A value investor I follow and respect, Whitney Tilson, recently shared a list of his favorite Charlie Munger quotes in a message to his email subscribers. Charlie Munger, of course, is Warren Buffett's key partner at Berkshire Hathaway, and he is in my view one of history's most insightful (and cantankerous!) investors. I thought the list of quotes and comments below would be useful to Casual Kitchen readers looking to raise their personal investing game. Enjoy!
Favorite Charlie Munger quotes, from Whitney Tilson:
• The more hard lessons you can learn vicariously, instead of from your own terrible experiences, the better off you will be... So the game is to keep learning.
• 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.
• Most people are trained in one model and try to solve all problems in one way. You know the old saying: To the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.
• Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. If you took our top 15 decisions out, we’d have a pretty average record.
• As Jesse Livermore said, “The big money is not in the buying and selling…but in the waiting.”
• 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.
• All I want to know is where I’m going to die, so I’ll never go there.
• No wise pilot, no matter how great his talent and experience, fails to use his checklist.
• 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.
• We have never given a damn whether any quarter’s earnings were up or down. We prefer profits to losses, obviously, but we’re not willing to manipulate in any way just to make some quarter look a little better.
• To say accounting for derivatives in America is a sewer is an insult to sewage.
• 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.
• Our approach has worked for us. Look at the fun we, our managers, and our shareholders are having. More people should copy us. It’s not difficult, but it looks difficult because it’s unconventional.
• If you rise in life, you have to behave in a certain way. You can go to a strip club if you’re a beer-swilling sand shoveler, but if you’re the Bishop of Boston, you shouldn’t go.
• Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day, if you live long enough, most people get what they deserve.
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