Charlie Munger Quotes

Wrigley is a great business, but that doesn't solve the problem. Buying great businesses at advantageous prices is very tough. ~ Charlie Munger

Move only when you have an advantage. It's very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor. ~ Charlie Munger

I've been associated with Warren ( Buffett) so long, I thought I'd be just a footnote. ~ Charlie Munger

Whenever you think something or some person is ruining your life, it's you. A victimization mentality is so debilitating. ~ Charlie Munger

By regularly reading business newspaper and magazines I am exposed to an enormous amount of material at the micro level.. I find that what I see going on there pretty much informs me about what's happening at the macro level. ~ Charlie Munger

Cicero's words also increased my personal satisfaction by supporting my long-standing rejection of a conventional point of view. ~ Charlie Munger

Part of [having uncommon sense] is being able to tune out folly, as opposed to recognizing wisdom. If you bat away many things, you don't clutter yourself. ~ Charlie Munger

Wesco had a market capitalization of $40 million when we bought it [in the early 1970s]. It's $2 billion now. It's been a long slog to a perfectly respectable outcome - not as good as Berkshire Hathaway or Microsoft, but there's always someone in life who's done better. ~ Charlie Munger

The stupid and dishonest accountants allowed the genie of totally inappropriate accounting to descend on derivatives books. And once this has happened - people get status, etc. - it's impossible to get it back into the bottle. ~ Charlie Munger

Being rational is a moral Imperative. You should never be stupider than you need to be. ~ Charlie Munger

I won't bet $100 against house odds between now and the grave. ~ Charlie Munger

I have a name for people who went to the extreme efficient market theory-which is "bonkers". It was an intellectually consistent theory that enabled them to do pretty mathematics. So I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality. ~ Charlie Munger

If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor. ~ Charlie Munger

A few public hangings will really change behavior. One of our Presidents said if he could execute three people each year for no cause, it would make it a lot easier to govern. When someone said that's not enough, he said, "Oh yes it is, because I'd publish the list of people under consideration." ~ Charlie Munger

Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. ~ Charlie Munger

Just avoid things like racing trains to the crossing, doing cocaine, etc. Develop good mental habits. ~ Charlie Munger

The Internet bubble circa 2000 is the most extreme in modern capitalism. In the 1930s, we had the worst depression in 600 years. Today is almost as extreme in the opposite way. ~ Charlie Munger

If only I had the influence with my wife and children that I have in some other quarters! ~ Charlie Munger

Mimicking the herd invites regression to the mean. ~ Charlie Munger

I'd say 3/4 of advertising works on pure Pavlov. Think how association, pure association, works. Take Coca-Cola company (we're the biggest share-holder). They want to be associated with every wonderful image: heroics in the Olympics, wonderful music, you name it. They don't want to be associated with presidents' funerals and so-forth. ~ Charlie Munger

If people tell you what you really don't want to hear what's unpleasant-there's an almost automatic reaction of antipathy. You have to train yourself out of it. ~ Charlie Munger

Whoever makes you smarter a little earlier in life makes you better ~ Charlie Munger

Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return - even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result. ~ Charlie Munger

In the 1930s, there as a stretch here you could borrow more against the real estate than you could sell it for. I think that's hat's going on in today's private-equity world. ~ Charlie Munger

I think that, every time you saw the word EBITDA, you should substitute the word "bullshit" earnings. ~ Charlie Munger

I always like it when someone attractive to me agrees with me, so I have fond memories of Phil Fisher. The idea that it was hard to find good investments, so concentrate in a few, seems to me to be an obviously good idea. But 98% of the investment world doesn't think this way. ~ Charlie Munger

The general culture of investment banking has deteriorated over the years. We did a $6 million deal years ago for Diversified Retailing and we were rigorously and intelligently screened. They bankers cared and wanted to protect their clients. The culture now is that anything that can be sold for a profit will be. 'Can you sell it?' is the moral test, and that's not an adequate test. ~ Charlie Munger

[With] closet indexing ... you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker. ~ Charlie Munger

If you want to understand science, you have to understand math. In business, if you're enumerate, you're going to be a klutz. The good thing about business is that you don't have to know any higher math ... ~ Charlie Munger

I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person's brain because it understands the most fundamental models- ones that will do most work per unit. ~ Charlie Munger

It's very useful to have a good grasp of all the big ideas in hard and soft science. A, it gives perspective. B, it gives a way for you to organize and file away experience in your head, so to speak. ~ Charlie Munger

So you can get very remarkable investment results if you think more like a winning pari-mutuel player. Just think of it as a heavy odds against game full of craziness with an occasional mispriced something or other. And you're probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It's just that simple. ~ Charlie Munger

I feel that by getting rich in the way I did, I think my own example has hurt my own country. ~ Charlie Munger

Quoting Demosthenes, 'For what each man wishes, that he also believes to be true.' I would rather make money playing a piano in a whorehouse than arguing that no cost is incurred when employees are paid in stock options instead of cash. I am not kidding. ~ Charlie Munger

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. ~ Charlie Munger

The name of the game is continuing to learn. Even if you're very well trained and have some natural aptitude, you still need to keep learning. ~ Charlie Munger

A lot of people think if you just had more process and more compliance
checks and doublechecks and so forth
you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust. ~ Charlie Munger

To some extent, stocks are like Rembrandts. They sell based on what they've sold in the past. Bonds are much more rational. No-one thinks a bond's value will soar to the moon. ~ Charlie Munger

I think the main figure that matters to all of us, including people in the media, is: How does GDP per capita grow? And those figures have been very good. There is a huge flux both up and down, so it isn't like we're all static in status. What's important is that pie grows. ~ Charlie Munger

The big money is not in the buying and selling ... but in the waiting. ~ Charlie Munger

People like the robber barons assumed that the doctrine of the survival of the fittest authenticated them as deserving power. You know, "I'm the richest. Therefore, I'm the best. God's in his heaven, etc." And that reaction of the robber barons was so irritating to people that it made it unfashionable to think of an economy as an ecosystem. But the truth is that it is a lot like an ecosystem. And you get many of the same results. ~ Charlie Munger

This is an amazingly sound place. We are more disaster-resistant than most other places. We haven't pushed it as hard as other people would have pushed it. I don't want to go back to Go. I've been to Go. A lot of our shareholders have a majority of their net worth in Berkshire, and they don't want to go back to Go either. ~ Charlie Munger

The laws of thermodynamic s are such that if the water is getting warmer - and I believe it is - the energy of the weather is going to go up. ~ Charlie Munger

I think it would be a great improvement if there were no D&O insurance . The counter-argument is that no-one with any money would serve on a board. But I think net net you'd be better off. ~ Charlie Munger

Economists get very uncomfortable when you talk about virtue and vice. It doesn't lend itself to a lot of columns with numbers. But I would argue that there are big virtue effects in economics. I would say that the spreading of double-entry bookkeeping by the Monk, Fra Luce de Pacioli, was a big virtue effect in economics. It made business more controllable, and it made it more honest. ~ Charlie Munger

Don't confuse correlation and causation. Almost all great records eventually dwindle ... ~ Charlie Munger

There are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that's still going to be lousy. The money still won't come to you. All of the advantages from great improvements are going to flow through to the customers. ~ Charlie Munger

You don't have to have perfect wisdom to get very rich - just a bit better than average over a long period of time. ~ Charlie Munger

We look for a horse with one chance in two of winning and which pays you three to one. ~ Charlie Munger

I know just enough about thermodynamics to understand that if it takes too much fossil-fuel energy to create ethanol, that's a very stupid way to solve an energy problem. ~ Charlie Munger

In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting. ~ Charlie Munger

Trying to prioritize among things we're unlikely to do is pretty fruitless. ~ Charlie Munger

There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn't awash in cash - and I don't want to go back. ~ Charlie Munger

Capitalism is a pretty brutal place. ~ Charlie Munger

The hedge fund known as "Long Term Capital Management" collapsed last fall through overconfidence in its highly leveraged methods, despite I.Q.'s of its principals that must have averaged 160. Smart people aren't exempt from professional disasters from overconfidence. Often, they just run aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods. ~ Charlie Munger

We like our current shareholders and don't want to entice anyone to become one. It would help current shareholders to hear our CEOs [of the Berkshireoperating subsidiaries], but we promised them they could spend 100% of their time on their business. We place no impediments on them running their businesses. Many have expressed to me how happy they are that they don't have to spend 25% of time on activities they didn't like. ~ Charlie Munger

As I talk about strengths and weaknesses in academic economics, one interesting fact you are entitled to know is that I never took a course in economics. And with this striking lack of credentials, you may wonder why I have the chutzpah to be up here giving this talk. The answer is I have a black belt in chutzpah. I was born with it. ~ Charlie Munger

We have found in a long life that one competitor is frequently enough to ruin a business. ~ Charlie Munger

We have a history when things are really horrible of wading in when no one else will. ~ Charlie Munger

People calculate too much and think too little. ~ Charlie Munger

Avoid working directly under somebody you don't admire and don't want to be like. ~ Charlie Munger

We believe there should be a huge area between everything you should do and everything you can do without getting into legal trouble. I don't think you should come anywhere near that line. We don't deserve much credit for this. It helps us make more money. I'd like to believe that we'd behave well even if it didn't work. But more often, we've made extra money from doing the right thing. Ben Franklin said I'm not moral because of it's the right thing to do - but because it's the best policy. ~ Charlie Munger

The investment game is getting more and more competitive. ~ Charlie Munger

I believe that we are at or near the apex of a great civilization ... In 50-100 years, if we're a poor third to some countries in Asia, I wouldn't be surprised. If I had to bet, the part of the world that will do best will be Asia. ~ Charlie Munger

Everyone has the idea of owning good companies. The problem is that they have high prices in relations to assets and earnings, and that takes all of the fun out of the game. ~ Charlie Munger

Expect hogs to eat a lot more in the presence of a lot of hog wash. ~ Charlie Munger

The world is getting very much more competitive. ~ Charlie Munger

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. ~ Charlie Munger

I'm not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I've reached that state. ~ Charlie Munger

Over the long term, the eclipse rate of great civilizations being overtaken is 100%. So you know how it's going to end. (Laughter) I'm more optimistic about the staying power of what's good in this country. But just because you have a wonderful spouse doesn't mean you should treat her badly. You have the feeling that some of the old virtues [that made this country great] are lessening. But there's so much good and so much strength left that I would not expect this country to suddenly founder ... ~ Charlie Munger

For society, the Internet is wonderful, but for capitalists, it will be a net negative. It will increase efficiency, but lots of things increase efficiency without increasing profits. It is way more likely to make American businesses less profitable than more profitable. This is perfectly obvious, but very little understood. ~ Charlie Munger

Rationality is not just something you do so that you can make more money, it is a binding principle. Rationality is a really good idea. You must avoid the nonsense that is conventional in one's own time. It requires developing systems of thought that improve your batting average over time. ~ Charlie Munger

The perfect example of Darwinism is what technology has done to businesses. ~ Charlie Munger

My idea of a good place to shop is Costco - it has these heavily marbled fillet steaks. The idea of eating some wheat thing and washing it down with carrot juice has never appealed to me. ~ Charlie Munger

If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet. ~ Charlie Munger

The tax code gives you an enormous advantage if you can find some things you can just sit with. ~ Charlie Munger

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

When you borrow a man's car, always return it with a tank of gas. ~ Charlie Munger

I think democracies are prone to inflation because politicians will naturally spend [excessively] - they have the power to print money and will use money to get votes. If you look at inflation under the Roman Empire, with absolute rulers, they had much greater inflation, so we don't set the record. It happens over the long-term under any form of government. ~ Charlie Munger

I think there's an awful lot of twaddle and bullshit on EVA. The whole game is to turn retained earnings into more earnings. EVA has ideas about cost of capital that make no sense. Of course, if a company generates high returns on capital and can maintain this over time, it will do well. But the mental system as a whole does not work. ~ Charlie Munger

If we mix only a moderate minority share of turds with the raisins each year, probably no one will recognize what will ultimately become a very large collection of turds. ~ Charlie Munger

There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested - there's never any cash. It reminds me of the guy who looks at all of his equipment and says, 'There's all of my profit.' We hate that kind of business. ~ Charlie Munger

I don't invest in what I don't understand. And I don't want to understand Facebook. ~ Charlie Munger

The beauty of a financial institution is that there are a lot of ways to go to hell in a bucket. You can push credit too far, do a dumb acquisition, leverage yourself excessively - it's not just derivatives [that can bring about your downfall]. ~ Charlie Munger

The idea of caring is that someone is making money faster [than you are] is one of the deadly sins. 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? ~ Charlie Munger

The cash register did more for human morality than the Congregational Church. It was a really powerful phenomenon to make an economic system work better, just as, in reverse, a system that can be easily defrauded ruins a civilization. A system that's very hard to defraud, like a cash register, helped the economic performance of a civilization by reducing vice, but very few people within economics talk about it in those terms. ~ Charlie Munger

Although I am very interested in the subject of human misjudgment - and lord knows I've created a good bit of it - I don't think I've created my full statistical share, and I think that one of the reasons was I tried to do something about this terrible ignorance I left the Harvard Law School with. ~ Charlie Munger

I knew a guy who had $5 million and owned his house free and clear. But he wanted to make a bit more money to support his spending, so at the peak of the internet bubble he was selling puts on internet stocks. He lost all of his money and his house and now works in a restaurant. It's not a smart thing for the country to legalize gambling [in the stock market] and make it very accessible. ~ Charlie Munger

Tthe first rule is that you can't really know anything if you just remember isolated facts and try and bang 'em back. If the facts don't hang together on a latticework of theory, you don't have them in a usable form ... You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. ~ Charlie Munger

Of course I'm troubled by huge consumer debt levels - we've pushed consumer credit very hard in the US. Eventually, if it keeps growing, it will stop growing. As Herb Stein said, "If something cannot go on forever, it will stop." When it stops, it may be unpleasant. Other than Herb Stein's quote, I have no comment. But the things that trouble you are troubling me. ~ Charlie Munger

Good businesses can survive a little bad management. ~ Charlie Munger

A director who gets $150,000 per year from a company and needs the money is not independent. ~ Charlie Munger

I regard the amount of brainpower going into money management as a national scandal. When some idiot would get rich, they'd say, 'Well, old Charlie was out in the field playing the big brass tuba on the day it rained gold.' A lot of people have become rich lately who were playing the tuba on the day it rained gold. ~ Charlie Munger

Ben Franklin and Samuel Johnson, he credits their wisdom for his success. "They were both utterly brilliant men. And powerful communicators. Both have helped me all the way through life. Their lessons are easy to assimilate." ~ Charlie Munger

And maybe the cereal makers by and large have learned to be less crazy about fighting for market share-because if you get even one person who's hell-bent on gaining market share ... For example, if I were Kellogg and I decided that I had to have 60% of the market, I think I could take most of the profit out of cereals. I'd ruin Kellogg in the process. But I think I could do it. ~ Charlie Munger

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

Sears had layers and layers of people it didn't need. It was very bureaucratic. It was slow to think. And there was an established way of thinking. If you poked your head up with a new thought, the system kind of turned against you. It was everything in the way of a dysfunctional big bureaucracy that you would expect. ~ Charlie Munger

You must force yourself to consider opposing arguments. Especially when they challenge your best loved ideas. ~ Charlie Munger

The total amount paid out in dividends is roughly equal to the amount lost in trading and investment advice, so net dividends to shareholders are zero. This is a very peculiar way to run a republic. ~ Charlie Munger

Failure to handle psychological denial is a common way for people to go broke. You've made an enormous commitment to something.You've poured effort and money in. And the more you put in, the more that the whole consistency principle makes you think. ~ Charlie Munger