Farewell to Munger
We’ll miss you, Charlie
Summary: The world lost a brilliant investor last week. Charlie Munger was one of a kind. This week the Transcript pays tribute to his wit and wisdom. We’ll miss you, Charlie.
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Buffett on meeting Charlie Munger
"I knew after I met Charlie, after a few minutes in the restaurant, I knew that this guy was going to be in my life forever. [I knew] we were gonna have fun together, we were gonna make money together, we were gonna get ideas from each other [and] we were both going to behave better than if we didn't know each other" - Buffett & Munger A Wealth of Wisdom (Charlie’ last Interview]
On Buffet
“Warren is not only a very good thinker and a good learner, which is important, but Warren has a big strong fiduciary gene. He cares about what happens to the shareholders. Warren and I were lucky in that the early shareholders really trusted us, we were young and didn't have a reputation, and so on. And naturally, we feel an exceptional loyalty to those people. And of course, naturally, they're all dead now. We're still loyal to them. Warren and I still care what happens to the Berkshire shareholders, a lot. And I think that helps us. I think that it helps if you're good at loyalty.” - 2023 Daily Journal Annual Meeting
On leverage
“If you take out of Warren Buffett’s life the ten most important trips to the pie counter, there were – his whole record would look like dung. We knew enough to take a good helping when we were offered a trip to the pie counter. Now we did take way smaller a helping than we could’ve easily handled. Berkshire could easily be worth twice what it is now. And the extra risk we would’ve taken would’ve been practically nothing. All we had to do was just a little more leverage that was easily available...The reason we didn’t is the idea of disappointing a lot of people who had trusted us when we were young under a thing that left us. If we lost three-quarters of our money, we were still very rich. That wasn’t true of every shareholder. Losing three-quarters of the money would’ve been a big letdown. So we were very cautious in dealing with our shareholders’ money. If Warren and I had owned Berkshire without any shareholders that we knew, we would’ve made more. We would’ve used more leverage” - Charlie Munger: A Life of Wit and Wisdom
“If you go back early in my career, I used some leverage. I sometimes ask myself a mental question. I say, “What is the appropriate percentage of your net worth you should put in a stock if you think it’s an absolute cinch?” If you’re the kind of fellow who’s right when you think something is a cinch, the answer is 100%. But nobody teaches people to think that way in finance. If the opportunity is great enough, the logical answer is 100%. Or maybe 200%. I think most people should avoid it [leverage], but maybe not everybody needs to play by those rules.” - 2023 Daily Journal Annual Meeting
On life
“I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you. Investment is much the same sort of a process.” - 1997 Berkshire Hathaway Annual Meeting
“This is a good life lesson: getting the right people into your system is the most important thing you can do.” - Poor Charlie's Almanack
“You can be very deserving and very intelligent, very disciplined, but there's also a factor of luck that comes into this
thing. And the people who get the outcomes that seem extraordinary, they’re the people who have discipline and intelligence and good virtue plus a hell of a lot of luck.” - A Conversation with Charlie Munger and Michigan Ross - 2017
“And so, all those old-fashioned values: family comes first, being in a position so you can help others when troubles come, prudent sense, a moral duty to be reasonable is more important than anything else. More important than being rich, more important than being important, an absolute moral duty because none of my intelligent relatives suffered terribly because they didn't advance higher.” - A Conversation with Charlie Munger and Michigan Ross - 2017
“I think most lives work best when you simply react intelligently to the opportunities and difficulties you encounter and just take the results as they fall. Some people think that by master planning, you will solve everything, but what I find is that the master plan gets a life of its own, and people believe it because they previously decided on that, and they make all kinds of mistakes.” - 2013 Daily Journal Annual Meeting
On mischances in life
"Another thing, of course, is life will have terrible blows, horrible blows, unfair blows. Doesn’t matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and your duty was not to be submerged in self-pity but to utilize the terrible blow in a constructive fashion. That is a very good idea." - 2007 USC Law School Commencement Address
“Well, my worst trade was buying a block for the Munger family in Alibaba, which is a pretty good company. But I think it got over-hyped. And Jack Ma was – made mistakes in dealing with the Chinese government. I had some bad ones – everybody has some bad ones. You have an off day. The greatest tennis player goes out there some days to the center court and has a bad day. It happens.” - Charlie Munger: A Life of Wit and Wisdom
On keys to financial success
“It's so simple. You spend less than you earn. Invest shrewdly, avoid toxic people and toxic activities, and try and keep learning all your life, etcetera etcetera. And do a lot of deferred gratification because you prefer life that way. And if you do all those things you are almost certain to succeed. And if you don't, you're gonna need a lot of luck” - Poor Charlie's Almanack
On success in life
"Part of the reason I’ve been a little more successful than most people is I’m good at destroying my own best-loved ideas...I’m pleased when I can destroy an idea that I’ve worked very hard on over a long period of time. And most people aren’t." - 2019 Wall Street Journal Interview
“The secret to happiness is to lower your expectations. ...that is what you compare your experience with. If your expectations and standards are very high and only allow yourself to be happy when things are exquisite, you'll never be happy and grateful. There will always be some flaws. But compare your experience with lower expectations, especially something not as good, and you'll find much in your experience of the world to love, cherish and enjoy, every single moment.” - 2021 Daily Journal Annual Meeting
On partners in life
“I think one thing we’ve done that’s helped us to get wonderful people, I always say the best way to get a good spouse is to deserve one, and the best way to get a good partner is to be a good partner yourself, and I think Warren and I have both done good with that, but whatever the reason we’ve had these marvelous partners, and they make us look a lot better than we are.” - 2017 Daily Journal Annual Meeting
“I’ll tell you something else. I know some wonderful people. If you take all the people I’ve worked with in my life, all my business partners and I’ve had quite a few by now. All the people I’ve worked with including Warren, all the people we’ve worked with and for. It’s been a wonderful ride. And there’s been a lot of humor in it too. You get good partners by deserving them. Everybody who trusted me when I was young is rich if they stayed the course. Every single one. That gives me pleasure.” - 2019 Wall Street Journal Interview
On life’s simple rules:
“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful in spite of your troubles, you deal with reliable people and you do what you’re supposed to do. All these simple rules work so well to make your life better.” - 2019 CNBC interview
On reputation
‘If the business is lousy enough and it gets a wonderful manager—the business has a lousy reputation and the manager has a good reputation—it’s the reputation of the business that's going to remain intact. You can't fix these really lousy businesses. You can wring the money out, whatever comes in liquidation and do something else with it, but most lousy businesses can't be fixed.” - A Conversation with Charlie Munger and Michigan Ross - 2017
“If you have a reputation for being decent to work with and unselfish, you make more money, not less. And at Berkshire, I can’t tell you the things that we have bought where the people wanted a good home for something that they love and they trusted us to take care of their loved one. That sounds ridiculous to talk about, in that language about businesses. But why wouldn’t you love something you spent your life building up? It’s very natural to love it – it’s your own creation. Of course, you want it in good hands. And so, so, good morals and a reputation for good morals are enormously valuable, and it’s just so simple…. The right way to go through life is a win-win. Just anything else is crazy. To be all take and no give is just an absolute disaster.” - 2019 Wall Street Journal Interview
On business
“If you stop to think about it, business success long term is a lot like biology. And in biology, what happens is the individuals all die, and eventually, so do all the species. Capitalism is almost as brutal as that. Think of what’s died in my lifetime. Just think of the things that were once prosperous that are now in failure or gone. Whoever dreamed when I was young that Kodak and General Motors would go bankrupt. You know, it’s just, it’s incredible what’s happened in terms of the destruction. Of course, that history is useful to know.” - 2021 Daily Journal Meeting
On Berkshire’s success
“Well, we got a little less crazy than most people and a little less stupid than most people. And that really helped us. Then, in addition, we were given this much longer time to run than most people, because something kept us alive into our 90s. And that gave us a long track from our little, piddling start all the way to the 90s. Those are the two things that really happened. And, of course, we wised up over time. We got into better and better companies. We understood more and more of the bad things that could happen. You know how easily they could creep in. And we avoided them even more – like when we were old than we did when we were young. And it all worked.” - Charlie Munger: A Life of Wit and Wisdom
“Who doesn't like to happily enjoy extreme success accumulated with people who are extremely admirable? That's what Warren and I have gotten to do. Well, of course, that's a lot of fun. What was interesting about Berkshire's history is what turned the first $300 million of Berkshire net worth into the first $3 billion of Berkshire net worth.” - Charlie Munger: A Life of Wit and Wisdom
“Berkshire got through this helpful reputation among their group of addicts over a long period of time. It took a long time. It's a very useful, useful thing to have. Two, I think Berkshire's been blessed with these big insurance companies. It's got two things to do. It can buy companies or it can buy securities as insurance companies. Aren't you going to make better investments, if you can get two reasonable options at all times instead of one? Doesn't that make sense? That's another of the reasons. I don't see why Berkshire isn't more copied, except I think people look at it and they look at their culture with its own traditions. They came to power at 58 they're going to be gone at 63. They don't see any way of getting from where they are to where we are.” - 2013 Daily Journal Annual Meeting
On careers
“Three rules for a career: 1) Don’t sell anything you wouldn’t buy yourself; 2) Don’t work for anyone you don’t respect and admire; and 3) Work only with people you enjoy.” - The Tao of Charlie Munger
“Well, it is very important when you choose a career. If you go into a career that’s very tough, you’re not gonna do very well. And if you go into one where you have special advantages and you like the work, you’re gonna do very well.” - 2020 CalTech Distinguished Alumni Award Interview
On the value of continuous learning
“The one feature that comes through is continuous learning. If we had not kept learning, you wouldn’t even be here. You would be alive probably, but not here. I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are.” - 2017 Berkshire Hathaway Annual Meeting
"In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time - none, zero. 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.” - Poor Charlie's Almanack
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. 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.” - 2003 Wesco Annual Meeting
“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 when they got up and boy does that help - particularly when you have a long run ahead of you.” - 2007 USC Law School Commencement Address
“Wisdom acquisition is a moral duty. And there's a corollary to that proposition which is very important, it means that you're hooked for lifetime learning, and without lifetime learning you people are not going to do very well. 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're going to learn after you leave here.” - 2007 USC Law School Commencement Address
On circles of competence
“You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence. If you want to be the best tennis player in the world, you may start out trying and soon find out that it’s hopeless—that other people blow right by you. However, if you want to become the best plumbing contractor in Bemidji, that is probably doable by two-thirds of you. It takes a will. It takes the intelligence. But after a while, you’d gradually know all about the plumbing business in Bemidji and master the art. That is an attainable objective, given enough discipline. And people who could never win a chess tournament or stand in center court in a respectable tennis tournament can rise quite high in life by slowly developing a circle of competence—which results partly from what they were born with and partly from what they slowly develop through work.” - Poor Charlie's Almanack
On the stock market
"I think value investors are going to have a harder time now that there’s so many of them competing for a diminished bunch of opportunities. So my advice to value investors is to get used to making less." - 2023 Berkshire Hathaway Annual Meeting
"What everybody has learned is that everybody needs some significant participation in the 12 companies that do better than everybody else. You need two or three of them, at least." - Acquired Podcast in 2023
“It takes character to sit with all that cash and to do nothing. I didn’t get to be where I am by going after mediocre opportunities” - Poor Charlie's Almanack
“There are huge advantages for an individual to get into a position where you make a few great investments and just sit on your a**: 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.” - Worldly Wisdom by Charlie Munger 1995 - 1998
“Is the stock market so efficient that people can't beat it? Well, the efficient market theory is obviously roughly right - meaning that markets are quite efficient and it's quite hard for anybody to beat the market by significant margins as a stock picker by just being intelligent and working in a disciplined way. Indeed, the average result has to be the average result. By definition, everybody can't beat the market. As I always say, the iron rule of life is that only 20% of the people can be in the top fifth. That's just the way it is. So the answer is that it's partly efficient and partly inefficient.” - May 5 1995 Outstanding Investor Digest
“Generally I don’t think management should be blamed if the stock market goes crazy for a certain period of time. If it went up 35 times earnings and then declined to 25 times earnings, how is that the CEO’s fault?” - 2006 Wesco Annual Meeting
On diversification:
"One of the inane things [that gets] taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks. That is an insane idea. It's not that easy to have a vast plethora of good opportunities that are easily identified. And if you've only got three, I'd rather it be my best ideas instead of my worst. And now, some people can't tell their best ideas from their worst, and in the act of deciding an investment already is good, they get to think it's better than it is. I think we make fewer mistakes like that than other people. And that is a blessing to us." - 2023 Berkshire Hathaway Annual Meeting
“I find it much easier to find four or five investments where I have a pretty reasonable chance of being right that they're way above average. I think it's much easier to find five than it is to find 100. I think the people who argue for all this diversification - by the way, I call it ‘deworsification’ - which I copied from somebody - and I'm way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.” - 2021 Daily Journal Annual Meeting
“When I started investing my little piddly savings as a lawyer, I tried to figure out how much diversification I would need if I had a 10% advantage every year over stocks generally. I just worked it out. I didn’t have any formula. I just worked it out with my high school algebra, and I realized that if I was going to be there for 30 or 40 years, I’d be about 99% sure that it would be just fine if I never owned more than three stocks and my average holding period is three or four years.” - 2017 Daily Journal Annual Meeting
“But the whole trick of the game is to have a few times when you know that something is better than average and to invest only where you have that extra knowledge. And then if you get just a few opportunities that’s enough. What the hell do you care if you own three securities and J.P. Morgan Chase owns a hundred? What’s wrong with owning a few securities?” - 2018 Daily Journal Annual Meeting
Invert, always Invert
“I had long looked for insight by inversion in the intense manner counseled by the great algebraist, Jacobi: “Invert, always invert.” I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes” - The Revised Psychology of Human Misjudgment
Keep things simple in valuations
“Warren often talks about these discounted cash flows, but I’ve never seen him do one. If it isn’t perfectly obvious that it’s going to work out well if you do the calculation, then he tends to go on to the next idea.”
“Berkshire is being run the way Thomas Hunt Morgan, the great Nobel laureate ran the Biology department at Caltech. He banned the freedom calculator which was the computer of that era and people said how can you do this every place else in Caltech we have freedom calculators going everywhere and he said well we're picking up these great nuggets of gold just by organized common sense and resources are short and we're not going to resort to any damn placer mining as long as we could pick up these major aggregations of gold. That's the way Berkshire works and I hope the placer mining era will never come somebody once subpoenaed our staffing papers on some acquisition and of course not only did we not have any staffing papers we didn't have any staff” - 1995 Berkshire Hathaway Annual Meeting
On inflation
“Most people will see declining returns [due to inflation]. One of the great defenses, if you're worried about inflation, is not to have a lot of silly needs in your life - you don't need a lot of material goods.” - 2004 Berkshire Hathaway Annual Meeting
“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.” - 2004 Wesco Annual Meeting
“If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation” - 2010 Berkshire Hathaway Annual Meeting
“I remember 2c stamps, 5c hamburgers, and the minimum wage of 30c / hr. In 80 years since those prices, there has been lots of inflation. Did it ruin investment opportunities? No. It isn’t easy, there are always huge risks, and of course, there will be inflation. It was a miracle between 1860 and 1910 there was no inflation. For a long time, the country got ahead without inflation. That world is not coming back.” - 2009 Wesco Annual Meeting
On compensation
“I don’t know how we’re going to fix corporate compensation. To have the CEO rewarded in a way that’s so extreme [is terrible].” - 2006 Wesco Annual Meeting
“I think the whole subject of proper governance is a really important subject, but I would argue that the compensation system is crazy, the institutional money-management system is crazy, and the rewards system is quite unfair in many cases. People are voting themselves money they're not entitled to.” - 2013 Daily Journal Annual Meeting
“I think if you’re wealthy and own a big share of a company and you get to decide what it does and whether it liquidates or whether it keeps going, that’s a nice position to be in, and maybe you shouldn’t try and grab all the money in addition, and that’s my theory on executive compensation.” - 2017 Daily Journal Annual Meeting
On algorithms in trading:
“But this will interest you in this world where people have all these algorithms and computer science and fancy math and so forth. Neither Warren nor I have ever used any fancy math in business and neither did Ben Graham (who taught Warren). Everything I’ve ever done in business could be done with the simplest algebra and geometry, and addition, multiplication, and so forth. I never used Calculus for any practical work in my whole damn life and I was a perfect whiz at it when they taught it to me. And by the way, since I never touched Calculus, not once after I was 19
years old, I've lost it. The symbols would mystify me. But, I think you'll find that if you really know the basic stuff, it's enormously useful and only a very few people are ever going to need any Calculus.” - 2017 A Conversation with Charlie Munger and Michigan Ross
“An awful lot of graduates of great engineering schools are investors. I wouldn’t call a man who uses computer science to sift vast amounts of data for correlation and then starts trading the correlation and if it works, keeps going, and if it doesn’t, stops, I wouldn’t call him an investor. It’s really, what he is a trader. And those correlations are very peculiar…. Of course, the more people that try and trade that one correlation, once they find it, the less well it works.” - 2019 Wall Street Journal Interview
On money management
“I think money management is a low calling relative to being a surgeon. I don’t like the percentage of our GDP and brainpower and professional effort that’s in money management. I don’t think it’s a good thing for our country, and don’t expect it to end well.” - 2005 Berkshire Hathaway Annual Meeting
“I have very mixed feelings on this subject because I regard the amount of brainpower going into money management as a national scandal. We have armies of people with advanced degrees in physics and math in various hedge funds and private equity funds trying to outsmart the market. A lot of you older people in the room can remember when none of these people existed. There used to be very few people in the business, who were not very intelligent. This was a great help to me. Now we have armies of very talented people working with great diligence to be the best they can be. I think this is good for the people in it because if you know enough about money management to be good at it, you will know a lot about life. That part is good.” - 2006 Wesco Annual Meeting
On the auto business
“I think the auto business is very difficult, very competitive, and everybody is going to make wonderful cars. Everybody already has enormous size and wealth. So, I regarded it as a tough business. Elon Musk is a genius, and so if anybody has a chance to do it, he probably is the man. But we have a saying at Berkshire that when a man with a reputation for genius takes on a business with a reputation for tough operating conditions, it’s the reputation of the business that’s likely to prevail. Without government help, getting electric cars off the ground is really hard. In China, it works a lot better than it does here because their air is worse.” - 2015 Daily Journal Annual Meeting
On accounting
“Obviously, you have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double-entry bookkeeping was a hell of an invention. And it's not that hard to understand. But you have to know accounting's limitations. But you have to know enough about it to understand its limitations - because although accounting is the starting place, it's only a crude approximation. And it's not very hard to understand its limitations. For example, everyone can see that you have to more or less just guess at the useful life of a jet airplane or anything like that. Just because you express the depreciation rate in neat numbers doesn't make it anything you really know.” - 1995 Outstanding Investor Digest
On derivatives
“Running off derivative book is agony and takes time. And you saw what happened when they tried to run off the derivative books at Enron. Its certified net worth vanished. In the derivative books of America, there are a lot of reported profits that were never earned and assets that never existed. And there are large febezzlement effects and some ordinary embezzlement effects that come from derivative activity. And the reversal of these is going to cause pain. How big the pain will be and how well it will be handled, I can’t tell you. But you would be disgusted if you had a fair mind and spent a month really delving into a big derivative operation. You would think it was Lewis Carroll [author of Alice in Wonderland]. You would think it was the Mad Hatter’s Tea Party. And the false precision of these people is just unbelievable. They make the worst economics professors look like gods. Moreover, there is depravity augmenting the folly” - Charlie Munger at the University of California, 2003
“If we have a hell of a mess due to a big derivatives blowup, the country will survive it. Did we need derivatives to get to their current huge size? [Of course not.] [People argue that because] it lays off risk, it therefore must be wonderful. That is not the Munger mindset. If you’re lucky, we’ll see who’s right.” - 2006 Wesco Annual Meeting
On AI
“I don’t think artificial intelligence is at all sure to create an economic revolution. I’m sure we’ll use more of it, but what are the consequences of using artificial intelligence to become the world’s best (golden boy)? There may be places where it works, but we’ve thought about it at Geico for years and years and years, but we’re still using the old-fashioned intelligence. So I don’t know enough about it to say more than that.” - 2018 Daily Journal Annual Meeting
"I am personally skeptical of some of the hype that has gone into artificial intelligence. I think old-fashioned intelligence works pretty well." - 2023 Berkshire Hathaway Annual Meeting
“Well, I think artificial intelligence is very important, but there's also a lot of crazy hype on the subject. Artificial intelligence is not going to cure cancer. It's not going to do everything that we want done. And there's a lot of nonsense in it, too. So I regard it as a mixed blessing, all this artificial intelligence. Some people have used it in some things like insurance underwriting pretty well. But a lot of people tried to use it, ordinary things like buying office buildings or something, I think that's way more -- I don't think it's going to help when you're going to buy an office building. Not very much anyway” - 2023 Daily Journal Annual Meeting
On gaming and the metaverse
“And I do think gaming is here to stay. But there again, I’m an old man, I don’t like a bunch of addicted young males spending 40 hours a week playing games on the TV. It does not strike me as a good result for civilization. I don’t like anything which is so addictive that you practically give up everything else to do it. Well, without any metaverse, just the existing technology of games on the internet, Activision Blizzard and a lot of other companies have gotten very large and some of the games are kind of constructive and social and others are very peculiar. Do you really want some guy 40 hours a week running a machine gun on his television set? I don’t. But a lot of the games are harmless pleasure, it’s just a different technique of doing it. I like the part of it that’s constructive, but I don’t like it when people spend 40 hours a week being an artificial machine gunner.” - 2022 Daily Journal Annual Meeting
On short selling
“I have made three short sales in my entire life and they were all more than thirty years ago. One was a currency and there were two stock trades. The two stock trades, I made a big profit on one and made a big loss on the other and they canceled out. On my currency bet, I made a million dollars — but it was a very irritating way to make a million dollars.” - 2023 Daily Journal Annual Meeting
“Well, Ben Franklin said, “If you want to be miserable, you know, during Easter or something like that,” he says, “borrow a lot of money to be repaid at Lent,” or something to that effect. And similarly, being short something, which keeps going up because somebody is promoting it in a half-crooked way, and you keep losing, and they call on you for more margin — it just isn’t worth it to have that much irritation in your life. It isn’t that hard to make money somewhere else with less irritation.” - 2001 Berkshire Hathaway Annual Meeting
On crypto
"I am not proud of my country for allowing this crap - well, I call it crypto shit. It's worthless, it's crazy, it's not good, it'll do nothing but harm, it's antisocial to allow it…I think the people that oppose my position are idiots. And so I don’t think there is a rational argument against my position…When you’re dealing with something as awful as crypto shit, it's just unspeakable. I’m ashamed of my country that so many people believe in this kind of crap and the government allows it to exist." - 2023 Daily Journal Annual Meeting
“Well, I certainly didn’t invest in crypto. I’m proud of the fact I’ve avoided it. It’s like, you know, something venereal disease or something. I just regarded it as beneath contempt. Some people think it’s modernity and they welcome a currency that’s so useful in extortions and kidnappings and so on and so on…tax evasion. And of course the envy. Everybody has to create his own new currency. And I think that’s crazy too. So. I wish it had been banned immediately, and I admire the Chinese for banning it. I think they were right, and we’ve been wrong to allow it.” - 2022 Daily Journal Annual Meeting
“Give a whole lot of things a wide berth. They don't exist, you know, crooks, crazies, egomaniacs, people full of resentment, people full of self-pity, people who feel like victims. There's a whole lot of things that aren't going to work for you. Figure out what they are and avoid them like the plague. And one of them is Bitcoin.” - 2017: A Conversation with Charlie Munger and Michigan Ross
On the US economy:
“What makes capitalism work is the fact that if you’re an able-bodied young person, if you refuse to work, you suffer a fair amount of agony, and because of that agony, the whole economic system works ... You take away that hardship and say, ‘You can stay home and get more than if you come in to work,’ that’s quite disruptive to an economic system like ours. The next time we do this, I don’t think we ought to be so liberal.” - 2022 Daily Journal Annual Meeting
On avoiding mental biases
“I spent a lifetime trying to avoid my own mental biases. A.) I rub my own nose into my own mistakes. B.) I try and keep it simple and fundamental as much as I can. And, I like the engineering concept of a margin of safety. I’m a very blocking and tackling kind of thinker. I just try to avoid being stupid. I have a way of handling a lot of problems - I put them in what I call my ‘too-hard pile,’ and just leave them there. I’m not trying to succeed in my ‘too hard pile.’” - 2020 CalTech Distinguished Alumni Award interview
On climate change
“I think there's a good chance that climate change will be less important than all the people think. That doesn't mean it will be unimportant, but I think it won't be an absolute full-blown horror capacity with no possibility to adjust.” - 2023 Daily Journal Annual Meeting
“I’m deeply skeptical of the conventional wisdom of the people who call themselves climate scientists. I strongly suspect that they’re more alarmed than the facts call for. And that they kind of like the fact that they can prattle about something they find alarming. I think there’s a hell of a lot of nonsense being prattled on the climate change. But no, there’s no doubt that CO2 does cause some global warming. But just because you accept that doesn’t mean that the world is absolutely going to hell in a handbasket. Or that the seas are going to rise by 200 feet any time soon and so on. So I’m deeply skeptical of a lot of these people.” - 2018 Daily Journal Annual Meeting
On China
“China has one problem. The problem with the Chinese people is they like to gamble and they actually believe in luck. Now that is stupid. What you don’t want to believe in is luck. What you don’t want to believe in is luck, you want to believe in odds. And China there’s some reason in the culture. Too many people believe in luck and gamble. And that’s a national defect.” - 2017 Daily Journal Annual Meeting
On incentives:
“Our incentive systems are different and what are they trying to adapt to is the reality of each situation. Show me the incentive, and I will show you the outcome. The basic rule of incentives is that you get what you were rewarded for. If you have a dumb incentive system, you get dumb outcomes. And one of our really interesting incentive systems is at Geico” - 2016 Berkshire Hathaway Annual Meeting
On his fundamental algorithm of life
“It's pragmatism. Partly we do things in our different way because it suits us. And partly we do it, it suits our temperament, our natures, and partly we do it because we've found through experience that it works better, at least with us sitting where we sit. It's just that simple. And, we've had enough good sense when something is working very well to keep doing it. I'd say we're demonstrating what might be called the fung, the Fundamental algorithm of life. Repeat what works.” - 2010 Berkshire Hathaway Annual Meeting
On quality businesses
“We’ve really made the money out of high-quality businesses. In some cases, we bought the whole business. And in some cases, we just bought a big block of stock. But when you analyze what happened, the big money’s been made in high-quality businesses. And most of the other people who’ve made a lot of money have done so in high-quality businesses. Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6% return—even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive-looking price, you’ll end up with a fine result. So the trick is getting into better businesses.” - 1994 USC Business School Speech
Just try to be not Stupid
“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.” - Damn Right! by Janet Lowe
Buffett on Charlie Munger
“What most of you do not know about Charlie is that architecture is among his passions. Though he began his career as a practicing lawyer (with his time billed at $15 per hour), Charlie made his first real money in his 30s by designing and building five apartment projects near Los Angeles. Concurrently, he designed the house that he lives in today – some 55 years later. (Like me, Charlie can’t be budged if he is happy in his surroundings.) In recent years, Charlie has designed large dorm complexes at Stanford and the University of Michigan and today, at age 91, is working on another major project. From my perspective, though, Charlie’s most important architectural feat was the design of today’s Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” - 2014 Shareholder Letter
Select Tributes from Other Execs:
Li Lu, Founder & Chairman, Himalaya Capital “In our capitalist society, where do virtue, moral responsibility, truth-seeking, and public service fit in? Charlie Munger answered these questions through his long exemplary life. He insisted on making money in the most morally sound way, entering transactions only when, if positions were reversed, he would comfortably take the other side. He sought worldly wisdom through lifelong learning.”
Tim Cook, CEO, Apple (AAPL 0.00%↑): “A titan of business and keen observer of the world around him, Charlie Munger helped build an American institution, and through his wisdom and insights, inspired a generation of leaders. He will be sorely missed. Rest in peace, Charlie.”
Brian Moynihan, CEO, Bank of America(BAC 0.00%↑) : “Charlie Munger was a legendary figure in the investment community and there are many who benefited greatly from his wisdom.”
Costco (COST 0.00%↑) CEO Craig Jelinek: "No one loved Costco more than Charlie. The Company benefited greatly from his wisdom over the last quarter-century plus. We at Costco extend our deep condolences to his family…He was a legend to me. A tremendous asset to Costco.”
Bill Ackman, CEO, Pershing Square Capital Management: “As a professor of life and living, Charlie confronted us with the most powerful direct truths and educated us about character, psychology, morality, judgment, wisdom, investing, and more. He was an unabashed, unafraid, exemplar of a man."
Li Lu, Founder & Chairman, Himalaya Capital: “In our capitalist society, where do virtue, moral responsibility, truth-seeking, and public service fit in? Charlie Munger answered these questions through his long exemplary life. He insisted on making money in the most morally sound way, entering transactions only when, if positions were reversed, he would comfortably take the other side. He sought worldly wisdom through lifelong learning.”