Charlie Munger

Charlie Munger

This a collection of almost everything including stories, lessons, short quotes which I will keep updating often. There is lesson in everything. Happy Learning!

Worldly wisdom is mostly very, very simple. And what I’m urging on you is not that hard to do if you have the will to plow through and do it. And the rewards are awesome – absolutely awesome.

Feel free to jump anywhere,


Three Rules for a Career by Charlie Munger

  1. Don’t sell anything you wouldn’t buy yourself
  2. Don’t work for anyone you don’t respect
  3. Work only with people you enjoy

I think it’s a huge mistake not to absorb elementary worldly wisdom if you’re capable of doing it because it makes you better able to serve others, it makes you better able to serve yourself, and it makes life more fun.

Basically Mungers have 3 stocks Berkshire, Costco and investment in Li Lu’s parternship. 3 things well along in my 95 years. You don’t need to own lot many stocks to get rich.

The most important word to the investors is rationality .

The safest way to try and get what you want is try and deserve what you want.

You have to keep learning if you want to be good investor.

My Berkshire Hathway stock cost me $16 a share and it’s not selling for almost $3,00,000 a share. It took a long time and it was a long term investment. And after 50 years sitting there, lo and behold it’s work out very well.

A great company will earn more and more while you’re just sitting and doing nothing. A mediocre company won’t do that. So you are harnessing long range force that will help you. It’s just very important. These mediocre companies that are around will cost a lot of agony and very modest profits. You do fine, it goes up a little, you have to sell, you have to find another and it’s all a lot of work.

Just buy one great company and get the right thing at right price and then just sit there.

I always like it when somebody who’s attracted to me agrees with me. Therefore, I got very fond memories of Phil Fischer. The basic idea was that it was hard to find good stocks and find good investments and you want to be in good investments and therefore you just find few of them that you know a lot about and concentrate on those. Seem to me it was obviously good idea and it’s proven to be an obviously good idea and yet 98% of investing world doesn’t follow it.

If you figure out the people you really want to be with and work for and you tell them so and why, it is likely to cause a favourable result.

Wisdom acquistion is a moral duty. There a corollary to this which means you are hooked to life time learning.

It’s not the short time gambling that works, its identifying the long term investments and sticking with it.

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.

In my whole life, I haven’t succeeded in something I wasn’t interested in!

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.

You are a disaster if you don’t know the edge of your competency.

I always like Occam’s Razor. That is wonderful way you can think. You can argue that Albert Einstein’s whole carrer was marvellous demonstration of Occam’s Razor.

What good does it do to be able to pass a test parroting back to the professor what he told you. Well, it you would get an academic label, it won’t get you fabulous investment results in life where it takes some imagination if you don’t see how these things work and how they interplay and of course the way to get that competency is to adopt neccessary elements and practise using it over a considerable period of time and considerable area of complexity.

If you underspend your income all your life and keep learning and collect all bone headaches experience mistakes other people made and avoid them, I would confidentally predict you will do just fine.

Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions. Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us but by and large we don’t bother with trying to predict the tides because we plan to play the game for long time. I recommend to all of you exactly the same attitude.

Lord Acton had this law, “Power tends to corrupt, and absolute power corrupts absolutely”. Well the Munger version of that is that, “Easy money courrpts and really easy money tends to corrupt absolutely”.

The first rule is that you’ve got to have multiple models — because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models. And the models have to come from multiple disciplines — because all the wisdom of the world is not to be found in one little academic department.

It’s like the old saying, ‘To the man with only a hammer, every problem looks like a nail.’ But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world.

You may say, ‘My God, this is already getting way too tough.’ But, fortunately, it isn’t that tough — because 80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.

You need a different checklist and different mental models for different companies. I can never make it easy by saying, ‘Here are three things.’ You have to drive it yourself to ingrain it in your head for the rest of your life.

Another thing I think should be avoided is extremely intense ideology because it cabbages up one’s mind. When you’re young it’s easy to drift into loyalties and when you announce that you’re a loyal member and you start shouting the orthodox ideology out, what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind.

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 in life. You’ve got to hang experience on a latticework of models in your head.

I have rule for politics which has served me well for predictions and that is, “the politicians are never so bad you don’t live to want them back”.

Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead–through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I’m going to die so I don’t go there.

Part of enjoying your life is to see it like it is, face it like it is and adapt to reality as it is whether you like it or not.

My mothers grandfather had a theory which he said over and over to his grandchildren including my mother was that real opportunites that come to you are few, it’s very fortunate life that has just bathed an opportunity all the way. Most people just get a few times when they can make a huge difference by seizing a huge activity and he said when you find one my dear grandchildren seize it boldly and don’t do it small. If you take whole history of Berkshire and if you take out the 20 best transactions, our record is a joke. Life is not just bathing you in unlimited opportunites even if you were being able to find them and seize them.

If you are going to live a long time, you have to keep learning. What you formerly knew is never enough. So, if you don’t learn constantly, revise your conclusions and get better ones, you are like one-legged man in ass-kicking contest.

When I urge a multidisciplinary approach I’m really asking you to ignore jurisdictional boundaries. And the world isn’t organized that way. It discourages the jumping of jurisdictional boundaries. Big bureaucratic businesses discourage it. And, of course, academia itself discourages it. All I can say there is that, in that respect, academia is horribly wrong and dysfunctional. And some of the worst dysfunctions in businesses come from the fact that they balkanize reality into little individual departments with territoriality and turf protection and so forth. So if you want to be a good thinker, you must develop a mind that can jump the jurisdictional boundaries.

Since your academic structure by and large, doesn’t encourage minds jumping jurisdictional boundaries, you’re at a disadvantage because, in that one sense, even though academia’s very useful to you, you’ve been mistaught. So if our professors won’t give you an appropriate multidisciplinary approach – if each wants to overuse his own models and under use the important models in other disciplines – you can correct that folly yourself. You can reach out and grasp the model that better solves the overall problem. All you have to do is know it and develop the right mental habits. And it’s kind of fun to sit there and outthink people who are way smarter than you are because you’ve trained yourself to be more objective and multidisciplinary. Furthermore, there’s a lot of money in it – as I can testify from my own personal experience.

We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them.

The great philosopher who said ‘A man never steps into the same river twice,’ you know, ‘The man is different, and so is the river, when he goes in the second time.’ That’s the trouble with economics. It’s not like physics. The same damn recipe done a different time gets a different result.

Advice on life: 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. And all these simple rules work so well to make your life better. And they’re so trite.

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 what your own aptitudes are. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.</span> 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.

You can argue that if you’re not willing to react with equanimity to a market price decline of 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 to the people who can be more philosophical about these market fluctuations.

Charlie Munger on Charles Darwin: “He trained himself to consider any evidence tending to disconfirm any hypothesis of his, especially if he thought his hypothesis was a particularly good one.”

If you are not willing to react with equanimity to a market price decline of 50% 2 or 3 times a century, you are not fit to be a common shareholder and you deserve the mediocre result you are going to get.

Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia…Every time you find your drifting into self-pity, I don’t care what the cause, your child could be dying from cancer, self-pity is not going to improve the situation. It’s a ridiculous way to behave.

Life will have terrible blows, horrible blows, unfair blows, it doesn’t matter. Some people recover and others don’t. 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 that your duty was not to be immersed in self-pity, but to utilize the terrible blow in a constructive fashion. That is a very good idea.

You know what Rudyard Kipling said? Treat those two imposters just the same success and failure. Of course, there’s going to be some failure in making the correct decisions. Nobody bats a thousand. I think it’s important to review your past stupidities so you are less likely to repeat them, but I’m not gnashing my teeth over it or suffering or enduring it. I regard it as perfectly normal to fail and make bad decisions. I think the tragedy in life is to be so timid that you don’t play hard enough so you have some reverses.


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

The best thing a human being can do is to help another human being know more.

Never spend more than you can earn.

As civilization came progess only the method of invention, similarly you can progress only when you learn the method of learning.

You can’t really know anything if you just remember isolated facts and try and bang them back. You’ve got to have models in your head. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework (integrated collection) of models in your head.

Fortunately it isn’t that tough because 80 or 90 important models will carry about 90% of the freight in making you a worldly wise person. And, of those, only a mere handful really carry very heavy freight.

Generally I have found two things you should never do in your life, one is never feel sorry for yourself (never ever), and other thing you never want to have is envy. That’s the only of the deadly sins, you’re never going to have fun at all. Pick one of others!

Always invert. ~ Carl Jacobi

Every missed chance in life was an opportunity to behave well, to learn something.

The best way to get what you want in life is to deserve what you want.

Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.

I have been a great actor for so long that I can no longer remember or know what I think about any subject. ~ Sir Cedric Hardwicke

I would rather deal with the guy with an IQ of 130 who thinks it’s 125 than with the guy with an IQ of 180 who thinks it’s 200. ~ Warren Buffett

Everything should be made as simple as possible, but not more simple. ~ Albert Einstein

A man who doesn’t learn about history before he was born goes through his life like a child. ~ Cicero

Better be roughly right than be precisely wrong.

If you keep learning all the time you have a huge advantage.

Treat the two impostors failures and success the same.

I always want to just put my head down and adjust. Feeling victimised is a counterproductive way to think as a human being.

In short term, stock market is gambling machine, but in long-term it’s a weighing machine. ~ Ben Graham

You change your mind when the facts change.

I like the long-term investors who figure out something is going to work over the long term.

All the wisdom in the world is not to be found in one little academic department. That would be a disastrous way to think and operate.

Go to bed smarter than when you woke up.

Every era, it is a cinch that a great nation will, in due time, be ruined.

Cognition, misled by tiny changes involving low contrast, will often miss a trend that is destiny.


One of my collagues, great success in life, clerked in Superme Court, etc but he knew a lot and he tended to show it as a very young lawyer and one day the senior partner he was working under called him and said, “Listen Chuck, I will explain something to you. Your duty under any circumstance is to behave in such a way that your client thinks he is the smartest person in the world and if you’ve got any energy avaliable inside of you after that use it to make your senior patner look like the smartest person in the world and only after you satisfy those two obiligation you want your life to shine at all.”

There once was a man who became famous composer in the world but was utterly miserable most of the time and one of the reasons was he always over spent his income. That man was Mozart.

There’s a famous story about Max Planck which is apocryphal: After he won his prize, he was invited to lecture everywhere, and he had this chauffeur that drove him around to give public lectures all through Germany. And the chauffeur memorized the lecture, and so one day he said, “Gee Professor Planck, why don’t you let me try it as we switch places?” And so he got up and gave the lecture. At the end of it some physicist stood up and posed a question of extreme difficulty. But the chauffeur was up to it. “Well,” he said, “I’m surprised that a citizen of an advanced city like Munich is asking so elementary a question, so I’m going to ask my chauffeur to respond.”

There is one story of Charlie selecting his partners wherein both partners decide to divide everything equally and if firm is behind the commitments to other people, both of them promise to put in 14 hours a day. Needless to say that firm didn’t fail and people died rich and honoured. Such a simple idea.

Once in the course, I had this guy in Harvard Law Review ahead of me and in an argument he said, “Charlie, think about it for a while and you will agree with me because you are smart and I am right”.

There was Nobel Prize Winner at Stanford, he looked at the investment success of Berkshire Hathaway and he said it’s luck. He said, it’s like enough money flipping coins and winning two or three times in a row.

When Shockley was at his craziest, he tried to recruit all these Nobel Laurates to donate the sperm so that the next generation could have the advantage of all this selective breeding and I think it was Muller who said to him, “I think you are barking up the wrong tree. What my sperm has given America is two guitar players. If you want Nobel Laurates, you better look them at immigrant illietrate tailors”.

Example of real bad employment market. My uncle Fred graduated from Harvard School of Architecture with great distinction and in 20s he had a very successful architectural practise in Omaha where he did churches, little buildings and houses, where he made 8 or 10 thousand dollars a year which is an enormous amount of money to make from credibly performing architectural profession in the 1920s. When the 30s came, the architectural (building) permits in Omaha would sometimes go down to $30,000 per month for the whole city of Omaha. There was exactly zero work for architects including my distinguished Uncle. So, he moved down to California. In California, he took drafting work at low rates for few architects that still had some work and when it went worse than that he went to County of Los Angeles and in the agony of County, they classified him as laundry man to save money but had him do drafting work which after all was exercising his skill. He didn’t think it was beneath him, he coped as best he could. He never complained to anybody and his pay after deductions all through 31, 32, 33, 34 was $108 per month. It wasn’t all that bad it seems because he rented his whole house in Glendale at $25 per month. When they created FHA in 1936, he could take a civil service exam which he was first so for rest of his life he was the chief architect for the FHA in Los Angeles. A responsible, interesting and civilization benefiting line of work and he had a long and happy career doing that. He never got discouraged, he never thought what he had to do was something he should vail about. I never heard him complain about anything.

My father used to tell a story on himself which was very good that I never forgot. He was graduate of Harvard Law School and practicing law in Nebraska and he went out to shoot pheasants in South Dakota. Everybody he was with was signing up as South Dakota resident to save $5 on hunting license. But the crowd, everybody was doing it and $5 was a lot of money back then. He almost signed the damn thing and thought to himself this is a perjury and practically a lawyer he stopped himself but he came so close. So, when the culture starts to go wrong, we are all susceptible to be dragged along and therefore it’s a very good habit in life to develop what Kipling says, “If you can keep your head when all about you are losing theirs and blaming it on you, If you can trust yourself when all men doubt you, But make allowance for their doubting too;”. I have been doing it all my life.

I love to tell story about Caltech. Caltech has Rubix Cube contest and one year one guy won it, he asked for 3 cubes and juggled it and as they went by in his hands while he was juggling he solved all of the three. People thought that was hell of achievement that was hard to top. The next year came along this very young woman and she said give me two Rubix Cubes and she just held them and looked at them for very long amount of time. She put one in left hand and another in right and put both hands behind her back and twiddled and took them out solved. Nobody has topped that yet!

This is a wonderful story on human nature. I have a friend Chief of the medical staff in California Hospital. A bunch of non-board certified anesthesiologist who came out of I forget the sub branch medicine. And they control the anesthesia department of the hospital and he could see that they had created 3 unecessary deaths and covered up every single one and he knows it’s just gonna ruin his life. So, he got rid of them all, changed the whole system. He told me story 20 years later and I said what happened to this day none of the people I cleaned out and none of their friends has ever spoken to me. He was willing to take all that ill will to do the Lord’s work and do it right. All over America there are stories like that. That’s very good story of human nature.

I finally figured out why the teachers of corporate finance often teach a lot of stuff that’s wrong. When I had some eye trouble very early in life, I consulted a very famous eye doctor and I realized that his place of business was doing a totally obsolete cataract operation. They were still cutting with a knife with better procedures and I said why are you in the great medical school performing absolute obsolete operations. He said it’s such a wonderful operation to teach. Well that’s what happens in corporate finance, they get these formulas and it’s fine teaching experience. You are given a formula, you are presented with a problem, you apply the formula, you get a real feeling of worthwhile activity. There is only on problem, it’s all balderdash.