If you’re not familiar with Charlie Munger, he’s vice chairman of Warren Buffet’s Berkshire Hathaway. Munger is probably the most quotable investor of all time. Sometimes what he says is hilarious and sometimes it’s serious. It always gets you thinking
BY MICHAEL YARDNEY
At a 2008 shareholder meeting, Munger criticised his physique, said ethanol was “one of the dumbest ideas in the history of the world” and then fell asleep on stage. In front of 40,000 people.
This is why people love him.
Mogran Housell of Motley Fool shared 30 awesome things Charlie has said over the years. While he primarily invested in companies and equities, these lessons are just as relevant for those interested in property investment.
Munger’s rule of investing: “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.”
On patience: “Almost all good businesses engage in ‘pain today, gain tomorrow’ activities.”
On Wall Street pay: “A man doesn’t deserve huge amounts of pay for creating tiny spreads on huge amounts of money. Any idiot can do it. And, as a matter of fact, many idiots do do it.”
On derivatives: ”The world of derivatives is full of holes that very few people are really aware of. It’s like hydrogen and oxygen sitting on the corner waiting for a little flame.”
On reality: “I think that one should recognise reality even when one doesn’t like it; indeed, especially when one doesn’t like it.”
On envy: “There’s nothing more counterproductive than envy. Someone in the world will always be better than you. Of all the sins, envy is easily the worst, because you can’t even have any fun with it. It’s a total net loss.”
On trusting others: “If you don’t allow for self-serving bias in the conduct of others, you are, again, a fool.”
On legacy: “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.”
On an easy life: “Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you’ve won.”
On pundits: “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.”
On accounting: “To say accounting for derivatives in America is a sewer is an insult to sewage.”
On competition: “Someone will always be getting richer faster than you. This is not a tragedy.”
On math: “Mankind invented a system to cope with the fact that we are so intrinsically lousy at manipulating numbers. It’s called the graph.”
On finance as a career: “A big percentage of Cal-Tech grads are going into finance. I regard this as a regretfully bad outcome. They’ll make a lot of money by clobbering customers who aren’t as smart as them.”
On being open: “If you get a lot of heavy ideology young – and then you start expressing it – you’re really locking your brain into a very unfortunate pattern.”
On humility: “I like people admitting they were complete stupid horses’ [behinds]. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”
Michael Yardney is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.