Charlie Munger quotes are an opportunity to learn from one of the greatest investors. Munger was a billionaire investor, Vice Chairman at Berkshire Hathaway, and Warren Buffett’s closest partner. He passed away on November 28, 1999 at the age off 99. Charlie Munger’s words of wisdom go beyond investment advice. He also shares valuable insights on life and how to succeed.
The following are wise Charlie Munger quotes for investors, entrepreneurs, and anyone willing to learn from the best.
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Charlie Munger Quotes to Invest and Live By
Successful Investing Requires Patience
Charlie Munger, of course, shared the same investment philosophy as his partner Warren Buffett which was to buy and hold excellent companies long-term. This requires an exercise of patience and riding out the volatility that tends to make investors feel anxious.
1. “It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”
2. “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.”
3. “The big money is not in the buying or the selling, but in the waiting.”
4. “If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.”
Advice on Investing
Munger believed in investing in excellent companies that are undervalued. It takes work to spot businesses selling below their intrinsic or book value. It requires a lot of research and digging into the numbers to find these gems. He also didn’t believe in extensive diversification. You should confidently invest in any business you have researched that is managed well and easy to understand. Investing in a smaller portfolio of stocks can lead to volatility. Still, as long as you know the business is operating well, you should keep the investment.
5. “You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing.”
6. “We have three baskets for investing: yes, no, and too tough to understand.”
7. “If something is too hard, we move on to something else. What could be simpler than that?”
8. “A great business at a fair price is superior to a fair business at a great price.”
9. “Invest in a business any fool can run, because someday a fool will. If it won’t stand a little mismanagement, it’s not much of a business. We’re not looking for mismanagement, even if we can withstand it.”
10. “There isn’t a single formula. You need to know a lot about business and human nature and the numbers… It is unreasonable to expect that there is a magic system that will do it for you.”
11. “An idiot, or a computer, can diversify a portfolio. But the whole trick of the game is to have a few times when you know something is better than average, and invest only where you have that extra knowledge. If that gets you a few opportunities, that’s enough.”
12. “How can professors spread this [nonsense that a stock’s volatility is a measure of risk]? I’ve been waiting for this craziness to end for decades. It’s been dented, but it’s still out there.”
13. “The idea of excessive diversification is madness.”
Success is Not Dependent on Your IQ
Munger never took an economics or business course, nor did he believe a high IQ is necessary to be successful at investing.
14. “We both insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think. So Warren and I do more reading and thinking and less doing than most people in business.”
15. “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.”
16. “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.”
17. “Our game is to recognize a big idea when it comes along when one doesn’t come along very often. Opportunity comes to the prepared mind.”
18. “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.”
19. “You’ll do better if you have passion for something in which you have aptitude. If Warren Buffett had gone into ballet, no one would have heard of him.”
20. “Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it’s time.”
Life Lessons
21. “Forgetting your mistakes is a terrible error if you’re trying to improve your cognition. Reality doesn’t remind you. Why not celebrate stupidities in both categories?”
22. “Live within your income and save so you can invest. Learn what you need to learn.”
23. “Don’t drift into self-pity because it doesn’t solve any problems. Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought.”
24. “Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand — you must learn to handle mistakes and new facts that change the odds.”
25. “Life and its various passages can be hard, brutally hard. The three things I have found helpful in coping with its challenges are: Have low expectations. Have a sense of humor. Surround yourself with the love of friends and family.”
26. “I have three basic rules. Meeting all three is nearly impossible, but you should try anyway:
- Don’t sell anything you wouldn’t buy yourself.
- Don’t work for anyone you don’t respect and admire.
- Work only with people you enjoy.
I have been incredibly fortunate in my life: with Warren I had all three.”
27. “Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat.”
Be Generous with Your Money and Knowledge
Every time Charlie Munger spoke, he deliberately shared information that would help people. He also encouraged people to share their wealth.
28. “The best thing a human being can do is to help another human being know more.”
29. “People should take way less than they’re worth when they are favored by life… I would argue that when you rise high enough in American business, you’ve got a moral duty to be underpaid— not to get all that you can, but to actually be underpaid.”
30. “Those of us who have been very fortunate have a duty to give back. Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference.”
Key Takeaway
The key takeaway from Charlie Munger quotes is to only invest in companies you understand and have thoroughly researched. If you are satisfied with their management, value, goals, and financial outlook, consider it a long-term investment. Be patient with your investments and ride out the ups and downs inherent in the market. Finally, never stop learning.
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Nadia Tahir is a freelance writer and content creator. She mostly writes in the areas of lifestyle and personal finance. She also enjoys writing on her blog about motherhood at This Mom is On Fire.
Always a good read from the “Bob-see Twins”.