Charlie Munger Quotes
372 Charlie Munger Quotes
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[In May 2007.] How did Berkshire’s track record happen? If you were an observer, you’d see that Warren did most of it sitting on his ass and reading. If you want to be an outlier in achievement, just sit on your ass and read most of your life. But they fire you for that!
Charlie Munger
[In May 2007.] The best legal experience I ever got when I was very young. I asked my father why he did so much work for a big blowhard, an overreaching jerk, rather than for his best friend Grant McFaden. He said, ‘That man you call a blowhard is a walking bonanza of legal troubles, whereas Grant McFaden, who fixes problems promptly and is nice, hardly generates any legal work at all.’ My dad was teaching me a lesson and it worked.
Charlie Munger
[In May 2007.] Ask the question: How can you best get what you want? The answer: Deserve what you want! How can it be any other way?
Charlie Munger
[In May 2008.] A public authority was wondering if they should set up an option exchange market. Warren was alone in the opinion of opposing it… Turning financial markets in to gambling markets to enrich the croupiers doesn’t make sense.
Charlie Munger
[In May 2008.] We made our money by being long wonderful businesses, not by using a long-short strategy.
Charlie Munger
[In May 2008.] 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
[In May 2008.] I watched a man who sold a business to a known crook just for a higher price, but who you knew would ruin the business. It’s better to sell companies you created to someone who would be a good steward at a lower price.
Charlie Munger
[In May 2008.] Human nature always has incentives to rationalize and misbehave.
Charlie Munger
[In May 2008.] I think it is stupid to use up the hydrocarbons of the world so quickly. It’s stupid when there are so few, and limited, alternatives… If we are to have a prosperous civilization, we must use the sun.
Charlie Munger
[In May 2008.] The great horde of professionals are taking croupier profits out of the system, and most of them are pretending to be experts. If you don’t have prospects as a professional investor, do an index fund.
Charlie Munger
[In May 2008.] We have lower due diligence expenses than anyone in America. I know of a place that pays over $200 million to its accountants every year, and I know we are safer because we think like engineers – we want margins of reliability…
Charlie Munger
[In May 2008.] Warren doesn’t plan to leave early. He wants people to say at his funeral, ‘That is the oldest looking corpse I’ve ever seen.’
Charlie Munger
[In May 2008 on risk aversion and risk management in Berkshire.] We try to behave in a way so that no rational person will worry about our credit. We also try to behave in a way that if people don’t like our credit, we wouldn’t notice it for months. That double layering of protection against risk is like breathing. The alternative culture is that you call a man a Chief Risk Officer, but often he is just a man who makes you feel good while you do dumb things.
Charlie Munger
[In May 2008.] We can make a lot of decisions about a lot of things very fast and very easily, and we are unusual in that. The reason is that there is such an enormous amount of things we don’t look at. If you don’t do startups, you blot a lot of complexity out of your life. What we found out is that there are still a lot of things to look at and that are available, even if we filter out all those things.
Charlie Munger
[In May 2008.] Differing people learn in differing ways. I was put together to learn by reading. If someone is talking to me - it doesn’t work as well. With a book, I can learn what I want at a speed that works. It works for my nature.
Charlie Munger
[In May 2009.] If you wait until the economy is working properly to buy stocks, it's almost certainly too late. I have no feeling that just because there's more agony ahead for the economy you should wait to invest.
Charlie Munger
[In January 2010.] I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.
Charlie Munger
[In January 2010.] You say, how can smart people do such immensely dumb things? You don’t have to make this stuff up. Life will constantly surprise you with these ridiculous examples which teach important lessons.
Charlie Munger
[In January 2010.] The right way to make decisions in practical life is based on your opportunity cost.
Charlie Munger
[In January 2010.] Bad morals drive out the good.
Charlie Munger
[In January 2010.] Corporate finance is beneath contempt. Believing just by buying volatile stocks you make an extra 7 percentage points per annum, I mean those people still believe in the tooth fairy and yet it is taught to the children. On the other hand, the children don’t have to work very hard to get there so it’s a Mad Hatter’s tea party… You have these extremely dumb things being done by these smart people.
Charlie Munger
[In January 2010.] Our civilization is not going to work better if we have trillions of shares traded everyday. It’s the most asinine idea you could ever have to extrapolate so vigorously, and of course three or four billion shares is way too many. We have computer programs that are trading with other computer programs. We have many of the bright people who ought to be doing our engineering going to work at hedge funds and investment banks and algorithmic trading places and so on and so on.
Charlie Munger
[In January 2010.] In the old days, knowing that people went crazy gambling in securities, they had margin rules. You could only borrow a limited amount to speculate with. [Then] they brought in option exchanges, they brought in derivatives, they brought in the repo system - they created the most wonderful gambling game for anybody with blood really coursing in his veins who wants to get rich quick. This is one of the most attractive things that ever came down the pike. Of course, it runs the great exodus and creates a big mess in the end. How could it not?
Charlie Munger
[In January 2010.] Financial outcomes in securities markets are not plottable. It is not a law of God that outcomes in securities prices will fall over time on a curve and [follow] reality according to Gauss’s curve. Quite the contrary, the tails are way fatter.
Charlie Munger
[In January 2010.] We used to sit at Salomon when they made these presentations in the risk management crowd with all these figures, all the daily trading and the disaster, blah blah blah and so forth. We would just roll eyes at one another that grown men could be doing this. And yet we were only two when the whole culture was into this craziness. People were actually making decisions about how much risk to take, based on the application of correct math, based on an assumption that wasn’t true. And by the way, people gradually knew it wasn’t true. But by that time they had gotten so enculturated in the math and they were so good at it they couldn’t give it up.
Charlie Munger
[In January 2010.] If people are asinine [extremely stupid or foolish] enough, the customers will frequently bring reality to bear by voting with their feet.
Charlie Munger
[In January 2010.] Imagine the SEC, they had trouble diagnosing Bernie Madoff. You have to believe in the tooth fairy to believe he was having those figures by the methods he claimed to be using. You wouldn’t have gotten that one by
Howard Marks for two seconds. I mean you wouldn’t have finished your sentence before he noticed it couldn’t be true.
Charlie Munger
[In January 2010.] If we had a more Germanic culture, we wouldn’t have done as many dumb things as we’ve done. Not that our Germans aren’t acculturated into our culture in due course, but the old Germanic virtues of thrift and so on did not get into this kind of trouble.
Charlie Munger
[In January 2010.] The head of Freddie Mac who had a Ph.D. in economics came out and sat with us and said what should we do? I was young and optimistic, being 60 or whatever I was, or 75. I said: ‘It’s very simple. You are using so much credit and there is so much danger in what you are doing that you should make no more than 80 percent loans to people with good credit. You shouldn’t do anything else. You’ve got a bunch of experts who you have hired to lobby everybody and to bring you information as to what the legislators want and so on and so on. You should go back there and fire them all and just say, when they ask you what you were doing, ‘I’m sorry, but we are using so much leverage and the government’s credit and we simply can’t afford to do anything with this much leverage except to make loans to sound people on sound properties.’ Well that would have been very good advice if he had followed it. For one thing, he’d probably still be employed. But, of course, can you imagine the advice this man got from his friendly investment bankers, consultants, public relations types, lobbyists? He bought every dumb derivative and went into every dumb thing and of course the place went totally insolvent in due course.
Charlie Munger
[In January 2010.] Envy is the great driver. One investment bank can’t stand some other investment bank being bigger and better. Even though the guy is making $5 million a year, he can’t stand it. It’s envy. And envy was in the laws of Moses, you couldn’t even covet your neighbor’s donkey. I mean, those old Jews really knew it would cause a lot of trouble even among sheep herders.
Charlie Munger
[In January 2010.] I knew we’d have a hell of a mess eventually. I just didn’t know when it was coming. I think I know eventually we will have a hell of an inflation mess, but I can’t tell you when it is coming. It could be way in the future. But I think eventually you’ll have it.
Charlie Munger
[In May 2010 on inflation at the age of 86.] I am nearly dead and if I am optimistic about the future then you can handle a little bit of inflation.
Charlie Munger
[In May 2010.] I don't think this massive derivative trading, net, has a social advantage to our civilization.
Charlie Munger
[In May 2011 on investing in gold.] We don’t invest in paintings of soup cans either.
Charlie Munger
[In May 2011.] People attracted to finance today are better suited for snake charming.
Charlie Munger
[In May 2011.] Serving on a lot of boards is for the birds.
Charlie Munger
[In May 2011 on how he would like to be remembered after he passes away.] This is the oldest corpse I have ever seen. [and for] Fortune fairly won and wisely used.
Charlie Munger
[In May 2012 on salary compensation consultants.] Prostitution would be a step up for these people.
Charlie Munger
[In May 2012.] I don't invest in what I don't understand. And I don't understand Facebook.
Charlie Munger
[In May 2012.] Civilized people don’t buy gold. They invest in productive businesses.
Charlie Munger
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