Charlie Munger Quotes

We both (Charlie Munger and Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.

In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time -- none, zero. You'd be amazed at how much Warren reads--and at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out.

Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.

How to find a good spouse? -the best single way is to deserve a good spouse.

There is no better teacher than history in determining the future... There are answers worth billions of dollars in 30$ history book.

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.

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

Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.

What are the secret of success? -one word answer :"rational

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.

Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat.

Go to bed smarter than when you woke up.

Buffett found it 'extraordinary' that academics studied such things. They studied what was measurable, rather than what was meaningful. 'As a friend [Charlie Munger] said, to a man with a hammer, everything looks like a nail.

Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?

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

The best armour of old age is a well spent life perfecting it.

I never allow myself to hold an opinion on anything that I don't know the other side's argument better than they do

If something is too hard, we move on to something else. What could be simpler than that?

Mimicking the herd invites regression to the mean (merely average performance).

As long as I have a book in my hand, I don’t feel like I’m wasting time.” —Charlie Munger

The best armour of old age is a well spent life preceding it.

I think that, every time you see the word EBITDA, you should substitute the words "bullshit earnings.

In my whole life, I have known no wise people (over a board subject matter area) who didn't read all the time - none, zero. You'd be amazed how much Warren reads - and at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out.

It's the work on your desk. Do well with what you already have and more will come in.

Buffett and his partner, Charlie Munger, realized that as customers form routines around a product, they come to depend upon it and become less sensitive to price.

Warren Buffett is one of the best learning machines on this earth. The turtles which outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you.

Learning from the success and failure of others is the fastest way to get smarter and wiser without a lot of pain.

Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world

Warren talks about these discounted cash flows. I’ve never seen him do one.

We both insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think. So Warren and I do more reading and thinking and less doing than most people in business.

On the Ideal Business - Buffett: “Something that costs a penny, sells for a dollar and is habit forming.

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

Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it. And the brain can’t use what it can’t remember or when it’s blocked from recognizing because it’s heavily influenced by one or more psychological tendencies bearing strongly on it … the deep structure of the human mind requires that the way to full scope competency of virtually any kind is to learn it all to fluency—like it or not.

In the 54 years (Charlie Munger and I) have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

In Buffett’s view, if you cannot write it down, you have not thought it through.

If investors only had to study the past, the richest people would be librarians.

It is remarkable how much long-term advantage we have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

Buffett has said that if you cannot explain why you failed after you have made a mistake, the business was too complex for you.

The reason we avoid the word "synergy" is because people generally claim more synergistic benefits than will come. Yes, it exists, but there are so many false promises. Berkshire is full of synergies - we don't avoid synergies, just claims of synergies.

After you have enough for daily life, all that matters is your health and those you love.

Yet the industry asks for more money from investors every year. The idea is to find investments that give you money, not take it.

The right manager can have an absolutely huge impact. Find people with brains, energy and integrity,

I observe what works and what doesn’t and why.

People are trying to be smart—all I am trying to do is not to be idiotic, but it’s harder than most people think.

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?

If you want to get rich, you’ll need a few decent ideas where you really know what you’re doing. Then you’ve got to have the courage to stick with them and take the ups and downs. Not very complicated, and it’s very old-fashioned.

It's not the bad ideas that do you in, it’s the good ideas. And you may say, 'That can't be so. That's paradoxical. What he [Graham] meant was that if a thing is a bad idea, it’s hard to overdo. But where there is a good idea with a core of essential and important truth, you can’t ignore it. And then it's so easy to overdo it. So the good ideas are a wonderful way to suffer terribly if you overdo them

The safest way to get what you want is to deserve what you want.

All skills attenuate with disuse.

Ben Franklin’s advice: “Keep your eyes wide open before marriage and half shut thereafter.

The secret of happiness is to lower your expectations.

Munger likes to say that a year in which you do not change your mind on some big idea that is important to you is a wasted year.

people who cannot be alone with their own thoughts are terrible candidates to become successful investors.

Take a simple idea and take it seriously.

Value is what a business is worth. Price is what you have to pay to get it.

One of Buffett’s annual themes is the value of learning. He noted that life properly lived is learning, learning, learning all the time. He observed that being wrong is when he learns the most.

Charlie Munger gave me a great quotation on this subject, from Demosthenes: “Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true.” The belief that some fundamental limiter is no longer valid—and thus historic notions of fair value no longer matter—is invariably at the core of every bubble and consequent crash. In fiction, willing suspension of disbelief adds to our enjoyment.

You don't have to pee on an electric fence to learn not to do it

We’d buy great businesses with excellent management at a fair to bargain price and leave them alone.

It's amazing how intelligent it is just to spend some time sitting. A lot of people are way too active.

Munger claimed that it is because professors are so enamored by modern portfolio theory. For the man with a hammer, every problem looks like a nail.

Tom Murphy, CEO of Capital Cities/ABC and considered by Buffett to be the best business manager in the country, prays every day to be humble.

Buffett continued, saying that MPT has no utility. It is elaborate with lots of little Greek letters to make you feel you are in the big leagues. The

Munger noted that high profits on capital often rely on information inefficiencies.

Buffett pointed out that when the investment tide goes out, you will see who has been swimming naked.

Good ideas are rare—when the odds are greatly in your favor, bet (allocate) heavily.

Stay within a well-defined circle of competence.

Resist the craving for false precision, false certainties, etc.

Avoid unnecessary transactional taxes and frictional costs; never take action for its own sake.

Buffett gave two criteria for evaluating the performance of management: 1) How well do they run the business? and 2) How well do they treat the owners?

To finish first you have to first finish.

The right way to think is the way Zeckhauser plays bridge. It’s just that simple. —CHARLIE MUNGER, HARVARD LAW SCHOOL, 1995

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 they were when they got up and boy that help, particularly when you have a long run ahead of you.

18 NEVER PAY YOUR LAWYER BY THE HOUR Incentive Super-Response Tendency To control a rat infestation, French colonial rulers in Hanoi in the nineteenth century passed a law: for every dead rat handed in to the authorities, the catcher would receive a reward. Yes, many rats were destroyed, but many were also bred specially for this purpose. In 1947, when the Dead Sea scrolls were discovered, archaeologists set a finder’s fee for each new parchment. Instead of lots of extra scrolls being found, they were simply torn apart to increase the reward. Similarly, in China in the nineteenth century, an incentive was offered for finding dinosaur bones. Farmers located a few on their land, broke them into pieces and cashed in. Modern incentives are no better: company boards promise bonuses for achieved targets. And what happens? Managers invest more energy in trying to lower the targets than in growing the business. These are examples of the incentive super-response tendency. Credited to Charlie Munger, this titanic name describes a rather trivial observation: people respond to incentives by doing what is in their best interests. What is noteworthy is, first, how quickly and radically people’s behaviour changes when incentives come into play or are altered and, second, the fact that people respond to the incentives themselves and not the grander intentions behind them.

All the equity investors, in total, will surely bear a performance disadvantage per annum equal to the total croupiers’ costs they have jointly elected to bear. This is an inescapable fact of life. And it is also inescapable that exactly half of the investors will get a result below the median result after the croupiers’ take, which median result may well be somewhere between unexciting and lousy.

There are essentially five things public corporations can do with a dollar earned: reinvest in the business, acquire other businesses or assets, pay down debt, pay dividends, and/or buy in shares. Deciding

Buffett also noted that book value is seldom meaningful in analyzing the value of a business. Book value simply records what was put into the business. The key to calculating value is determining what will come out of the business.

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 they were when they got up and boy does that help, particularly when you have a long run ahead of you

Successful investors … must possess an interest in the process. It’s no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

I want to think about things where I have an advantage over others. I don't want to play a game where people have an advantage over me. I don't play in a game where other people are wise and I am stupid. I look for a game where I am wise, and they are stupid. And believe me, it works better. God bless our stupid competitors. They make us rich.

Three things ruin people: drugs, liquor, and leverage.

Always take the high road, it's far less crowded.

The moat represents a barrier to competition and could be low production costs, a trademark, or an advantage of scale or technology.

Every year Buffett explains that he wants Berkshire to have great long-term shareholders and that splitting the stock would only work against that.

So instead of copying, understand why they made the decisions they did. Then apply those insights to your own decisions and your own position.

good quality corporate bonds yielding 10% or better with great call protection.

In thinking about markets, it is important to remember that markets are there to serve you, not instruct you.

With imports exceeding exports, the world is doing the savings for us. China, with a much higher savings rate, will grow faster than us, and it probably needs to do so.

automatically compound. If you need cash, you can sell stock and pay capital gains tax at a lower rate than a dividend would be taxed.

Buffett’s formula for happiness is simple: “Do what I like with people I like.” He noted that he learned early in life that his favorite employer was himself. It avoids aggravation.

Buffett chimed in that most buybacks are done at any price, which makes no sense. Very rarely do you see metrics to govern the prices paid. Buybacks above intrinsic value destroy value.

Charlie Munger, the Easter Bunny, Superman, and a successful forecaster of an investment bank find themselves in their own corner of a large square-shaped trading floor. In the center of the room is a large stack of $100 bills. If each of them starts racing toward the center of the floor at the same time, who gets the money? The answer is Munger, because the other three don’t exist!

At the same time, he held firm that it doesn’t serve to make decisions in anger. He quoted Berkshire board member Tom Murphy: “You can always tell a man to go to hell tomorrow if it’s such a good idea.

occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. As

As a value investor, your ideal situation is to find a company increasing its intrinsic value. Ideally, the company would be one with a declining stock price, thus creating an even better bargain as time unfolds. No one has employed these principles more effectively than Buffett and Munger.

The best protection against inflation, according to Buffett, is your own earning power. If you constantly increase your earning power, you’ll be sure to get your share of the economic pie. The next best thing is to own wonderful businesses, especially those that have low capital requirements.

Everyone makes mistakes, but Munger has repeatedly said that staying away from the really big mistakes, like cocaine and heroin, is vital. As an analogy, Munger has pointed out that if you are floating down a river and there are really dangerous whirlpools that are killing many people on a daily basis, you do not go anywhere near that whirlpool. Munger also pointed to alcoholism as a major cause of failure in life. His point on substance abuse is simple: why play dice with something that can ruin your life forever? His timeless advice in every setting is to avoid situations with a massive downside and a small upside (negative optionality).

Nevertheless, their dishonesty upset Buffett. They were trying to chisel him out of 12.5 cents per share. So Buffett went the other way and started buying increasingly more shares of Berkshire until he took control. He then booted out the guy who had tried to chisel him out. In 1964, Warren Buffett took control of that small New England textile firm, and it became his new base for making investments.

Bridge requires a continual effort to assess probabilities in at best marginally knowable situations, and players need to make hundreds of decisions in a single session, often balancing expected gains and losses. But players must also continually make peace with good decisions that lead to bad outcomes, both one’s own decisions and those of a partner. Just this peacemaking skill is required if one is to invest wisely in an unknowable world. —RICHARD ZECKHAUSER, 2006

Ben Graham told a story forty years ago that illustrates why investment professionals behave as they do. An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence,” said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately, the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.” —WARREN BUFFETT, 1985