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21 All-Time Best Quotes by Charlie Munger

Charlie Munger, 95, is a name that doesn’t require any introduction for those involved in the investing world. If you are new to investing, you might have heard Charlie as Warren Buffett’s right hand. However, even individually, Charlie Munger is considered as one the world’s wittiest investor.

Anyways, let me first introduce Charlie Munger to the newbies. Charlie Munger is an American investor, businessman and a self-made billionaire with the net worth of over $1.7 Billion (as of Feb 2019). He is the vice chairman of Berkshire Hathaway, the conglomerate headed by Warren Buffett. And like Buffett, Charlie Munger is also an active philanthropist and has donated millions of his personal wealth for good causes.

Interesting, if you look into his background, Charlie Munger never took any course in investing, finance or economics while he was in university. During World War II, Charlie studied meteorology at Caltech to become an army meteorologist. Later, he earned a degree in law from Harvard Law School.

Charlie Munger and Warren Buffett met in 1959 during a dinner party and got along immediately. Although they knew each other for a very long time, however, they built their informal partnership by investing together only in the 1970s. Later in the 1980s, both started the present structure of Berkshire Hathaway and have been running in profitably ever since by building wealth for themselves and their investors. Here’s what Warren Buffett thinks of his business partner Charlie Munger:

We’ve got an extremely good partnership and business is more fun — just as life is more fun — with a good personal partner and to have a great business partner. You know it’s just — we’ve accomplished more but we’ve also had way more fun.” -Warren Buffett

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Charlie Munger’s wisdom is an asset for all the investing community. The knowledge and success that he has gained in the past many decades is quite inspirational.  Therefore, in this post, we are going to highlight twenty-one evergreen quotes by Charlie Munger that every investor should know. Let’s get started.

21 All-time best Quotes by Charlie Munger

Charlie Munger Quotes on investing wisdom

“People calculate too much and think too little.”

“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.”

“What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head. And you’ve got to array your experience — both vicarious and direct — on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and fail in life. You’ve got to hang experience on a latticework of models in your head.”

Charlie Munger Quotes on Wealth Creation

“The big money is not in the buying or the selling, but in the waiting.”

“What are the secrets of success? -one word answer: ”rational”

“It takes the character to sit with all that cash and to do nothing. I didn’t get to where I am by going after mediocre opportunities.”

“To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people.”

“All I want to know is where I’m going to die so I’ll never go there.”

Charlie Munger Quotes on Importance of learning

“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.”

I paid no attention to the territorial boundaries of academic disciplines and I just grabbed all the big ideas that I could.”

“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.”

“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”

Also read: 31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

Charlie Munger Quotes on Circle of Competence:

“Knowing what you don’t know is more useful than being brilliant.”

“If something is too hard, we move on to something else. What could be simpler than that?” 

I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.”

“We have three baskets: in, out, and too tough. … We have to have a special insight, or we’ll put it in the “too tough” basket.” 

Charlie Munger Quotes on life rules to live by

“Mimicking the herd invites regression to the mean.”

“Remember that reputation and integrity are your most valuable assets — and can be lost in a heartbeat.”

Just because you like it does not mean that the world will necessarily give it to you.”

“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.”

Take a simple idea, and take it seriously.”

Suggested Readings on Charlie Munger

Book: 

Articles: 

The Ultimate Guide to Walter Schloss Investing cover

The Ultimate Guide to Walter Schloss Investing

When you think of investing, the first name that comes to your mind is Warren Buffet- and with good reason. Buffet has a legendary track record and has generated very high returns for his investors since the ’60s. But a lesser-known investor who was just as good and referred to as ‘Big Walt’ by Buffet is Walter Schloss, one of the most legendary investors in the investment world.

Background

Walter Schloss’ investment theories are most applicable to small value investors and were based on the teachings of Benjamin Graham (another icon in the investing world and also known as the father of the value investing).

Schloss’s studies helped gain an insight into how to perform deep value investing that is still relevant in today’s market. While the basis of Walter Schloss’s principles were based on Graham, he developed his own strategies while staying close to the fundamentals. His theories earned him the title ‘Superinvestor’ in 1984.

The Investing Playbook

Walter Schloss’ investment strategies involved a more ‘play by the book’ approach of investing in undervalued stocks. He focused on the quantitative factor and instead of following every stock he owned, Schloss decided to follow stocks based on valuation and buying at a discount to the intrinsic value. In 1994 Schloss listed the factors he believed were required to make money on the stock market. I have discussed the most important factors below:

1. Price is the most important thing when it comes to buying stocks

Walter Schloss’ believed Ben Graham’s philosophy that ‘a stock well bought is half sold’. He felt that every stock will become an attractive buy at a certain point as long as the price dropped low enough to provide a safety margin.

2. The price of a stock in relation to its book value is the most important factor in valuing stocks

Walter Schloss never bought stocks that had a premium to book value ratio. Instead, he bought it at a discount to book value as it provided a margin of safety. The investors who remained patient in the short run would be rewarded in the long run if they systematically bought discounted stocks.

3. Buy stock in companies that have been in business for a while

Schloss preferred to invest in stocks of companies that have a long history of being in business. The fact that these businesses have been in operation for so long gives the investor the confidence that the company will continue to operate long into the future as well. It can also help identify their business cycle and compare the book value earnings. Walter Schloss’s also invested in companies that were going through a downturn in their business cycle if he believed that the asset portfolio was strong and the chances of the company performing well in the long-term seemed favorable.

4. Maintain a diverse asset portfolio and stay fully invested

Walter Schloss usually traded a 100 different stocks at any given time and he was a 100% invested. During a high market valuation, he would adjust his price to book value upward if the company was paying a good dividend. But he relied on dividends rather than earnings as an indicator of a company’s profitability.

When analyzing the quality of the management in the company you choose to invest in, Walter Schloss believed that being ethical was more important than just being smart. In an interview, he said: “In a choice between a smart guy with a bad reputation and a dumb guy, I think I’d go with the dumb guy who’s honest. Of course, you can’t always protect yourself there, either. I guess the choices we’ve made are probably in those areas.”

The ‘rules of investing’ were written by Walter Schloss many years ago but they still remain relevant today. If an investor learns to stick to a small value approach, it will benefit them in the long run. Keep it simple.

Also read: Why Warren Buffet Suggests- ‘Price Is What You Pay, Value Is What You Get’?

Walter Schloss and Portfolio Management

Walter Schloss did not invest too much time assessing the details of a particular stock to the very last detail rather he studied the company financials and did not overanalyze each investment opportunity. He spread his risks evenly and sometimes invested just $10,000 in a stock. His portfolio consisted of a hundred stocks.

In the initial investment, Schloss would take a small position and eventually buy more if the difference between the trading price and intrinsic value continued to widen. In particular, he preferred to invest in companies with a higher margin of safety and focused on stocks with low leverage.

Walter Schloss’s deep value investing

As a small value investor, the strategies used by Walter Schloss are extremely relevant. Walter Schloss’s investment strategy was incredibly old-school, he was a simple man and operated more like a small-time investor rather than a professional financial advisor. Schloss never aimed to reach new heights as an investor and continued to use and search for new deep value investing ideas till the very end.

Value investing are stocks that trade lower than their book value and while it is hard to find these stocks in today’s market where ‘money never sleeps’, this old school strategy developed by Walter Schloss is still important. Here are the key takeaways of this investing style:

  • The main criteria of the investor should be to discount your stock to a tangible book value
  • The quality of the management is also important, if the company is not confident in their management, then neither should you
  • Having a diversified portfolio is incredibly important. In the long term, it is the valuation of your portfolio that helps you earn large gains in the stock market.

Also read: #5 Things Warren Buffett looks for before investing.

BONUS: 16 Investing Rules from Walter Schloss

(FROM A 1994 LECTURE)

  1. Price is the most important factor to use in relation to value.
  2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
  3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
  4. Have patience. Stocks don’t go up immediately.
  5. Don’t buy on tips or for a quick move. Let the professionals do that if they can. Don’t sell on bad news.
  6. Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for the weaknesses in your thinking. Buy on a scale down and sell on a scale up.
  7. Have the courage of your convictions once you have made a decision.
  8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
  9. Don’t be in too much of a hurry to see. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to re-evaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E ratios high? If the stock market historically high. Are people very optimistic etc?
  10. When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 years before the stock sold at 20 which shows that there is some vulnerability in it.
  11. Try to buy assets at a discount than to buy earnings. Earning can change dramatically in a short time. Usually, assets change slowly. One has to know much more about a company if one buys earnings.
  12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally, it is harder to keep money than to make it. Once you lose a lot of money, it is hard to make it back.
  13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.
  14. Remember the work compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 yrs, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.
  15. Prefer stock over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.
  16. Be careful of leverage. It can go against you.

Conclusion

The Walter Schloss investing style is great for anyone looking to invest in small companies. The strategies help reduce risk with the promise of high returns.

Unlike Warren Buffet’s investing style which requires the ability to identify a competitive advantage and do thorough research into a company’s financial statements that most people don’t have the know-how to do. Schloss provides a great alternative to this- focus on assets rather than earnings.

Many small investors are in the habit of solely investing in a company based on its annual earnings but they are more likely to succeed if they focus on the assets in the balance sheet. Walter Schloss investing is a time-tested lesson that still holds true today.

becoming warren buffett

Becoming Warren Buffett – 2017 HBO Documentary [Video]

Becoming Warren Buffett – 2017 HBO Documentary [Video]

Warren Buffett, also known as the ‘Oracle of Omaha’ is a popular name in the investing world.

He is an American business magnate, investor, speaker and philanthropist who serves as the chairman and CEO of Berkshire Hathaway. Warren Buffett is considered the greatest investor of all time. As of June 2018, he is the third richest person on the world with a net worth of over $88.5 billion

Warren Buffett was born on 30th August 1920, in Omaha, Nebraska. He made his first stock investment as an age of eleven. Later, he attended Columbia Business School as a graduate where he learned the philosophies of Value Investing through his mentor- Benjamin Graham, the father of value investing. In 1959, Warren Buffett created his Buffett Partnership after meeting Charlie Munger.

In 1962, Warren Buffett started buying stocks in a textile manufacturing firm called Berkshire Hathaway On May 10, 1965 Warren Buffett, through his investment partnership, took over the management and control of Berkshire Hathaway. Buffett’s partnership firm had accumulated about 49% of the shares of Berkshire.

As of today, Berkshire Hathaway is the third largest public company in the world, the ninth largest conglomerate by revenue and the largest financial services company by revenue in the world.

Becoming Warren Buffett – 2017 HBO Documentary

In 2017, HBO released a documentary on Becoming Warren Buffett, a co-production of HBO and Kunhardt Films; directed by Peter Kunhardt; produced by Teddy Kunhardt and George Kunhardt.

Here’s the video on how Warren Buffett became the greatest investor in the world –>

(Credits: Advexon TV)

Also read:

best quotes on investing

31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More:

Over the years, there are many successful investors who have shared their wits with the world. Warren Buffett, Benjamin Graham, Philip Fisher, Charlie Munger, Peter Lynch, Seth Klarman, Joel Greenblatt etc are few of the famous investors who have inspired the world by their ‘words of wisdom’.

Here are the 31 hand-picked best quotes on Investing by few of the world’s most successful investors. Enjoy Yourself.

31 Hand-Picked Best Quotes on Investing:

Warren Buffett

warren buffett

  1. “Price is what you pay. Value is what you get.”
  2. “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”
  3. “Risk comes from not knowing what you are doing.”
  4. “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
  5. “In the business world, the rearview mirror is always clearer than the windshield.”
  6. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
  7. “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
  8. “The difference between successful people and really successful people is that really successful people say no to almost everything.”
  9. “The stock market is a device for transferring money from the impatient to the patient.”
  10. “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
  11. “I will tell you how to become rich. Close the doors, be fearful when others are greedy. Be greedy when others are fearful.”

Also read: Why Warren Buffet Suggests- ‘Price Is What You Pay, Value Is What You Get’?

PHILIP FISHER

philip fisher

  1. “Conservative investor sleep well.”
  2. “The stock market is filled with individuals who know the price of everything, but the value of nothing.”

Also read: Common Stocks and Uncommon Profits by Philip Fisher- Book Review

Benjamin Graham

  1. “Buy not on optimism, but on arithmetic.”
  2. “The individual investor should act consistently as an investor and not as a speculator.”
  3. “If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”
  4. The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.”

Also read: ‘The Intelligent Investor’ by Benjamin Graham- Book Review

Charlie Munger

  1. “Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger
  2. “Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.”
  3. “No wise pilot, no matter how great his talent and experience, fails to use his checklist.” – Charlie Munger Peter

Also read: 21 All-Time Best Quotes by Charlie Munger

Peter Lynch

peter lynch

  1. “Behind every stock is a company. Find out what it’s doing.”
  2. “Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part ownership of a business.”
  3. “If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.”
  4. “Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
  5. “If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”

Also read: One up on wall street by Peter Lynch- Book Review

Few Other Best Quotes on Investing:

  1. “Minimizing downside risk while maximizing the upside is a powerful concept.” – Mohnish Pabrai
  2. “The secret to investing is to figure out the value of something – and then pay a lot less.” Joel Greenblatt
  3. “Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer
  4. “While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” -Seth Klarman
  5. “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
  6. “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

Also read: The Little Book That Beats The Market by Joel Greenblatt- Book Review

BOTTOM LINE:

None of the quote mentioned above by any of the successful investors is too complex to understand. Stock investing is simple if you have the right attitude and follow the proper approach.

That’s all. I hope this post- “31 Hand-Picked Best Quotes on Investing -Buffett, Munger, Graham & More” is useful and entertaining to you.

If I missed any of the best quotes on investing, feel free to comment below. #HappyInvesting