Somebody once asked Warren Buffet what he considered his best investment decision. His reply – “Recruiting Charlie.” The sixty-year-long friendship and later partnership between Charlie Munger and Warren Buffet turned a New England textile company into one of the world’s largest and most profitable companies.
Sadly, Charlie Munger passed away last week, and the investing world lost a legend.
Charlie Munger was an avid reader and a staunch advocate of continuous learning, simplification, humility, transparency, and integrity, values we hold dearly at CircleBlack.
Known for his quick wit and brevity, we thought a fitting tribute would be to share some of his wisdom, in his own words.
Here are forty of the best Charlie Munger quotes:
- “The big money is not in the buying and the selling, but in the waiting.”
- “There is no better teacher than history in determining the future… There are answers worth billions of dollars in a thirty dollar history book.”
- “It is better to buy a good business at a fair price than a fair business at a good price.”
- “Spend each day trying to be a little wiser than you were when you woke up.”
- “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.”
- “A lot of people think that if they have a hundred stocks, they’re investing more professionally than they are if they have four or five. I regard this as insanity.”
- “People calculate too much and think too little.”
- “The iron rule of nature is: You get what you reward for. If you want ants to come, you put sugar on the floor.”
- “If you totally divorce economics from psychology, you’ve gone a long way toward divorcing it from reality.”
- “A majority of life’s errors are caused by forgetting what one is really trying to do.”
- “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.”
- “Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail.”
- “In my whole life, I have known no wise people who didn’t read all the time — none, zero.”
- “Ninety-nine percent of the troubles that threaten our civilization come from too optimistic.”
- “No wise pilot, no matter how great his talent and experience, fails to use a checklist.”
- “Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”
- “Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat.”
- “If you don’t get elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest.”
- “Mimicking the herd invites regression to the mean.”
- “Every time you see the word EBITDA, you should substitute the words “bullshit earnings.”
- “Invert, always invert: Turn a situation or problem upside down. Look at it backward.”
- “If I had to name one factor that dominates human bad decisions, it would be what I call denial.”
- “I’m a very blocking and tackling kind of a thinker. I just try and avoid being stupid.”
- “A lot of smart people think they’re way smarter than they are, and therefore they do worse than dumb people. And it’s very common to be utterly brilliant and think you’re way the hell smarter than you are.”
- “Good investing requires a weird combination of patience and aggression. And not many people have it.”
- “I have made bad business decisions. You can’t live a successful life without doing some difficult things that go wrong. That’s just the nature of the game.”
- “I’m constantly making mistakes where I, in retrospect, realize that I should have decided differently. And I think that that is inevitable because it’s difficult to be a good investor.”
- “I didn’t get rich by buying stocks at a high price-earnings multiple in the midst of crazy speculative booms, and I’m not going to change.”
- “The whole trick in life is to get so that your own brain doesn’t mislead you.”
- “My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.”
- “Learn the basic elements of your advisor’s trade. You don’t have to learn very much, by the way, because if you learn just a little then you can make him explain why he’s right.”
- “Bull markets go to people’s heads. If you’re a duck on a pond, and it’s rising due to a downpour, you start going up in the world. But you think it’s you, not the pond.”
- “Those who will not face improvements because they are changes, will face changes that are not improvements”
- “We don’t give a damn about lumpy results. Everyone else is trying to please Wall Street. This is not a small advantage.”
- “Gigantic macroeconomic predictions are something I’ve never made any money on.”
- “Knowing what you don’t know is more useful than being brilliant.”
- “The liabilities are always 100 percent good. It’s the assets you have to worry about.”
- “You must force yourself to consider opposing arguments, especially when they challenge your best-loved ideas.”
- Most people are too fretful; they worry too much. Success means being very patient but aggressive when it’s time.
- “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.”
Disclosures
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.