Charlie Munger Quotes

372 Charlie Munger Quotes

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[In 1995 on future forecasts provided by a salesman.] Mark Twain used to say, ‘A mine is a hole with a liar on the top.’ And a projection prepared by anybody who stands to earn a commission or an executive trying to justify a particular course of action will frequently lie – although it’s not a deliberate lie in most cases. The man has come to believe it himself. And that’s the worst kind. Projections should be handled with great care – particularly when they’re being provided by someone who has an interest in misleading you.
Charlie Munger

[In 1998.] You tend to forget your own mistakes when reputation is threatened by remembering.
Charlie Munger

[In 1998.] Around here I would say that if our predictions have been a little better than other people’s, it’s because we’ve tried to make fewer of them.
Charlie Munger

[In March 1998.] It’s very, very important to create human systems that are hard to cheat. Otherwise you’re ruining your civilization because these big incentives will create incentive-caused bias and people will rationalize that bad behavior is okay.
Charlie Munger

[In October 1998.] Smart, hard-working people aren’t exempt from professional disasters resulting from overconfidence.
Charlie Munger

[In May 2000.] There is no reason to look only for living models. The eminent dead are in the nature of things some of the best models around. And if a model is all you want, you’re really better off not limiting yourself to the living. Some of the very best models have been dead for a long time.
Charlie Munger

[In 2001.] The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.
Charlie Munger

[In 2002.] We have a passion for keeping things simple.
Charlie Munger

[In 2002.] We try to arrange [our affairs] so that no matter what happens, we’ll never have to ‘go back to go.’
Charlie Munger

[In October 2003.] Economics involves too complex a system… economics should emulate physics’ basic ethos, but its search for precision in physics-like formulas is almost always wrong in economics.
Charlie Munger



[In 2004.] The worst abuses come where people have the greatest temptations.
Charlie Munger

[In 2004.] In the New York Police Department, they have a simple system. Your pension is based on your pay in your final year. So when anyone reaches the final year, everybody cooperates to give him about 1,000 hours of overtime. And he retires – in some cases after a mere 20 years of service – with this large income. Well, of course his fellow employees help him cheat the system. In substance, that’s what’s happened. But the one thing I guarantee you is that nobody has the least sense of shame. They soon get the feeling they’re entitled to do it. Everybody did it before, everybody’s doing it now – so they just keep doing it.
Charlie Munger

[In 2004.] I think the best single way to teach ethics is by example.
Charlie Munger

[In May 2004.] If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet.
Charlie Munger

[In May 2004.] I'd rather throw a viper down my shirt front than hire a compensation consultant.
Charlie Munger

[In May 2005.] It’s human nature - people will rationalize all sorts of things to get paid. If you want good behavior, don’t pay on a commission basis. Our judges aren’t paid so much a case.
Charlie Munger

[In May 2005.] History would indicate a certain percentage will lie about their results if they have any discretion whatsoever, and will try to cover up market errors if they can. I can confidently predict scandals. It will always be thus.
Charlie Munger

[In May 2005.] We have monetized houses in this country in a way that’s never occurred before. Ask Joe how he bought a new Cadillac [and he’ll say] from borrowing on his house. We are awash in capital. [Being] awash is leading to very terrible behavior by credit cards and subprime lenders - a very dirty business, luring people into a disadvantageous position. It’s a new way of getting serfs, and it’s a dirty business. We have financial institutions, including those with big names, extending high-cost credit to the least able people. I find a lot of it revolting. Just because it’s a free market doesn’t mean it’s honorable.
Charlie Munger

[In May 2005.] The world is not going to give you extra return just because you want it. You have to be very shrewd and hard working to get a little extra. It’s so much easier to reduce your wants.
Charlie Munger

[In May 2005.] Never abuse current clients by trying to get new ones. Think how this would work with matrimony - if you ignore your current wife while you pursue another one.
Charlie Munger



[In May 2005.] If you live long enough and act well, and have some intelligence, you’ll do fine.
Charlie Munger

[In May 2005 on Berkshire’s success with acquisitions.] Our success has come from the lack of oversight we’ve provided, and our success will continue to be from a lack of oversight
Charlie Munger

[In May 2005.] Where you have complexity, by nature you can have fraud and mistakes. You’ll have more of that than in a company that shovels sand from a river and sells it. This will always be true of financial companies, including ones run by governments. If you want accurate numbers from financial companies, you’re in the wrong world.
Charlie Munger

[In May 2005.] We don’t have any great record making macroeconomic predictions.
Charlie Munger

[In May 2005.] 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

[In May 2005 on a housing bubble.] In parts of California and in the Washington DC suburbs, there’s a bubble… One of the Directors of Wesco told me that a modest house next to his recently sold for $27 million. There are some very extraordinary housing price bubbles going on and the consequences could be serious… It’s obvious that easy financing is fueling big price increases.
Charlie Munger

[In 2005.] If something is too hard, we move onto to something else. What could be more simple than that?
Charlie Munger

[In 2006.] I generally try to approach complex tasks by first disposing of the easy decisions.
Charlie Munger

[In May 2006.] We simply try buy things for less than they’re worth. We’re not making microeconomic decisions or forecasts… I’m not good at predicting macro things.
Charlie Munger

[In May 2006 on some ways to better choose a money manager.] I always prefer a system in which people are eating their own cooking, so look for a money manager who has almost all of his net worth alongside yours in his fund… Another rule is to avoid things with a high commission: avoid anything sold by anyone on a high commission!
Charlie Munger



[In May 2006.] We’ve always believed in value investing – just try to get more value than you’re paying for. There are a lot of ways to do this – it could even be investing in another manager. Or you could invest and hold for 30 years.
Charlie Munger

[In May 2006 on the risks of derivatives.] I regard the counterparty risk as extreme. But no-one cares about this because the accounting statements assume it away. If you look at the trading sheets on Wall Street, there’s no line for counterparty risk. The person who is supposed to think about this would be very unpopular [if he tried to add this]. Pulling away the punch bowl at the party has never been a way to prosperity and popularity.
Charlie Munger

[In May 2006.] There will be some repeat of Long Term Capital Management in some place - you can count on that.
Charlie Munger

[In May 2006.] The only thing that will change corporate directors’ behavior is if they look ridiculous in the press.
Charlie Munger

[In May 2006 on naked shorting.] One of the nice things about being an old man in a secure place is that I don’t have to think about many things and naked shorting is one of them. My jihad calendar is full enough.
Charlie Munger

[In May 2006.] What a man hopes is what he believes.
Charlie Munger

[In May 2006.] The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.
Charlie Munger

[In May 2006 on looking back on his life, still going at age 91 in July 2015.] I wouldn’t have done a lot in my life different. I think I’ve been a very fortunate man… Generally speaking, I have no regrets. The only regret I have is that I’ll soon be dead. I deal with it through humor.
Charlie Munger

[In May 2006.] In the 1930s, there was a stretch where you could borrow more against the real estate than you could sell it for. I think that’s what’s going on in today’s private-equity world.
Charlie Munger

[In May 2006.] A foreign correspondent, after talking to me for a while, once said: ‘You don’t seem smart enough to be so good at what you’re doing. Do you have an explanation?’ I said, ‘We know the edge of our competency better than most.’ That’s a very worthwhile thing. It’s not a competency if you don’t know the edge of it.
Charlie Munger



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