Monday, January 1, 2024

Charlie Munger Quotes on Investing and Life

Charlie Munger would have turned 100 today. Sadly, he passed away in November. While that is sad news, the knowledge he shared with the world will live forever.

Charlie Munger was Warren Buffett’s business partner at Berkshire Hathaway. He was a successful lawyer, and investor, who was instrumental in helping Warren expand his investing horizon. Charlie is credited with encouraging Buffett to invest in high quality businesses, which compound over time. Before that, Buffett spent most his attention to statistically cheap stocks.

Charlie Munger is not studied as well as Warren Buffett, which is a shame. It’s a shame because Charlie Munger has shared a lot of insightful lessons on investing, human nature and human biases, which could help many aspiring investors.

There are two good books I have read about Charlie Munger. The first one is “Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger”, and the second is “Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition”.

Warren Buffett's partner at Berkshire Hathaway was a fountain of knowledge and wisdom

I have compiled 100 Charlie Munger quotes in celebration for his life:

1. The big money is not in the buying and the selling, but in the waiting.

2. Those who keep learning, will keep rising in life.

3. Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted independence. I desperately wanted it.

4. There isn’t a single formula. You need to know a lot about business and human nature and the numbers… It is unreasonable to expect that there is a magic system that will do it for you.

5. There is no better teacher than history in determining the future… There are answers worth billions of dollars in a history book.

6. 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?

7. We have three baskets for investing: yes, no, and too tough to understand.

8. There are three ways to go broke: 'liquor, ladies and leverage'

9. 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.”

10. 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.

11. Knowing what you don’t know is more useful than being brilliant

12. Live within your income and save so that you can invest. Learn what you need to learn

13. It’s 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

14. “Take one simple idea and take it seriously.”

15. In my whole life, I have known no wise people who didn’t read all the time – none, zero.

16. A great business at a fair price is superior to a fair business at a great price

17. If you can get really good at destroying your own wrong ideas, that is a great gift

18. 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

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

20. People calculate too much and think too little

21. Go to bed smarter than when you woke up

22. All I want to know is where I'm going to die so I'll never go there

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

24. We have three baskets: in, out, and too tough. … We have to have a special insight, or we’ll put it in the “too tough” basket.

25. Do the work on your desk. Do well with what you already have and more will come in.”

26. To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people

27. It's not supposed to be easy. Anyone who finds it easy is stupid

28. When you mix raisins and turds, you still get turds

29. You don’t have to be brilliant, only a little bit wiser than the other guy on average, for a long time

30. Acknowledging what you don’t know is the dawning of wisdom

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

32. Being something and doing something that no one had done before are two different things

33. If you keep learning all the time you have a huge advantage

34. A majority of life's errors are caused by forgetting what one is really trying to do

35. The best thing a human can do is to help another human being know more

36. The habit of committing far more time to learning and thinking than to doing is no accident.

37. One of the greatest ways to avoid trouble is to keep it simple...the system often goes out of control

38. Opportunity comes to the prepared mind

39. I paid no attention to the territorial boundaries of academic disciplines and I just grabbed all the big ideas that I could

40. I try to get rid of people who confidently answer questions about which they don't have any real knowledge

41. 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

42. Simplicity has a way of improving performance by enabling us to better understand what we are doing

43. You should avoid sloth and unreliability

44. envy, resentment, and self-pity are disastrous modes of thoughts. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse.

45. Those of us who have been fortunate have a duty to give back. Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference

46. We recognized early on that smart people do very dumb things, and we wanted to know why and who, so that we could avoid them

47. Live within your income and save so you can invest. Learn what you need to learn

48. 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

49. All intelligent investing is value investing, acquiring more than you are paying for

50. A lot of people with high IQs are terrible investors because they've got terrible temperaments

51. The liabilities are always 100 percent good. It's the assets you have to worry about

52. the most famous composer in the world but was utterly miserable most of the time, and of the reasons was because he always overspent his income. This was Mozart. If Mozart couldn't get by with this kind of asinine conduct, I don't think you should try

53. We're not interested in taking a substantial chance of taking a lot of very decent people back to 'Go' so we can have one more zero on our net worth.

54. Mimicking the herd invites regression to the mean

55. You must force yourself to consider opposing arguments. Especially when they challenge your best-loved ideas

56. We both (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.

57. Our game is to recognize a big idea when it comes along when one doesn't come along very often.

58. Ninety-nine percent of the troubles that threaten our civilization come from too optimistic, therefore we should have a system where the accounting is a way more conservative

59. We try to operate in a seamless web of deserved trust and be careful of whom we trust

60. Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won

61. Just because you like it does not mean that the world will necessarily give it to you.

62. I would argue that passion is more important than brainpower

63. Is there such a thing as a cheerful pessimist? That's what I am

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

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

66. You need patience, discipline, and agility to take losses and adversity without going crazy

67. No wise pilot, no matter how great his talent and experience, fails to use a checklist

68. There is no way you can live an adequate life without making mistakes

69. Invert, always invert: Turn a situation or problem upside down. Look at it backward

70. All I want to know is where I'm going to die, so I'll never go there

71. worldly wisdom" consists of a set of mental models framed as a latticework to help solve critical business problems

72. Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail

73. If you’re going to live a long time, you have to keep learning — what you formerly knew is never enough. So if you don’t learn to constantly revise your earlier conclusions, and get better ones, you are — I always use the same metaphor — you’re like a one-legged man in an ass-kicking contest.

74. A majority of life's errors are caused by forgetting what one is really trying to do

75. I met the towering intellectuals in books, not in classroom, which is natural. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control

76. Wall Street has too much wealth and political power

77. I've seen so much folly and stupidity on the part of our major philanthropic groups, including the world bank. I really have more confidence in building up the more capitalistic ventures like Costco

78. It's like the slaughter of the innocents. It makes the people who run Las Vegas seem like good people

79. Everywhere there is a large commission, there is a high probability of a rip-off

80. Some people are extraordinarily good at knowing the limits of their knowledge because they have to be

81. Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game wherein you have to learn to quit sometimes when holding a much-loved hand

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

83. Another thing, of course, is that life will have terrible blows in it, horrible blows, unfair blows. It doesn't matter. And some people recover and others don't

84. Confucious said that real knowledge is knowing the extent of one's ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome

85. Wisdom acquisition is a moral duty. It's not something you do just to advance in life...You are not going to get very far in life based on what you already know. You're going to advance in life by what you learn after you leave here

86. One solution fits all is not the way to go. All these cultures are different. The right culture for the Mayo Clinic is different from the right culture at a Hollywood movie studio. You can't run all these places with a cookie-cutter solution

87. There's a tendency to think that our present politicians are much worse than we had in the past. But we tend to forget how awful our politicians were in the past

88. Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it's time

89. You don't have to have the ability that quantum mechanics requires. You just have to know a few simple things and really know them

90. Don't drift into self-pity because it doesn't solve any problems

91. There is not more money to be made from law, but less time to enjoy it

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

93. The best armor of old age is a well-spent life perfecting it

94. I think that one should recognize the reality even when one doesn't like it; indeed, especially when one doesn't like it

95. "If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve"

96. The first rule of compounding: Never interrupt it unnecessarily

97. The first $100,000 is a b!tch

98.  There are huge advantages for an individual to get into a position where you make a few great investments and just sit on your ass: You are paying less to brokers. You are listening to less nonsense. And if it works, the governmental tax system gives you an extra 1, 2 or 3 percentage points per annum compounded

99. To get there a person must consistently underspend his income. Getting wealthy, is like rolling a snowball. It helps to start on top of a long hill start early and try to roll that snowball for a very long time. It helps to live a long life.

100. To a man with a hammer, everything looks like a nail

Thank you for reading! 

You can read more about Charlie Munger below:

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