Charlie Munger

“In the late 19 sixties, both Charlie and Warren had their own hedge fund. As the bull market of late 19 sixties raged on, everything became overpriced and Warren could no longer find anything cheap enough to buy. So rather than alter his investment strategy, W…”

“I read Barron's magazine for 50 years. I only found, the entire time, I found one idea that I could act on. Only one. I made eighty million dollars on that idea, basically risk-free. Then I took that eighty million dollars and I gave it to Lee Lu and he turned…”

“In my whole life, I have known no wise people who didn't read all the time. None. Zero.”

“It's not greed that drives the world, but envy. You have to cure yourself of this. Curing yourself of this is key, key for a well-lived life.”

“If you have enough sense to become a mental adult yourself, you can run rings around people smarter than you. Just pick up the key ideas from all the disciplines, not just a few, and you're immensely wiser than they are.”

“One is actually better off reading a hundred business biographies than a hundred books on investing. Why? Because if we learn the history of a hundred different business models, we learn when the businesses had tough times and how they got through them. We als…”

“He starts this investment partnership, starts a new law firm three years in. He's like, okay, I'm going to stop practicing law. I'm going to focus on investing full time. Charlie is 41 years old, 41 years old when he makes that decision.”

“The holding in blue chip stamp alone accounted for 61% Of the fund's investments”

“Over the long term, the eclipse rate of great civilizations being overtaken is a hundred percent.”

“He decided each day he would devote one hour of his time at the office to work on his own real estate projects, and by doing so, he completed five.”

“It's 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.”

“Charlie said one of the best things that Ben Franklin ever did, and this is advice to you and I, right? The, one of the best things that Ben Franklin ever did was that he sought out other impressive people like Washington, but a ton of others like a players on…”

“I think people that multitask pay a huge price. When you multitask so much, you don't have time to think about anything deeply. You're giving the world an advantage you shouldn't do. Practically everybody is drifting into that mistake. I did not succeed in lif…”

“The highest form that civilization can reach is a seamless web of deserved trust. Not much procedure, just totally reliable people correctly trusting one another.”

“Extreme specialization is the way to succeed. Most people are way better off specializing than trying to understand the world”

“When we bought C's Candies, we didn't know the power of a good brand. Over time, we just discovered that we could raise prices by 10% a year, and no one cared. Learning that changed Berkshire.”

“Andrew Wilkinson and Chris Barling are the founders of tiny. They're the ones that set up this dinner with Charlie Munger.”

“Look at this generation with all of its electronic devices and multitasking. I will confidently predict less success than Warren, who just focused on reading.”

“When Charlie closed his fund in 1975, it had ten million dollars in assets and showed an average annual rate of return of almost 25% for the 14 years it was in operation.”

“In business, we often find that the winning system goes almost ridiculously far in maximizing and or minimizing one or a few variables, like the discount warehouses of Costco.”

“By the late 19 seventies, the float at blue chip had grown to approximately a hundred million dollars money that Charlie and Warren could invest.”

“In some cases he's making his own books. He has transcriptions from very valuable and rare interviews with some of history's greatest founders, and he put them in binders.”

“Average out betting on the quality of a business is better than betting on the quality of the management. But very rarely you find a manager who is so good that you're wise to follow him into what looks like a mediocre business.”

“He says if you don't learn elementary probability, that you go through life like a one-legged man in an ass-kicking contest.”

“Charlie says that learning from history is a form of leverage. The fact is so few people can do this, that and you see this because financial, the financial disasters of today are almost completely forgotten in a year or two.”

“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 …”

“One arbitrage deal involved British Columbia Power, a company that was being taken over by the Canadian government. The takeover price was 22 dollars a share. BCP was selling for 19 dollars a share. Charlie brought all the shares of BCP He could get his hands …”

“And another thing that he repeats is that you should remember that good ideas are rare, and when you find one, you have to bet heavily.”

“And so Charlie's answer to the question was fascinating. He says, no, I always had an inner clock. And so Charlie's point there was that he was doing it for him. He did it because he wanted to do these things. He was interested in them, not because X, even if …”

“If he had never experienced the pain of the market crash of 1973 and 1974, he would have never had the foresight to stockpile the cash he used to buy Wells Fargo stock in 2008 and 2009.”

“Charlie would help Warren make the investment and management decisions that would take Berkshire Hathaway from a net income of one hundred and forty eight million in 1984 to approximately twenty four billion in 2016.”

“These are Charlie Munger's three rules for a career. Number one, don't sell anything you wouldn't buy yourself. Number two, don't work for anyone you don't respect and admire. And three, work only with people you enjoy.”

“You must have the confidence to override people with more credentials than you, whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. But there are also cases where you have to recognize that you ha…”

“The blueprint he gave me was simple. Forget what you know about buying fair businesses at wonderful prices, and instead, buy wonderful businesses at fair prices.”

“If you're not willing to rack with equanimity to market price decline at 50% two or three times a century, you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared with the people who do have the temperament, …”

“Your job in life is to get in a great business and then stay there. And Charlie's point here is like, I could tell you that advice. You're just not going to do it. It's so hard to build a wonderful business. You're not going to be assaulted from the outside. M…”

“You don't build a company and sell it for forty billion dollars and then learn all this stuff. Like he was, had an insatiable thirst for knowledge and information that could be useful to his life and his career, his entire life. He knew this stuff as he was bu…”

“I found the same thing when I was meeting with Charlie Munger, is like, they are authentic to themselves, and I, that's something I'm obviously trying to strive to be, but like, I just love seeing that, because sometimes you see, like, the public persona is fa…”

“Ed Thorpe says, Charlie Munger says the same thing, the only way to play, to win in business is to play games where you have an edge.”

“The problem isn't getting rich. The problem is staying sane.”

“Because I really do believe that building a great business is in service of building a great life. The mistake that is made that you see in a lot of these biographies is the fact that you have that inner drive, right? That you probably had since you were reall…”

“When he stopped doing real estate in 19 or real estate development in 1964, at least with his partner, he had a nest egg of 1.4 million dollars from real estate alone.”

“If you look at Berkshire Hathaway and all of its accumulated billions, the top 10 insights account for most of it. Most of the money came from 10 insights.”

“Wisdom is prevention. Wise people don't solve problems. They avoid them.”

“In business, we often find that the winning system goes almost ridiculously, ridiculously far in maximizing and or minimizing one or a few variables.”

“There's a common injunction at Berkshire HQ. Always tell us the bad news promptly. It is only the good news that can wait.”

“Instead of just pounding it in, he told it to me in a way that required a slight mental reach. I had to make the reach myself in order to get the idea that I should behave like Grant McFadden. And because I had to reach for it, I held it better.”

“Once I get most of the circulation, I get most of the advertising. And once again, most of the advertising and the circulation, why would anybody want a thinner paper with less information in it? So it tends to cascade to a winner take all situation.”

“Father's ability to wall off the most intrusive distractions from whatever mental task he was engaged in accounts as much as anything else for his success.”

“Learn how to ignore the example from others when they are wrong, because few skills are more worth having.”

“Almost everyone thinks that they fully recognize how important incentives and disincentives are for changing behavior, but this is not often so. I've been in the top five percent of my age cohort, my Entire life and understanding the power of incentives yet ha…”

“Trust is one of the greatest economic forces on earth. He's gonna apply this to what, ah, inside of the partnership that he had, ah, with Warren. And so he talks about the highest, one of the highest forms of civilization that one can reach, ah, is a seamless,…”

“There is no better teacher than history in determining the future. There are answers worth billions of dollars in a 30 dollar history book.”

“There was no formal partnership or contractual relationship. The bond was created by a handshake.”

“If you watched him with a time clock, you'd find that about half of his waking time is spent reading. Then a big chunk of the rest of his time is spent talking one-on-one. Either on the telephone or in person with highly gifted people whom he trusts and who tr…”

“Intense interest in any subject is indispensable if you're going to excel at it. You need to maneuver yourself into doing something in which you have an intense interest.”

“I believe in the discipline of mastering the best that other people have figured out. I don't believe in just sitting down and trying to dream it up all yourself. Nobody's that smart.”

“Without numerical fluency, you are like a one-legged man in an ass-kicking contest”

“So they were partners up until they died up until Charlie died, so that would be 64 years by my math.”

“In the highest reaches of business, it's not uncommon to find leaders who display followership akin to that of teenagers.”

“The judge Risks nearly half of his assets by exchanging his money for the bank's weak loans. This enabled Tom to open back up his doors.”

“If you just focus on business, you're just gonna, it's like the, every, with the person with the hammer, everything looks like a nail, and so you're only gonna use business, stuff you learn in business school to solve business problems. He's like, then you're …”

“So he leaves the law firm that he founded and he did not take his share of the firm's capital. Instead he directed that his share go to the estate. Of his young partner, Fred Warder, who died of cancer and left behind a wife and children.”

“I read somewhere that this law firm, I think like, I think it's doing like five hundred million a year in revenue right now. I didn't verify that, but that's what I read.”

“To a considerable extent, you're going to be dealing with grossly defective people. They create an enormous amount of law business, and even when your own client is a paragon of virtue, you'll often be dealing with gross defectives on the other side.”

“Charlie says, 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 you can make. You have to figure out where you get, where you've got an edge.”

“Occasionally scaling down and intensifying gives you the big advantage.”

“It is the nature of things that many hard problems are best solved only when they're addressed backwards.”

“And I think when you're trying to teach the great concepts that work, it helps to tie them into the lives and personalities of the people who develop them. I think you learn economics better if you make Adam Smith your friend. That sounds funny, making friends…”

“The game of competitive life often requires maximizing the experience of the people who have the most aptitude and the most determination as learning machines. If you want the very highest reaches of human achievement, that is where you have to go.”

“Humans have this embedded innate and very strong desire that if you do me a favor, I feel the need to repay you. That person is going to the Les Schwab tire center and they're going to buy their tires from them.”

“Extreme success is likely to be caused by some combination of the following factors. Number one, extreme maximization or minimization of one or two variables. Number two, adding success factors so that a bigger combination drives success often in a non-linear …”

“If you want to read one book that will demonstrate really shrewd compensation systems and a whole chain of small businesses, read the autobiography of Les Schwab. Who has a bunch of these tire shops all over the Northwest. And he made a huge fortune in one of …”

“In our 34 years of business, we have never hired a manager from the outside. Every single one of our more than 250 managers and assistant managers started at the bottom changing tires. They have all earned their management job by working up.”

“I got the chance to talk to both before they passed away. Two hours of Sam Zell and three hours of Charlie Munger.”

“One thing I learned from having dinner with Charlie was the importance of Getting into a great business and staying in it. There's a tendency in human nature to mess up a good thing because of an inability to sit still.”

“Charlie spends a lot of time talking about this idea of like, you can analyze. I love his surfing model. Cause he'll go and analyze like, why was Sam Walton so successful? Why was Les Schwab so successful? Why was the founder of national cash register so succe…”

“Take one idea that you use in your career, and the return is a thousand times that.”

“Trust is one of the greatest economic forces on earth.”

“When I had dinner with Charlie Munger, this is the advice that he gave us. ... He talked about the fact that they would meet people, you know, in their third, their twenties, thirties, and forties, and they would do business and do deals for the rest of their …”

“Charlie Munger said Henry Singleton was the smartest person that he ever met.”

“Charlie Munger believes that Rockefeller built the greatest company of all time.”

“He said, I read Barron's Magazine for 50 years. In 50 years, I found one investment opportunity in Barron's, out of which I made about eighty million dollars, with almost no risk. I took the eighty million and gave it to Lee Lu, who turned it into 400 or five …”

“Right before Charlie Munger died, he said something that's so important. And he said that trust is one of the greatest economic forces on earth.”

“Social proof leads to more sales, which leads to better distribution, which accelerates the winner take all or winner take most flywheel, which leads to ever greater specialization, which leads to more scale.”

“Decisions in your life are all about opportunity costs and wise people think in terms of personal opportunity costs. In other words, it's your alternatives that matter. That is how we make all of our decisions.”

“Sit on your ass investing. You're paying less to brokers. You're listening to less nonsense, and if it works, the tax system gives you an extra one, two, or three percentage points per year. This important investment philosophy assumes that one is better off b…”

“Buffett said, Benjamin Graham taught me only to buy cheap stocks. Charlie allowed me to change my thinking. That's the real impact Charlie's had on me. I needed a powerful force to walk out of the limitations imposed by Graham's theories. Charlie's ideas were …”

“And he says their biggest ideas, meaning Munger and Buffett's, their biggest ideas really gave them 10,000 times their money.”

“There's this very hard to find interview that John D. Rockefeller gave towards the end of his life. It's like, I think, 1700 pages. I think the transcript is 1700 pages long. It's the William O. Inglis interviews that he did with Rockefeller, and on Charlie's …”

“In 95 years, I have given Munger family money to an outsider to run once. Once in 95 years, and that is Li Lu.”

“In the next 12 years, the capital grew more than 20 times.”

“When Charlie thinks about things, he starts by inverting. To understand how to be happy in life, Charlie will study how to make life miserable. To examine how a business becomes big and strong, Charlie first studies how businesses decline and die. Most people …”

“Reading Barron's magazine for 50 years made him like four hundred million dollars, and he described why, because he's like, I read Barron's magazine for 50 years, the entire 50 years that I read Barron's magazine, I found one actionable insight that I could ac…”

“In the mid-nineteen eighties, because at that time Coca-Cola had become a poorly defined conglomerate, including a shrimp farm, winery, and a film studio. As the poor businesses were cut away to reveal the jewel that is syrup manufacturing and marketing operat…”

“This often works because there's normally a jewel at the heart of most companies that has often been used to fund new ventures. That jewel has been taken for granted by inpatient management. As the jewel becomes diluted by less successful projects, aggregate p…”

“I think that's why you find in people that reach the top of the profession, they have this historical database they can draw in, draw from in their head. It's exactly why Sam Zell and Charlie Munger spent so much time reading and studying history.”

“Do not just tell people on your team or me why something is good. It is infinitely more valuable to tell us why it's not good. And what you could say here is really just tell us the bad news because the good news takes care of itself.”

“Munger would say that you need to find what you're good, good at, and then pound away at it forever.”

“Both Munger and Zell were exactly that way. They did not try to hide their eccentricities. They embrace them. And that's part of the reason that they had such a cult-like following.”

“If you were to ask Charlie Munger and I did, I got to talk to Charlie Munger about this before he died, like who he thought the greatest entrepreneur of all time was. And he would say Rockefeller.”

“He had this brilliant incentive systems where he would share profits with 50% of the profits with each of the employees who worked in each store.”

“While an excess of self-regard is often counterproductive in its effect on cognition, it can cause some weird successes from overconfidence that happened to cause success. Never underestimate the man who overestimates himself.”

“We were paying 10 dollars a click for something that had a marginal cost to Google of exactly zero. And we saw that the ads were working for us. We could see at Geico how well Google advertising worked, and we just sat there sucking our thumbs.”

“There is something interesting when I had dinner with Munger. One of the most fascinating things he said, it was so odd. He thought it was very unusual to be so wealthy and love that that goes against human nature. The fact that him and Buffett, everybody obvi…”

“When I was younger, I was offered 300 shares of Bell Ridge oil. Any idiot could have told you there's no possibility of losing money and a large possibility of making money. So I bought it. The guy calls me back three days later and offered me 1500 more shares…”

“If you look at how the fortunes were built in this country, they were built by someone who identified a wonderful business.”

“And I actually think it's because there's the benefits of teaching, you know, it's not like they hoarded the knowledge that they, of their six or seven decade career. They wrote about their shareholders. They talked about the AGM. They, you know, people wrote …”

“And like one thing that they bring up over and over again is in their wholly owned businesses, unless it's going to completely drain a bunch of money, they're not going to sell them. Even if, you know, they can say, Oh, we're, we used to make 15%. Now we make …”

“When I went to Charlie Munger's house and got, got to have dinner with him, he actually said that he thought Rockefeller was the greatest entrepreneur of all time.”

“Munger's response to Brent was something like, we find somebody that did a good job before and ask them to do the same job for us. And the follow-up question, Brent's follow-up question was something like, yeah, but what about, you know, hiring for potential o…”

“So Munger says the mistakes that have been the most extreme in our history are mistakes of omission. They do not show up in our figures. They show up in our opportunity costs.”

“Picking some extreme example and asking my favorite question, what in the hell is going on here? Is the way to wisdom in this world. When something like a state farm happens, you should try to understand it.”

“In 95 years. I have given Munger family money to an outsider to run once, once in 95 years. And that is a Li Lu and he has hit it out of the park.”

“The whole secret of investment is to find places where it's safe and wise to not diversify.”

“If you put it in reverse, you say name a business that has been ruined because it was over downsized. I cannot think of a single one, but if you asked me to name businesses that were half ruined or ruined by bloat, I could rattle off name after name after name…”

“And part of the reason I think he's able to do that is because of his incredible communication skills. He doesn't just express ideas. He makes them memorable. It reminds me a lot of Charlie Munger, reminds me of Elon Musk, reminds me of Steve Jobs.”

“You don't have to be brilliant. You just have to be consistently not stupid over a long period of time. And just being consistently not stupid and don't sabotage yourself over decades puts you ahead of probably 99% of the people on the planet.”

“Anybody engaged in difficult work needs somebody they can organize their thoughts with. That person should be somebody, you know, you like and admire and trust.”

“He concluded, Henry was a lot smarter, but Warren had thought about investments a lot longer.”

“Munger said Henry Singleton was the smartest single human being I've ever known in my entire life.”