121 Charlie Munger Quotes

You are about to read 121 quotes from the legendary investor and thinker Charlie Munger. There’s no other list in existence like this. Munger has been Warren Buffett’s business partner for more than 50 years now. Their combined wisdom and wit is pure brilliance. The quotes below are all hand selected from countless hours of research and reading.

1. “Life will have terrible blows in it, horrible blows, unfair blows. It doesn’t matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every missed chance in life was an opportunity to behave well. Every missed chance in life was an opportunity to learn something and that your duty was not to be submerged in self-pity. But instead to utilize the terrible blow in constructive fashion. That is a very good idea.”

2. “What do you want to avoid? Such an easy answer: sloth and unreliability. If you’re unreliable, it doesn’t matter what your virtues are. You’re going to crater immediately. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.”

3. “Don’t do cocaine. Don’t race trains. And avoid AIDS situations.”

4. “Three rules for a career: 1) Don’t sell anything you wouldn’t buy yourself; 2) Don’t work for anyone you don’t respect and admire; and 3) Work only with people you enjoy.”

5. “When any guy offers you a chance to earn lots of money without risk, don’t listen to the rest of his sentence. Follow this, and you’ll save yourself a lot of misery.”

6. “If you think your IQ is 160 but it’s 150, you’re a disaster. It’s much better to have a 130 IQ and think it’s 120.”

7. “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 Buffett 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.”

8. “You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.”

9. “I’m always reminded of the young guy who went to Mozart and said, ‘I’d like to write symphonies.’ When Mozart said, ‘You’re too young,’ the young man replied, ‘But you were young when you started.’ Mozart pointed out, ‘Yes, but I wasn’t asking anyone else for advice on how to do it.’”

10. “Generally speaking, envy, resentment, revenge and self-pity are disastrous modes of thought. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity. Self-pity will not improve the situation.”

11. “Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted the independence. I desperately wanted it.”

12. “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.”

13. “I met the towering intellectuals in books, not in the classroom, which is natural. I can’t remember when I first read Ben Franklin. I had Thomas Jefferson over my bed at seven or eight. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control.”

14. “We both, Warren Buffett and I, 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.”

15. “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at.”

16. “Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.”

17. “There is no better teacher than history in determining the future. There are answers worth billions of dollars in $30 history book.”

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

19. “When you borrow a man’s car, always return it with a tank of gas.”

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

21. “Being an effective teacher is a high calling.”

22. “There are huge advantages for an individual to get into a position where you make a few great investments and just sit back, you’re paying less to brokers, you’re listening to less nonsense.”

23. “Very-high-IQ people can be completely useless. And many of them are.”

24. “Benjamin Graham used to say, ‘It’s not the bad investment ideas that fail; it’s the good ideas that get pushed into excess.”

25. “The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.”

26. “Obviously if you want to get good at something which is competitive, you have to think about it and practice a lot. You have to keep learning because the world keeps changing and competitors keep learning. You have to go to bed wiser than you got up. People who do that almost never fail utterly. Very few have ever failed with that approach. You may rise slowly, but you are sure to rise.”

27. “We’re emphasizing the knowable by predicting how certain people and companies will swim against the current. We’re not predicting the fluctuation in the current.”

28. “Move only when you have an advantage. It’s very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor. We just keep our heads down and handle the headwinds and tailwinds as best we can, and take the result after a period of years.”

29. “Only in fairy tales are emperors told they are naked.”

30. “People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There’s always been a market for people who pretend to know the future. Listening to today’s forecasters is just as crazy as when the king hired the guy to look at the sheep guts.”

31. “Sit on your ass investing. You’re paying less to brokers, you’re listening to less nonsense, and if it works, the tax system gives you an extra one, two, or three percentage points per annum.”

32. “I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I’ve seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not.”

33. “No wise pilot, no matter how great his talent and experience, fails to use his checklist.”

34. “You need to have a passionate interest in why things are happening. That cast of mind, kept over long periods, gradually improves your ability to focus on reality. If you don’t have the cast of mind, you’re destined for failure even if you have a high IQ.”

35. “There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back.”

36. “Someone will always be getting richer faster than you. This is not a tragedy.”

37. “You must value the business in order for you to value the stock.”

38. “Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying eighteen percent.”

39. “I think that one should recognize reality even when one doesn’t like it; indeed, especially when one doesn’t like it.”

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

41. “99% of the troubles that threaten our civilization come from too optimistic accounting. And yet these damn accountants with their desire for mathematical purity want to devote exactly as much attention to accounting that is too pessimistic as they do to accounting that is too optimistic — which is crazy. 99% of the problems come from being too optimistic. Therefore, we should have a system where the accounting is way more conservative.”

42. “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.”

43. “The best armor of old age is a well-spent life preceding it.”

44. “I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.”

45. “It’s not possible for investors to consistently outperform the market. Therefore you’re best served investing in a diversified portfolio of low-cost index funds or exchange-traded funds.”

46. “Live within your income and save so that you can invest.”

47. “They don’t do this in airplanes, but they’ve done it in simulators. They have the pilot do something where an idiot co-pilot would know the plane was going to crash, but the pilot’s doing it, and the co-pilot is sitting there, and the pilot is the authority figure. Twenty-five percent of the time, the plane crashes. I mean this is a very powerful psychological tendency.”

48. “Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group – then to hell with them.”

49. “Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much loved hand.”

50.”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. Tell me where I’m going to die, that is, so I don’t go there.”

51. “It is really useful to be reminded of your errors. I think Warren Buffett and I are pretty good at that. We do kind of mentally rub our own noses in our own mistakes. And that is a very good mental habit.” 

52. “When a better tool or idea or approach comes along, what could be better than to swap it for your old, less useful tool? Warren Buffett and I routinely do this, but most people, as Galbraith says, forever cling to their old, less useful tools.”

53. “The big money is not in the buying and selling. But in the waiting.”

54. “To the extent that all I’ve done is pick stocks that have gone up and sat on my behind as my family got richer, I haven’t left much contribution to society. I guess it’s a lot like Wall Street. The difference is, I feel ashamed of it. I try to make up for it with philanthropy and meetings like this one today. This meeting is not out of kindness. This is atonement.”

55. “Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you’ve won.”

56. “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.”

57. “Almost all good businesses engage in pain today for gain tomorrow activities.”

58. “Choose clients as you would friends.”

59. “In business we often find that the winning system goes almost ridiculously far in maximizing and or minimizing one or a few variables. Like the discount warehouses of Costco.”

60. “We look for a horse with one chance in two of winning and which pays you three to one.”

61. “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.”

62. “A great business at a fair price is superior to a fair business at a great price.”

63. “Do the best you can do. Never tell a lie. If you say you’re going to do it, get it done. Nobody cares about an excuse. Leave for the meeting early. Don’t be late., but if you are late, don’t bother giving people excuses. Just apologize. They’re due the apology, but they’re not interested in the excuse.”

64. “It never ceases to amaze me to see how much territory can be grasped if one merely masters and consistently uses all the obvious and easily learned principles.”

65. “If you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply.”

66. “I won’t bet $100 against house odds between now and the grave.”

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

68. “Without numerical fluency, in the part of life most of us inhibit, you are like a one-legged man in an ass-kicking contest.”

69. “In my life there are not that many questions I can’t properly deal with using my $40 adding machine and dog-eared compound interest table.”

70. “We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”

71. “What are the secret of success? One word answer: rationality”

72. “Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter out buying opportunities.”

73. “Today, it seems to be regarded as the duty of CEOs to make the stock go up. This leads to all sorts of foolish behavior. We want to tell it like it is.”

74. “Smart people do dumb things.”

75. “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.”

76. “There’s only one way to the top: hard work.”

77. “Do what you like and are good at.”

78. “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.”

79. “Being smart and doing something that no one has done before are two different things.”

80. “The liabilities are always 100% good. It’s the assets you have to worry about.”

81. “Ben Graham was a truly formidable mind, and he also had a clarity in writing, and we talk over and over again about the power of a few simple ideas thoroughly assimilated, and that happened with Graham’s ideas which came to me indirectly through Warren, but some also directly from Graham. The interesting thing for me is that Buffett the former protégé — by the way Buffett was the best student Graham had in 30 years of teaching at Columbia — became better than Graham. That’s the natural outcome — as Milton said, ‘If I’ve seen a little farther than other men, it’s by standing on the shoulders of giants.’ So, Warren stood on Ben’s shoulders, but he ended up seeing more than Ben. No doubt somebody will come along and do a lot better than we have.”

82. “All intelligent investing is value investing. Acquiring more than you are paying for.”

83. “The difference between a good business and a bad business is that good businesses throw up one easy decision after another. The bad businesses throw up painful decisions time after time.”

84. “People couldn’t believe that I suddenly made myself a subordinate partner to Warren. But there are people that it’s okay to be subordinate partner to. I didn’t have the kind of ego that prevented it. There always are people who will be better at something than you are. You have to learn to be a follower before you become a leader. People should learn to play all roles.”

85. “Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.”

86. “I would argue that passion is more important than brain power.”

87. “The world learned what happened after World War I, when we demanded that Germany repay. It was chaos and hyperinflation. The result, of course, was the rise of Hitler. And Hitler could have been more successful than he was; his kids or family members could still be in power today, had things gone just a little differently. You don’t ever want to do anything to push an economy to collapse. Terrible things result. Now think about this. During World War II, Japan tortured our soldiers to death. They marched them around. The Germans put people in ovens. Just awful. And what did we do after the war? We gave them money to rebuild. We said, ‘Let bygones be bygones.’ The result was a magnificent global economic system and a win for human rights.”

88. “I would rather throw a viper down my shirt than hire a compensation consultant.”

89. “If you get a lot of heavy ideology young, and then you start expressing it, you are really locking your brain into a very unfortunate pattern.”

90. “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.”

91. “I am a biography nut myself, and I think when you’re trying to teach the great concepts that work, it helps to tie them into the lives and personal ties of the people who developed them. I think that you learn economics better if you make Adam Smith your friend. That sounds funny, making friends among the eminent dead, but if you go through life making friends with the eminent dead who had the right ideas, I think it will work better in life and work better in education. It’s way better than just giving the basic concepts.”

92. “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 derive it yourself to ingrain it in your head for the rest of your life.”

93. “Quickly eliminate the big universe of what not to do, followup with a fluent, multidisciplinary attach on what remains, then act decisively when, and only when, the right circumstances appear.”

94. “I don’t have the slightest interest in gold. I like understanding what works and what doesn’t in human systems. To me that’s not optional; that’s a moral obligation. If you’re capable of understanding the world, you have a moral obligation to become rational. And I don’t see how you become rational hoarding gold. Even if it works, you’re a jerk.”

95. “There are two types of mistakes: 1) doing nothing, what Warren calls “sucking my thumb” and 2) buying with an eyedropper things we should be buying a lot of.”

96. “I think track records are very important. If you start trying to have a perfect one in a simple thing like honesty, you’re well on your way to success in this world.”

97. “Some economic distortions come from the masses believing that other people are right. Others come from the need to make a living through behavior that may be less than socially desirable. I’ve always been skeptical of conventional wisdom. You have to be able to keep your head on when everyone else is losing theirs.”

98. “The game of investing is one of making better predictions about the future than other people. How are you going to do that? One way is to limit your tries to areas of competence. If you try to predict the future of everything, you attempt too much. You’re going to fail through lack of specialization.”

99. “Frequently, you’ll look at a business having fabulous results. And the question is, “How long can this continue?” Well, there’s only one way I know to answer that. And that’s to think about why the results are occurring now and then to figure out the forces that could cause those results to stop occurring.”

100. “Insurers or financial institutions that incorrectly assess their true exposure often experience the kind of painful lesson Twain refers to “A man who carries a cat by the tail learns something he can learn in no other way.”

101. “A few major opportunities clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. An then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.”

102. “My habit of committing far more time to learning and thinking than to doing is no accident.”

103. “How do you learn to be a great investor? First of all, you have to understand your own nature. Each person has to play the game given his own marginal utility considerations and in a way that takes into account his own psychology. If losses are going to make you miserable and some losses are inevitable, you might be wise to utilize a very conservative pattern of investment and savings all your life. So you have to adapt your strategy to your own nature and your own talents. I don’t think there’s a one size fits all investment strategy.”

104. “Investors can have 90% of their wealth in a single company, if it is the right company.”

105. “Like any good algebraist, the pilot is made to think sometimes in a forward fashion and sometimes in reverse; and so he learns when to concentrate mostly on what he wants to happen and also when to concentrate mostly on avoiding what he does not want to happen.”

106. “How do some people get wiser than other people? Partly it is inborn temperament. Some people do not have a good temperament for investing. They’re too fretful; they worry too much. But if you’ve got a good temperament, which basically means being very patient, yet combine that with a vast aggression when you know enough to do something, then you just gradually learn the game, partly by doing, partly by studying.”

107. “We have three baskets for investing: yes, no and too tough to understand.”

108. “I’ve had kids in both moderate and immoderate circumstances, and to be honest, my children that were raised when we had less money have worked harder.”

109. “The company that needs a new machine tool, and hasn’t bought it, is already paying for it.”

110. “It is really useful to be reminded of your errors. I think Warren Buffett and I are pretty good at that. We do kind of mentally rub our own noses in our own mistakes. And that is a very good mental habit.”

111. “It’s kind of fun to sit there and out-think people who are way smarter than you are because you’re trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.”

112. “This is a good lesson for anyone: the ability to take criticism constructively and learn from it.”

113. “I’ve heard Warren say a half a dozen times, “It’s not greed that drives the world, but envy.” And you go through the psychology survey courses, and you go to the index: envy, jealousy, in a 1,000-page book… it’s blank! There’s some blind spots in academia, but it’s an enormously powerful thing.”

114. “A lot of the businesses we buy at Berkshire Hathaway are kind of cranky and old-fashioned like us.”

115. “The most extreme mistakes in Berkshire’s history have been mistakes of omission. We saw it, but didn’t act on it. They’re huge mistakes and we’ve lost billions. And we keep on doing it. We’re getting better at it. We never get over it.”

116. “We’re partial to putting out large amounts of money where we won’t have to make another decision. If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of it’s intrinsic value. That’s hard. But, if you can buy a few great companies, then you can sit on your ass. That’s a good thing.”

117. “Obviously the more hard lessons you can learn vicariously, instead of from your own terrible experiences, the better off you will be. I don’t know anyone who did it with great rapidity.”

118. “If you tell the truth, you don’t have to remember your lies.”

119. “We think there should be a huge area between what you’re willing to do and what you can do without significant risk of suffering criminal penalty or causing losses. We believe you shouldn’t go anywhere near that line. You ought to have an internal compass. So there should be all kinds of things you won’t do even though they’re perfectly legal. That’s the way we try to operate.”

120. “If you keep trying to get a little better over time, you’ll start to make investments that are virtually certain to have a good outcome. The keys are discipline, hard work and practice. It’s like playing golf – you have to work on it. If you don’t keep learning, other people will pass you by.”

121. “Warren Buffett has become one hell of a lot better investor since the day I met him, and so have I. If we had been frozen at any given stage with the knowledge we had, the record would have been much worse than it is today. So the game is to keep learning, and I don’t think people are going to keep learning who don’t like the learning process. You need to like the learning process.”

Bonus material

Using the wisdom of Charlie Munger to help your investing – stop making dumb mistakes!

When Warren Buffett and Charlie Munger first met, Susie noticed something she hadn’t seen before. She had been married to Buffett for several years and he was the sharpest talker she knew. No one could touch him when it came to business or stocks. That evening, however, she remembers watching Warren meet his match. It was Larry Bird vs. Magic Johnson or Ted Williams vs. Joe Dimagio. Susie Buffett’s first thought was, “I think Warren felt Charlie was the smartest person he’d ever met and Charlie felt Warren was the smartest person he’d ever met.”

If you read enough about Buffett and Munger, you start to observe how certain phrases, tips, and aphorisms repeatedly get shared. One of those is this thing called inversion. It’s actually one of Munger’s favorite life hacks. He once said this:

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. Tell me where I’m going to die, that is, so I don’t go there.”

Tell me where I’m going to die, that is, so I don’t go there.

I was recently thinking about some of my worst investing decisions, and I really think 90% of them could have been avoided had I remembered this line. Instead of thinking about all the things that could go right, think about all the things that could go wrong. Lay everything negative out on a giant piece of paper. What’s the worst thing that could happen here? What does everyone else know that I don’t? These are only a few examples, but there are countless ways to invert by asking questions about the worst possible outcomes.

A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc…” — Charlie Munger

Sometimes the key to great investing is to simply avoid stupidity. One really bad mistake can ruin a year of gains. Poof. Gone. But that’s where I believe inversion is essential. Don’t act before you’ve thought through the worst of the worst. Work backward and then decide if you can manage it.

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