Charlie Munger

  • Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6 percent on capital over 40 years, you’re not going to make much different than a 6-percent return – even if you originally buy it at a huge discount. Conversely, if a business earns 18 percent on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result.
  • ‘Ninety-nice per cent of the troubles that threaten our civilisation come from too optimistic accounting. And yet these damn accountants with their desire for mathematical purity want to devote exactly as much attention to accounting that is too pessimistic as they do to accounting that is too optimistic — which is crazy. Ninety-nine per cent of the problems come from being too optimistic. Therefore, we should have a system where the accounting is way more conservative.’
  • ‘It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.’
  • ‘I met the towering intellectuals in books, not in the classroom, which is natural. I can’t remember when I first read Ben Franklin. I had Thomas Jefferson over my bed at seven or eight. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control.’
  • ‘I think gold is a great thing to sew in to your garments if you’re a Jewish family in Vienna in 1939 but I think civilized people don’t buy gold.’
  • “If you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply.”
  • “You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose.”
  • “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?”
  • “Psychologically, I don’t mind holding a company I like and admire and I trust and know that it will be stronger than now after many years. And if the valuation gets a little silly, I just ignore it. So, I own assets that I would never buy at their current prices but I am quite comfortable holding them.”
  • “Tupperware… developed what I believe to be a corrupt system of psychological manipulation. But the practice… worked and had legs. Tupperware parties sold billions of dollars of merchandise for decades”
  • “I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge”
  • “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”
  • “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.”
  • “Mimicking the herd, invites regression to the mean.”
  • “If people weren’t wrong so often, we wouldn’t be so rich.”
  • “I think that one should recognize reality even when one doesn’t like it; indeed, especially when one doesn’t like it.”
  • “At Berkshire, 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.”
  • “Investors should remember that excitement and expenses are their enemies”
  • “We’re partial to putting out large amounts of money where we won’t make another decision. If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation if its intrinsic value. That’s hard. But, if you can buy a few, great companies, then you can sit on ass. That’s a good thing.”
  • “The big money is not in the buying and selling … but in the waiting”
  • “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”
  • “Our ideas are so simple that people keep asking us for mysteries when all we have are the most elementary ideas…There’s nothing remarkable about it. I don’t have any wonderful insights that other people don’t have. Just slightly more consistently than others, I’ve avoided idiocy…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.”
  • “I would not feel entitled to a view unless I could successfully argue against the best counterargument of the smartest opponent.”
  • “Show me the incentive and I will show you the outcome”
  • “[The economics profession] has been confident in various formulas, but economics is not physics. The same formula that works in one decade doesn’t work in the next. Economics is a difficult subject, and a lot of overconfidence has been removed from the economics profession over the last 20 years. They’ve been really surprised.”
  • 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 misplaced bet – that they can occasionally find one.
  • “You could once find value by just rooting around in the less traveled parts of the world – the pink sheets-you’d find a lot of opportunity”
  • “When I was young I scrambled around doing anything that would work. I could get tiny little obscure companies who were too cheap because they were on the pink sheets and all kinds of things. As I got more money, I decided I didn’t like all that scratching around. I was thinking about things I didn’t want to think about.”
  • “Our rule is pure opportunism. If there is a masterplan somewhere in Berkshire, they’re hiding it from me. Not only do we not have a master plan, we don’t have a master planner.”