded ruins a civilization. A system that's very hard to defraud, like a cash register, helped the economic performance of a civilization by reducing vice, but very few people within economics talk about it in those terms. — Charlie Munger

If you rise in life, you have to behave in a certain way. You can go to a strip club if you're a beer-swilling sand shoveler, but if you're the Bishop of Boston, you shouldn't go. — Charlie Munger

We have a history when things are really horrible of wading in when no one else will. — Charlie Munger

I have what I call an iron prescription that helps me keep sane when I naturally drift toward preferring one ideology over another and that is: I say that I'm not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people who support it. I think only when I've reached that state am I qualified to speak. This business of not drifting into extreme ideology is a very, very important thing in life — Charlie Munger

I get flack for saying [when I visit a college and give a speech], "This is a nice college, but the really great educator is McDonald's." They hate me for saying this and think I'm a slimy creature. But McDonald's hires people with bad work habits, trains them, and teaches them to come to work on time and have good work habits. I think a lot of what goes on there is better than at Harvard. — Charlie Munger

Buffett and Munger joke that envy is the only one of the seven deadly sins that isn't any fun. "Envy is crazy," remarks Munger. "It's 100 percent destructive. . . . If you get those things out of your life early, life works a lot better. — Guy Spier

Cicero's words also increased my personal satisfaction by supporting my long-standing rejection of a conventional point of view. — Charlie Munger

I don't want to understand Facebook. — Charlie Munger

The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does. For example, when we were in the textile business, which is a terrible commodity business, we were making low-end textiles-which are a real commodity product. And one day, the people came to Warren and said, "They've invented a new loom that we think will do twice as much work as our old ones." — Charlie Munger

[With] closet indexing ... you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker. — 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

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

If the same family were always on the bottom, then you'd have big resentments. But if DuPonts go down and Pampered Chef up, [that's good]. That much churn makes people think the system is fairer. Buffett: We don't like churn now, but we liked it more 30-40 years ago. — Charlie Munger

Of course I'm troubled by huge consumer debt levels - we've pushed consumer credit very hard in the US. Eventually, if it keeps growing, it will stop growing. As Herb Stein said, "If something cannot go on forever, it will stop." When it stops, it may be unpleasant. Other than Herb Stein's quote, I have no comment. But the things that trouble you are troubling me. — Charlie Munger

Great investing requires a lot of delayed gratification. — Charlie Munger

What are the secret of success?
-one word answer :"rational — Charles T. Munger

I think the main figure that matters to all of us, including people in the media, is: How does GDP per capita grow? And those figures have been very good. There is a huge flux both up and down, so it isn't like we're all static in status. What's important is that pie grows. — Charlie Munger

I don't think vengeance is much good. — 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

I think the notion that liquidity of tradable common stock is a great contributor to capitalism is mostly twaddle. The liquidity gives us these crazy booms, so it has as many problems as virtues. — Charlie Munger

A lot of opportunities in life tend to last a short while, due to some temporary inefficiency ... For each of us, really good investment opportunities aren't going to come along too often and won't last too long, so you've got to be ready to act and have a prepared mind. — Charlie Munger

Let me know what your problem is, and I will try to make it more difficult for you. — Charlie Munger

There is the sheer amount of Franklin's wisdom. And the talent. Franklin played four instruments. He was the nation's leading scientist and inventor, plus a leading author, statesman, and philanthropist. There has never been anyone like him. — Charlie Munger

Buffett's methodology was straightforward, and in that sense 'simple.' It was not simple in the sense of being easy to execute. Valuing companies such as Coca-Cola took a wisdom forged by years of experience; even then, there was a highly subjective element. A Berkshire stockholder once complained that there were no more franchises like Coca-Cola left. Munger tartly rebuked him. 'Why should it be easy to do something that, if done well two or three times, will make your family rich for life? — Roger Lowenstein

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

Recognize reality even when you don't like it-especially when you don't like it. — 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

If you want to understand science, you have to understand math. In business, if you're enumerate, you're going to be a klutz. The good thing about business is that you don't have to know any higher math ... — Charlie Munger

There are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that's still going to be lousy. The money still won't come to you. All of the advantages from great improvements are going to flow through to the customers. — Charlie Munger

A lot of people with high IQs are terrible investors because they've got terrible temperaments. And that is why we say that 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

Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sides show a large profit from the same trade. — Charlie Munger

If you're going to be an investor, you're going to make some investments where you don't have all the experience you need. But if you keep trying to get a little better over time, you'll start to make investments that are virtually certain to have a good outcome. The keys are discipline, hard work, and practice. It's like playing golf - you have to work on it. — Charlie Munger

If you buy something because it's undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That's hard. But if you buy a few great companies, then you can sit on your ass. That's a good thing. — Charlie Munger

Suppose you were a real estate investor with a 1/3 interest in the best apartment complex in town, the best mall, and the best office building. Would you feel like a poor, undiversified investor? No! But as soon as you get into stocks, people feel this way. Partly, people need to justify their fees. — 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

If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands. — Charlie Munger

Everything in nature is a puzzle until it finds its solution in man, who solves it in some way with God, and so completes the circle of creation. — Theodore T. 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

The big money is not in the buying and selling ... but in the waiting. — Charlie Munger

The quality of the medical care delivered, including the pharmaceutical industry, has improved a lot. I don't think it's crazy for a rich country like the USto spend 15% of GDP on healthcare, and if it rose to 16-17%, it's not a big worry. — Charlie Munger

And, partly, I had found that theory-structure was a superpower in helping one get what one wanted. As I had early discovered in school wherein I had excelled without labor, guided by theory, while many others, without mastery of theory failed despite monstrous effort. Better theory I thought had always worked for me and, if now available could make me acquire capital and independence faster and better assist everything I loved. — Charlie Munger

The iron rule of nature is: you get what you reward for.
If you want ants to come, you put sugar on the floor. — 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

Seeking Wisdom: From Darwin to Munger — Timothy Ferriss

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

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

Wrigley is a great business, but that doesn't solve the problem. Buying great businesses at advantageous prices is very tough. — Charlie Munger

Investing is where you find a few great companies and then sit on your ass. — Charlie Munger

You're not going to get very far in life based on what you already know. You're going to advance in life by what you're going to learn after you leave here. — Charlie Munger

You have to learn to be a follower before you become a leader. — Charlie Munger

There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested - there's never any cash. It reminds me of the guy who looks at all of his equipment and says, 'There's all of my profit.' We hate that kind of business. — Charlie Munger

Intense interest in any subject is indispensable if you're really going to excel in it. — Charlie Munger

Our success has come from the lack of oversight we've provided, and our success will continue to be from a lack of oversight. But if you're going to provide minimal oversight, you have to buy carefully. It's a different model from GE's. GE's works - it's just very different from ours. — Charlie Munger

A business model that relies on trickery is doomed to fail. — Charlie Munger

Berkshireis in the business of making easy predictions If a deal looks too hard, the partners simply shelve it. — Charlie Munger

The general culture of investment banking has deteriorated over the years. We did a $6 million deal years ago for Diversified Retailing and we were rigorously and intelligently screened. They bankers cared and wanted to protect their clients. The culture now is that anything that can be sold for a profit will be. 'Can you sell it?' is the moral test, and that's not an adequate test. — Charlie Munger

The normal expectancy of the average investor - for example, the pension funds of AT&T or IBM - is 6% for a long time. — Charlie Munger

I call myself the assistant cult leader. — 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

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

The model I like to sort of simplify the notion of what goes on in a market for common stocks is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet. That's what happens in the stock market. — Charlie Munger

I regard the amount of brainpower going into money management as a national scandal. When some idiot would get rich, they'd say, 'Well, old Charlie was out in the field playing the big brass tuba on the day it rained gold.' A lot of people have become rich lately who were playing the tuba on the day it rained gold. — Charlie Munger

How should the best parts of psychology and economics interrelate in an enlightened economist's mind? ... I think that these behavioral economics ... or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology. — 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

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

Proper accounting is like engineering. You need a margin of safety. Thank God we don't design bridges and airplanes the way we do accounting. — 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. Look for more value in terms of discounted future cash-flow than you are paying for. Move only when you have an advantage. — Charlie Munger

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

I did not succeed in life by intelligence. I succeeded because I have a long attention span. — Charlie Munger