I think there's something to be said for developing the disposition to own stocks without fretting. Charlie Munger More Quotes by Charlie Munger More Quotes From Charlie Munger 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 acquisition buckets dumb 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. Charlie Munger insightful swim people If all you succeed in doing in life is getting rich by buying little pieces of paper, it's a failed life. Life is more than being shrewd in wealth accumulation. Charlie Munger pieces paper littles 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 riding human-nature numbers The cash register did more for human morality than the Congregational Church. It was a really powerful phenomenon to make an economic system work better, just as, in reverse, a system that can be easily defrauded ruins a civilization. A system that's very hard to defraud, like a cash register, helped the economic performance of a civilization by reducing vice, but very few people within economics talk about it in those terms. Charlie Munger powerful civilization people The big money is not in the buying and selling ... but in the waiting. Charlie Munger selling buying waiting And maybe the cereal makers by and large have learned to be less crazy about fighting for market share-because if you get even one person who's hell-bent on gaining market share.... For example, if I were Kellogg and I decided that I had to have 60% of the market, I think I could take most of the profit out of cereals. I'd ruin Kellogg in the process. But I think I could do it. Charlie Munger crazy fighting thinking In the corporate world, if you have analysts, due diligence, and no horse sense, you've just described hell. Charlie Munger due-diligence horse world A rough rule in life is that an organization foolish in one way in dealing with a complex system is all too likely to be foolish in another. Charlie Munger organization life-is way Even in pure mathematics they can't remove all paradox, and the rest of us should also recognize we are going to have to endure a lot of paradox, like it or not. Charlie Munger paradox mathematics should 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 venice long book Economic systems work better when there's an extreme reliability ethos. And the traditional way to get a reliability ethos, at least in past generations in America, was through religion. The religions instilled guilt. ... And this guilt, derived from religion, has been a huge driver of a reliability ethos, which has been very helpful to economic outcomes for man. Charlie Munger ethos men past 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. Charlie Munger financial simple long It's stupid the way people extrapolate the past -- and not slightly stupid, but massively stupid. Charlie Munger stupid people past To us, investing is the equivalent of going out and betting against the pari-mutuel system. We look for a horse with one chance in two of winning, and that pays three to one. In other words, we're looking for a mispriced gamble. That's what investing is, and you have to know enough to know whether the gamble is mispriced. Charlie Munger horse winning two What's fascinating . . .is that you could now have a business that might have been selling for $10 billion where the business itself could probably not have borrowed even $100 million. But the owners of that business, because its public, could borrow many billions of dollars on their little pieces of paper- because they had these market valuations. But as a private business, the company itself couldn't borrow even 1/20th of what the individuals could borrow. Charlie Munger pieces paper littles What good is envy? It’s the one sin you can’t have any fun at. Charlie Munger envy sin fun I won’t bet $100 against house odds between now and the grave. Charlie Munger graves odds house The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does. For example, when we were in the textile business, which is a terrible commodity business, we were making low-end textiles-which are a real commodity product. And one day, the people came to Warren and said, "They've invented a new loom that we think will do twice as much work as our old ones." Charlie Munger technology real thinking I think we have lost our way when people like the [board of] governors and the CEO of the NYSE fail to realize they have a duty to the rest of us to act as exemplars... You do not want your first-grade school teacher to be fornicating on the floor or drinking booze in the classroom; similarly you do not want your stock exchange to be setting the wrong moral example. Charlie Munger drinking teacher school
