Charlie Munger Quotes
372 Charlie Munger Quotes
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[In May 2006 on gold and silver.] We didn’t get where we are by owning non-interest-bearing commodities.
Charlie Munger
[In May 2006 on the future of newspapers.] It’s simplicity itself that its future will be way worse than its past.
Charlie Munger
[In May 2006 on what was a great business undergoing a negative permanent structural change.] We have a method of coping: we just put it in the ‘too hard’ basket. If something is too hard, we move on to something that’s not too hard. What could be more simple?
Charlie Munger
[In May 2006 on the future of the U.S. housing sector due to an excess of bank lending.] Some of the worst sins in manufactured-housing financing have gone over to the financing of stick-built homes. A lot of ridiculous credit is being extended in the U.S. housing sector. There was a horrible aftermath in manufactured housing and my guess is that we’re likely to see some thing similar…
Charlie Munger
[In May 2007 on Berkshire Hathaway.] I would argue that it started with a young man reading everything when he was 10 years old, becoming a learning machine. He started this long run early. Had he not been learning all this time, our record would be a mere shadow of what it is. And he’s actually improved since he passed the age at which most other people retire. Most people don’t even try this – it takes practice. So it’s been a long run, with extraordinarily concentrated power by a man who is a ferocious learner. Our system ought to be more copied than it is. The system of passing power from one old codger to another is not necessarily the right system at all.
Charlie Munger
[In May 2007 on the next chief investment officer for Berkshire.] It reminds me of the young guy who went up to Mozart and said, ‘I’d like to write symphonies.’ When Mozart said, ‘You’re too young,’ the young man replied, ‘But you were young when you started.’ Mozart pointed out, ‘Yes, but I wasn’t asking anyone else for advice on how to do it.’
Charlie Munger
[In May 2007.] There’s just too much money floating around.
Charlie Munger
[In May 2007.] If you get paid enormous bonuses based on profits that don’t exist, you’ll keep going… One person told me the accounting is better because positions are marked to market and said, ‘Don’t you want real-time information?’ I replied that if you can mark to market to report any level of profits you want, you’ll get terrible human behavior. The person replied, ‘You just don’t understand accounting.’
Charlie Munger
[In May 2007.] When people talk about sigmas in terms of disaster probabilities in markets, they’re crazy. They think probabilities in markets are Gaussian distributions, because it’s easy to compute and teach, but if you think Gaussian distributions apply to markets, then you must believe in the tooth fairy. It reminds me of when I asked a doctor at a medical school why he was still teaching an outdated procedure and he replied, ‘It’s easier to teach.’
Charlie Munger
[In May 2007.] If accountants lie down on the job, you see huge folly.
Charlie Munger
[In May 2007.] It’s in the national interest to give loans to the deserving poor. But the moment you give loans to the undeserving poor or the stretched rich, you run into trouble.
Charlie Munger
[In May 2007 on future returns in the stock market.] We think there will be a disruption not too many years ahead… I don’t think this is a time to swing for the fences.
Charlie Munger
[In May 2007 on commodities.] We’re going to be investors in businesses, not commodities, and that has to work better over time.
Charlie Munger
[In May 2007 on investing in casinos and the tricks they use to get people to gamble.] I would argue that casinos use clever psychological tricks, some of which are harmless, but a lot of grievous injury has been done. You won’t find a lot of gambling companies in Berkshire’s portfolio.
Charlie Munger
[In May 2007 on CEO’s and corporate excess.] If the trappings of power are greatly abused, I think you would find those companies would be disappointing to investors. The Roman emperor who was best remembered was Marcus Aurelius – he had no trappings of power, though he could have. The best way to combat [the excesses of leaders] is to have examples of exemplary behavior.
Charlie Munger
[In May 2007.] Margin of safety means getting more value than you’re paying. There are many ways to get value. It’s high school algebra; if you can’t do this, then don’t invest.
Charlie Munger
[In May 2007.] When you’re trying to determine intrinsic value and margin of safety, there’s no one easy method that can simply be mechanically applied by a computer that will make someone who pushes the buttons rich. You have to apply a lot of models. I don’t think you can become a great investor rapidly, no more than you can become a bone-tumor pathologist quickly.
Charlie Munger
[In May 2007 on the importance of management in a business.] Two things matter: if the quality of the business is good enough, it can carry bad management. The reverse isn’t true, though. It’s very rare for a great manager to take over a bad business, say the textile business, and make it great. You shouldn’t look for Warrens.
Charlie Munger
[In May 2007.] I don’t think there’s any substitute for thinking…
Charlie Munger
[In May 2007 on things like ‘Beta.’] We recognized early on that very smart people do very dumb things, and we wanted to know why and who, so we could avoid them.
Charlie Munger
[In May 2007 on some of the best ways for a 10 year old to earn money.] When I was young, I read The Richest Man in Babylon, which said to under-spend your income and invest the difference. Lo and behold, I did this and it worked. I got the idea to add a mental compound interest too, so I decided I would sell myself the best hour of the day to improving my own mind, and the world could buy the rest of the time. It sounds selfish, but it worked.
Charlie Munger
[In May 2007 on the ‘too difficult pile’. (Yes, no or too difficult.)] If you have a child dying of a terrible disease, you can’t just put it in the ‘too difficult’ box. There are a lot of things you can’t just put aside. But in investing, you can do this.
Charlie Munger
[In May 2007.] Experience is what happens when you’re looking for something else.
Charlie Munger
[In May 2007.] Mark Twain once said that picking up a cat by its tail yielded better learning than was available in any other fashion. But that’s a terrible way to learn things. Another comic thought man ought to learn vicariously: you shouldn’t have to try it to learn not to pee on an electrified fence.
Charlie Munger
[In May 2007.] Warren is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you.
Charlie Munger
[In May 2007.] Warren was lucky that he could still learn effectively and build his skills, even after he reached retirement age. Warren’s investing skills have markedly increased since he turned 65.
Charlie Munger
[In May 2007.] It’s hard to think of great success by committees in the investment world – or in physics. Many people miss this.
Charlie Munger
[In May 2007.] In a democracy, everyone takes turns. But if you really want a lot of wisdom, it’s better to concentrate decisions and process in one person.
Charlie Munger
[In May 2007.] All human beings work better when they get what psychologists call reinforcement. If you get constant rewards, even if you’re Warren Buffett, you’ll respond – and few things give more rewards than being a great investor. The money comes in, people look up to you and maybe some even envy you. And if you buy a whole lot of operating businesses and they win a lot of admiration, there’s a lot of reinforcement. Learn from this and find out how to prosper by reinforcing the people who are close to you
Charlie Munger
[In May 2007.] If you have enough sense to become a mental adult yourself, you can run rings around people smarter than you. Just pick up key ideas from all the disciplines, not just a few, and you’re immensely wiser than they are.
Charlie Munger
[In May 2007.] I got a lot of hard knocks when I was young. You could say I was forced into investing. The world will not ordinarily reward you for correcting other people in their area of expertise.
Charlie Munger
[In May 2007.] You could say that the dysfunction of others has been an advantage to me… You all want to get more than you deserve out of life by being rational – who doesn’t?
Charlie Munger
[In May 2007.] If you get Warren Buffett for 40 years and the b*stard finally dies on you, you don’t really have a right to complain.
Charlie Munger
[In May 2007.] Getting a good reputation in life can have remarkably favorable outcomes…
Charlie Munger
[In May 2007.] There’s a German saying: Man is too soon old and too late smart.
Charlie Munger
[In May 2007.] I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important.
Charlie Munger
[In May 2007.] I invert: I try to figure out what I don’t like and try to avoid it. It’s worked wonders for me.
Charlie Munger
[In May 2007 and early on wanting financial independence.] You don’t have to listen to me very long to know my views wouldn’t be welcome everywhere, so I decided I needed glorious independence, which required that I be a man of independent means.
Charlie Munger
[In May 2007.] For many people it’s good that they’re extra busy. They’re not good thinkers, so you get more out of them if they just keep doing what they’re doing. But if you’re a person of good cognition, you can learn a lot more if you put your mind to it. I don’t think there’s any substitute for just sitting and thinking.
Charlie Munger
[In May 2007.] In nature vs. nurture, nature is way more important than people give it credit for. That’s not to say people can’t improve, but… You need to recognize where nature has been kind and play a game where nature has given you the greatest talent. Man is the prisoner of his talents. I’m afraid that’s the hand we’re given to play in life. If you’re 5’ 2’, I don’t think you want to play basketball.
Charlie Munger
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