Charlie Munger Quotes

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

It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait.

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

I did not intend to get rich. I just wanted to get independent.²

The first rule of compounding: Never interrupt it unnecessarily.³

I like crypto currencies a lot less than you [Warren Buffett] do. And, so, to me, it’s just dementia, and I think the people who are professional traders that go into trading crypto currencies, it’s just disgusting, it’s like somebody else is trading turds and you decide, I can’t be left out.⁴⁵

Warren Buffett: Charlie’s big on lowering expectations.

Charlie Munger: Absolutely. That’s the way I got married. My wife lowered her expectations.⁵

Q: In your letter on Berkshire’s past and future, you wrote about the principles that have mad Berkshire successful over the years. My question is, why is it that Berkshire’s organizational principles as a holding company have not been copied more by others given its incredible success in track record? Thank you.

Charlie Munger: Well, it’s a good question. I think the main reason is that it looks impossible. If you were in Procter & Gamble, with its culture and its bureaucracy, and you sat down to figure out, “How can I make Procter & Gamble more like Berkshire Hathaway?” It would go immediately to the too hard pile. It’s just too hard, there’s too much momentum. But you raise by your question a very interesting thing that deserves more attention than it gets. One of the reasons that Berkshire has been so successful is there’s practically nobody at headquarters. We have almost no corporate bureaucracy. We have a few internal auditors who go out from there and check this or that, but basically we have no bureaucracy. Having no bureaucracy is a huge advantage if the people who are running it are sensible people. Think of how poorly all of us have behaved in big bureaucracy even though we have a lot of talent, because we couldn’t change anything. So bureaucracy has a standard bunch of evils on a standard bunch of stupid wastes and so forth. And avoiding it is hugely important and of course, tendency of successful places, particularly successful governmental places, is to have more and more bureaucracy. Of course it’s terribly counterproductive. And of course the bureaucracy, the individual bureaucrats they’re benefiting, more assistance, more meetings, more this, more that. So what looks like poison to us from the outside because the decisions are so terrible looks wonderful for them, it’s opportunity. I’ve just described the great tragedy of modern life. Modern life creates successful bureaucracy and successful bureaucracy breeds failure and stupidity. How could it be otherwise? That’s the big tension of modern life. And some of these places that go into a stupid bureaucracy and fire a third of the people and then the place works better. They’re doing the Lord’s work but you wouldn’t think so if you were working there. But there’s a lot of horror and waste in bureaucracy and it’s inevitable. It’s as natural as old age and death.⁶

Becky Quick: What worries you most about our economy and the stock market? And on the other hand, what makes you optimistic?

Charlie Munger: Well, you have to be optimistic about the competency of our technical civilization. But there again, it’s an interesting thing. If you take the last 100 years, 1922 to 2022, most of modernity came in in that 100 years. And then the previous 100 years, that got another big chunk of modernity. Before that, things were pretty much the same for the previous thousands of years. Life was pretty brutal, and short, and limited, and what have you. No printing press, no air conditioning, no modern medicine. And I don’t think we’re going to get things that are in what I call the real human needs. Think of what it meant to get, say first you got the steam engine, the steamship, the railroad, and a little bit of improvement in framing, and a little bit of improvement in plumbing. That’s what you got in there, in the 100 years that ended in 1922. The next 100 years gave us widely distributed electricity, modern medicine, the automobile, the airplane, the records, the movies, the air conditioning in the south. And think what a blessing it was. If you wanted three children, you had to have six, because three died in infancy. That was our ancestors. Think of the agony of having to watch half your children die. It’s amazing how much achievement there has been in civilization in these last 200 years and most of it in the last 100 years. Now, the trouble with that is that the basic needs are pretty well filled. In the Unites States, the principal problem of the poor people is that they’re too fat. That is a very different place from what happened in the past. In the past, they were on the edge of starving. And what happens is, it’s really interesting is with all this enormous increase in living standards, and freedom, and diminishment of racial inequities, and all the huge progress that has come, people are less happy about the state of affairs than they were when things were way tougher. And that has a very simple explanation. The world is not driven by greed, it’s driven by envy. And so the fact that everybody’s five times better off than they used to be, they take it for granted. All they think about is somebody else having more now and it’s not fair that he should have it and they don’t. That’s the reason that God came down and told Moses that he couldn’t envy his neighbor’s wife or even his donkey. I mean, even the old Jews were having trouble with envy. So it’s built into the nature of things. It’s weird for somebody at my age because I was in the middle of the Great Depression and the hardship was unbelievable. I was safer walking around Omaha in the evening than I am in my own neighborhood in Los Angeles after all this great wealth and so forth. So, and I have no way of doing anything about it. I can’t change the fact that a lot of people are very unhappy and feel very abused after everything’s improved by about 600% because there’s still somebody else who has more. I have conquered envy in my own life. I don’t envy anybody. I don’t give a damn what somebody else has. But other people are going crazy by it. And other people play to the envy in order to advance their own political careers. We have whole networks now that they want to pour gasoline on the flames of envy. I like the religion of the old Jews. I like the people who were against envy, not the people who were trying to profit from it. But if you stop that, think of the pretentious expenditures of the rich. Who in the hell needs a Rolex watch so you can get mugged for it? You know, I mean, everybody wants to have a pretentious expenditure, and that helps drive demand in our modern capitalist society. My advice to the young people is don’t go there, to hell will the pretentious expenditure. I don’t think there’s much happiness in it. But it does drive the civilization we actually have. And it drives the dissatisfaction. Steven Pinker⁷ of Harvard is one of our smart modern academics. He constantly points out that everything’s gotten way better, but the general feeling about how fair it is has gotten way more hostile. And as it get better and better, people are less and less satisfied. That is weird but that’s what’s happened.⁸

When people use the word “common sense,” what they mean is uncommon sense. Because the standard human condition is ignorance and stupidity. And when they say, old Joe has common sense, what they mean is he has uncommon sense.⁹¹⁰

Influencers Transcript: Charlie Munger, May 9, 2019¹⁰

I tend to avoid the whole subject, just as I ignore– tide with me, tide against, and just keep swimming. But both parties are so partisan now that they’re blinded by their anger. And I don’t want to be blinded by my anger, so I control it. And I would recommend it to both parties. I think they should all cool it.

I can’t think of a single example in my whole life where keeping it simple has worked against us. We made mistakes, but they weren’t because we kept it simple. … I would say that the chief advantage that Berkshire’s had in accumulating a good record is that we have avoided the pompous bureaucratic systems. We’ve tried to give power to very talented people and let them make very quick decisions.

Well, I don’t think we have a master plan of knowing where the opportunities are. We’re trying to find intelligent things to do with a torrent of surplus cash. And we’ve always had a torrent of surplus cash. And we’re always looking for intelligent things to do with it. And if we find things that are intelligent to do, we do it. And if we don’t find anything, we’ll let the cash build up. What the hell’s wrong with that?

Well, I have to be interested when they’re that important and sweep the world and change practice. But I don’t have to invest in everything I’m interested in. I’m looking for things where I think I can predict what’s going to happen with a high degree of accuracy. And I have no feeling that I have the ability to do that with Uber.

[No. 001] Mimicking the herd invites regression to the mean.

[No. 002] I’ve never been able to predict accurately. I don’t make money predicting accurately. We just tend to get into good business and stay there.

[No. 003] Thanks to the early 1930s and the behavior of the capitalists in the robber baron days … stocks yielded dividends that were twice as much as the interest rates on bonds. It was a wonderful period to be buying stocks. We profited from others’ demoralization from the previous generation.

[No. 019] You have to be very patient, you have to wait until something comes along, which, at the price you’re paying, is easy. That’s contrary to human nature, just to sit there all day long doing nothing, waiting. It’s easy for us, we have a lot of other things to do. But for an ordinary person, can you imagine just sitting for five years doing nothing? You don’t feel active, you don’t feel useful, so you do something stupid.

[No. 078] After the South Sea Bubble¹², Britain outlawed public corporations–only private ones allowed. And they led the world for 100 years. A modest amount of liquidity will serve the situation. Too much liquidity will hurt human nature. I would never be tenured if I said that. But I’m right and they are wrong.

[No. 080] Koreans came up from nothing in the auto business. They worked 84 hours a week with no overtime for more than a decade. At the same time every Korean child came home from grade school, and worked with a tutor for four full hours in the afternoon and the evening, driven by these Tiger Moms. Are you surprised when you lose to people like that? Only if you’re a total idiot.

[No. 089] It’s been my experience in life, if you just keep thinking and reading, you don’t have to work.

[No. 093] Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Slug it out one inch at a time, day by day. At the end of the day – if you live long enough – most people get what they deserve.

[No. 102] 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.

[No. 112] The best way to get a good spouse is to deserve a good spouse.

[No. 124] Remember Louis Vincenti’s rule, “Tell the truth, and you won’t have to remember your lies.”