Charlie Munger Quotes - Page 14

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• Tthe 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 may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life.

  Charlie Munger

  School, Trying, Together

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• 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 Warrendoes is a matter of personal preference. I would hate to have people ask me for money all day long.

  Charlie Munger

  Hate, Long, People

  Charlie Munger's advice on life and other at the 2003 Berkshire Hathaway Annual Meeting, www.tilsonfunds.com. May 3, 2003.

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• Litigation is notoriously time-consuming, inefficient, costly and unpredictable.

  Charlie Munger

  Unpredictable, Consuming, Time Consuming

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• If you can get good at destroying your own wrong ideas, that is a great gift.

  Charlie Munger

  Ideas, Destroying, Great Gifts

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• The cost of being a publicly traded stock has gone way, way up. It doesn't make sense for a little company to be public anymore. A lot of little companies are going private to be rid of these burdensome requirements.

  Charlie Munger

  Cost, Gone, Littles

  Charlie Munger's opening remarks at the 2005 Wesco Financial Annual Meeting, www.tilsonfunds.com. May 4, 2005.

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• I also want to raise the possibility that there are, in the very long term, "virtue effects" in economics- for instance that widespread corrupt accounting will eventually create bad long term consequences as a sort of obverse effect from the virtue-based boost double-entry book-keeping gave to the heyday of Venice. I suggest that when the financial scene starts reminding you of Sodomand Gomorrah, you should fear practical consequences even if you like to participate in what is going on.

  Charlie Munger

  Book, Venice, Long

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• A banker who is allowed to borrow money at X and loan it out at X plus Y will just go crazy and do too much of it if the civilization doesn't have rules that prevent it.

  Charlie Munger

  Crazy, Civilization, Bankers

  "Berkshire's Munger: High-Frequency Trading 'Basically Evil'". Interview with Becky Quick, www.cnbc.com. May 3, 2013.

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• The beauty of a financial institution is that there are a lot of ways to go to hell in a bucket. You can push credit too far, do a dumb acquisition, leverage yourself excessively - it's not just derivatives [that can bring about your downfall].

  Charlie Munger

  Dumb, Buckets, Acquisition

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• It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling to parlay their existing advantage into dominance on the Internet. But it is way less sure [that this will occur] than the certainty 20 years ago that the basic business would grow steadily, so there's more downside risk. The perfectly fabulous economics of this business could become grievously impaired.

  Charlie Munger

  Years, Risk, Alternatives

  "Charlie Munger Speaks - Part 2". Charlie Munger's comments on businesses at the 2000 Wesco Financial Annual Meeting, www.fool.com. May 15, 2000.

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• Black-Scholes works for short-term options, but if it's a long-term option and you think you know something [about the underlying asset], it's insane to use Black-Scholes.

  Charlie Munger

  Thinking, Long, Black

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• Quoting Demosthenes, 'For what each man wishes, that he also believes to be true.' I would rather make money playing a piano in a whorehouse than arguing that no cost is incurred when employees are paid in stock options instead of cash. I am not kidding.

  Charlie Munger

  Believe, Men, Piano

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• All the equity investors, in total, will surely bear a performance disadvantage per annum equal to the total croupiers' costs they have jointly elected to bear. This is an inescapable fact of life. And it is also inescapable that exactly half of the investors will get a result below the median result after the croupiers' take, which median result may well be somewhere between unexciting and lousy.

  Charlie Munger

  Cost, Half, May

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• Black-Scholes is a know-nothing system. If you know nothing about value - only price - then Black-Scholes is a pretty good guess at what a 90-day option might be worth. But the minute you get into longer periods of time, it's crazy to get into Black-Scholes. For example, at Costco we issued stock options with strike prices of $30 and $60, and Black-Scholes valued the $60 ones higher. This is insane.

  Charlie Munger

  Crazy, Black, Insane

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• Fixable but unfixed bad performance is bad character and tends to create more of itself, causing more damage to the excuse giver with each tolerated instance.

  Charlie Munger

  Character, Damage, Excuse

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• I'm very pleased when the smartest people come [to the U.S.] and almost never pleased when the very bottom of the mental barrel comes in.

  Charlie Munger

  People, Barrels, Bottom

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• We tend to buy things - a lot of things - where we don't know exactly what will happen, but the outcome will be decent.

  Charlie Munger

  Outcomes, Decent, Happens

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• With so much money riding on reported numbers, human nature is to manipulate them. And with so many doing it, you get Serpico effects, where everyone rationalizes that it's okay because everyone else is doing it. It is always thus.

  Charlie Munger

  Numbers, Riding, Human Nature

  "Charlie Munger Speaks - Part 2". Charlie Munger's general comments at the 2000 Wesco Financial Annual Meeting, www.fool.com. May 15, 2000.

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• Part of that, I think, is being able to tune out folly, as distinguished from recognizing wisdom. You've got whole categories of things you just bat away so your brain isn't cluttered with them. That way, you're better able to pick up a few sensible things to do.

  Charlie Munger

  Thinking, Simplicity, Brain

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• Harvard and Yale concentrated with venture capitalists that got the best calls and brainpower. Very few firms made most of the money, and they made it in just a few periods. Everyone else returned between mediocre and lousy. When returns happened, envy rippled through institutional money management. The amount invested in venture capital went up 10 times post-1999. That later money was lost very quickly. It will happen again. I don't know anyone who successfully resists this stuff. It becomes a new orthodoxy.

  Charlie Munger

  Yale, Envy, Venture Capitalists

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• I think gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939, but civilized people don't buy gold, they invest in productive businesses.

  Charlie Munger

  Thinking, People, Gold

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• I think there's an awful lot of twaddle and bullshit on EVA. The whole game is to turn retained earnings into more earnings. EVA has ideas about cost of capital that make no sense. Of course, if a company generates high returns on capital and can maintain this over time, it will do well. But the mental system as a whole does not work.

  Charlie Munger

  Thinking, Games, Ideas

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• A different set of incentives from rising in an economic establishment where the rewards system, again, the reinforcement, comes from being a truffle hound. That's what Jacob Viner, the great economist called it: the truffle hound - an animal so bred and trained for one narrow purpose that he wasn't much good at anything else, and that is the reward system in a lot of academic departments.

  Charlie Munger

  Animal, Different, Purpose

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• I don't invest in what I don't understand. And I don't want to understand Facebook.

  Charlie Munger

  Want

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• At Berkshire Hathaway we do not like to compete against Chinese manufacturers.

  Charlie Munger

  Chinese

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• To some extent, stocks are like Rembrandts. They sell based on what they've sold in the past. Bonds are much more rational. No-one thinks a bond's value will soar to the moon.

  Charlie Munger

  Past, Moon, Thinking

  Charlie Munger's comments on stocks and Rembrandts at the 2001 Berkshire Hathaway Annual Meeting, www.tilsonfunds.com. April 28, 2001.

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