Wit and Wisdom From The World’s Most Irreverent Billionaire
Ladies and gentlemen, tune in to our special show on the Maria Rekrut Radio Show on Thursday, November 30, 2023, at 5 p.m. EST on https://4680q.ca/
We will remember the life and wisdom of the legendary investor, Charlie Munger. Join us as we reflect on the invaluable lessons and insights shared by the vice chairman of Berkshire Hathaway. From the importance of rationality and continuous learning to the art of patience and long-term value investing, Charlie Munger’s words of wisdom have left an indelible mark on the world of finance. Don’t miss this opportunity to celebrate the life and legacy of a true investing icon.
Charlie Munger is one of the great minds of the 20th century. Below is an attempt to capture that wisdom in one shareable place.
Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically you get ahead, but not necessarily in fast spurts. Nevertheless, 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.
Charlie Munger, the vice chairman of Berkshire Hathaway and a renowned investor, has imparted numerous investment lessons and words of wisdom over the years. Here are some of his notable insights:
- Be rational and objective.
- Be a learning machine.
- Financial freedom is about independence.
- Live within your income and save so that you can invest.
- Learn what you need to learn.
- Investing is where you find a few great companies and then sit on your ass.
- The big money is not in buying or selling, but in the waiting.
- Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you’ve won.
Munger’s wisdom emphasizes the importance of rationality, continuous learning, patience, and living within one’s means. His insights reflect a long-term, value-oriented approach to investing and a focus on
Charles “Charlie” Munger, a longtime resident of Pasadena, California, is perhaps best known as the Vice Chairman of the world’s greatest compound interest machine: Berkshire Hathaway, Inc.
In the time of his and Warren Buffett’s reign as the leaders of Berkshire, the company has returned roughly 2,000,000% on its initial value, or 20,000 to 1. This was accomplished in the adult lifetime of two men simply by investing the capital of the company in an increasing number of prosperous enterprises and without dangerous amounts of borrowing. It is a story for the ages.
Charlie is known as a “sidekick” only to people who don’t know him well. To those who do know him, Charlie is a fiercely independent intellectual who, in the words of his partner Buffett, “Marches to the beat of his own music, and it’s music like virtually no one else is listening to.”
Besides his work co-headlining the Berkshire affair and various other business and philanthropic ventures, Charlie is known for his fluent, multidisciplinary mind. Trained as a meteorologist during World War II and as a lawyer at Harvard before devoting himself to business, Munger has drawn heavily from the study of psychology, economics, physics, biology, and history, among other disciplines, in developing his system of “multiple mental models” to cut through difficult problems in complex social systems. It is a system like no other.
As a result, his insights on business and life are unique, rare, and correct with unusual consistency. Speeches and writings made long ago stand up in their logic and validity today as much as when they were written, given their basis in the deeply fundamental wisdom of the world.
Adopting the “Munger” approach to thinking is difficult, as is imitating any genius, but utilizing its core tenets will quickly remove the cobwebs from your mind. When asked his secret to success, Munger once answered, “I’m rational.”
Charlie Munger Quotes
“If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.”
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically, you get ahead, but not necessarily in fast spurts. Nevertheless, 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.”
“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.”
“Just because you like it does not mean that the world will necessarily give it to you.”
“I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.”
“I always say I want to know where I would die so I can never go there.”
“The iron rule of nature is: You get what you reward for. If you want ants to come, you put sugar on the floor.“
“We’re just not interested in taking a substantial chance of taking a lot of very decent people back to “Go” so we can have one more zero on our net worth.”
“I think Warren and I know the edge of our competency better than other people do.”
“I paid no attention to the territorial boundaries of academic disciplines and I just grabbed all the big ideas that I could.”
“Take a simple idea, and take it seriously.”
The Psychology of Human Misjudgment — The Psychology of Human Misjudgment is considered the magnum opus on why we behave the way we do.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business — Charlie describes his thoughts on investing, but only after going through a detailed list of useful mental models fundamental to understanding the world before you learn to invest.
Turning $2 Million Into $2 Trillion — Charlie goes through a long mental exercise of building Coca-Cola up from scratch, starting in 1986, using only the elementary mental models that would be learned by a young college student.
Academic Economics — Strengths and Weaknesses, after Considering Interdisciplinary Needs – Economics has often been the Queen of the social sciences. And yet, it’s still not very good. Charlie diagnoses its strengths and weaknesses and offers ways to improve.
Suggested Readings on Charlie Munger
The Munger Operating System: How to Live a Life that Really Works — In 2007, Munger gave a speech to USC about how to live an effective life. We call it the Munger Operating System for life.
Charlie Munger on Mental Models – Our complete list of the world’s most useful Big Ideas, inspired by Charlie himself.
Five Simple Notions For Solving Problems – Munger recommends a five-step approach to solve difficult problems.
The Tension Created by Stretch Goals – What is a better approach: Setting stretch goals that might cause people to cheat? Or making goals a little easier? Charlie thinks there is a tension between the two.
Adding Mental Models to Your Mind’s Toolbox – Charlie explains his concept of developing “multiple mental models” to add to your thinking toolbox.
Charlie Munger on the Value of Thinking Backward and Forward – You need to learn how to invert a problem in order to solve it most effectively.
Three Underrated Reasons for Berkshire Hathaway’s Enormous Success – Charlie and his partner Warren Buffett diagnose some of the more under-appreciated aspects of Berkshire’s rise to wealth.
Working Together: Why Great Partnerships Succeed – Trust is the key to great relationships of all kinds, and especially business partnerships.
Circle of Competence – If there’s one thing Charlie takes pride in, it’s that he knows what he knows and what he doesn’t know. That is a circle of competence.
Temperament is more important than IQ – “If you keep learning all the time, you have a wonderful advantage.”
Charlie Munger on why Energy Independence is a Terribly Stupid Idea – Charlie takes up a very unpopular opinion on the idea of “energy independence”.
The Work Required To Have An Opinion – How to be wrong a lot less often? Know the other side of the argument better than they do.
A Two-step Process for Making Effective Decisions – You need to analyze the variables in a major decision, and where your brain naturally leads you astray.
Worldly-Wisdom from Charlie Munger – Here is a sampling of Charlie’s insightful comments at the 2013 Daily Journal Corporation annual meeting.
How Good Gamblers Think – The one secret to winning at gambling is the secret to winning at investing: Wait for the odds, and bet only then.
Charlie Munger: “If I were teaching business school …” – How would Munger teach business school students how to think about business?
The Human Mind has a Shut-Off Device – Charlie thinks we all have a tendency to land on our first idea and stay there, and we need an antidote.
Getting The Best Odds – Gamblers can’t predict what will happen on any hand, but they can bet when they have the odds in their favor. Over time, they accrue an advantage.
How Raising Prices Can Increase Sales – Everyone in economics thinks lowering prices leads to rising sales. Sometimes that is true. But knowing when isn’t true leads to some interesting results.
Charlie Munger: Why Bureaucracy is not Shareholder Friendly – The constant curse of scale is that it leads to big, dumb bureaucracy—which, of course, reaches its highest and worst form in government where the incentives are really awful.
Charlie Munger on Getting Rich, Wisdom, Focus, Fake Knowledge and More – Here is a long list of wonderful thoughts from Munger.
A Conversation with Charlie Munger DuBridge Distinguished Visitor Lecture 2008 – In 2008, Charlie Munger spoke at Caltech, offering some of his most incisive, cutting, and original thoughts.
Daily Journal Corporation Notes
Charlie Munger is the Chairman of the Daily Journal, a public company based in LA. Every year at the annual shareholders meeting he talks for hours. I take very detailed notes.
- 2021 Daily Journal Meeting Notes
- 2019 Daily Journal Meeting Notes
- 2017 Daily Journal Meeting Notes
- 2016 Daily Journal Meeting Notes
- 2015 Daily Journal Meeting Notes
- 2014 Daily Journal Meeting Notes
- 2013 Daily Journal Meeting Notes
Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition – Compiled by Glenair CEO Peter Kaufman, Poor Charlie’s Almanack is the greatest compendium of Munger wisdom available.
Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger – Janet Lowe’s brief, readable biography of Charlie Munger’s life.