Charlie Munger and Warren Buffett on the keys to success

Munger: It's so simple: You spend less than you earn and invest shrewdly and avoid toxic people and toxic activities and try and keep learning all your life, etc., etc.  And do a lot of deferred gratification because you prefer life that way.  And if you do all those things, you are almost certain to succeed.  And if you don't, you're going to need a lot of luck, a lot of luck.  And you don't want to need a lot of luck; you want to go into a game where you're very likely to win without having any unusual luck.

Buffett: I'd add one more thought, though: You need to know how people can manipulate other people and you need to resist the temptation to do it yourself.

Munger: Oh yes!  The toxic people who are trying to fool you or lie to you, who aren't reliable in meeting their commitments, the great lesson of life is get them the hell out of your life.

Buffett: Yep.

Munger: And do it fast!

~ Charlie Munger and Warren Buffett, 2023 Berkshire Hathaway annual meeting, May 6, 2023

(video posted by Vitaliy Katsenelson, see here)

Charlie Munger on learning about investing through experience

Learning about investing from books is like learning about sex from romance novels.

~ Charlie Munger

Charlie Munger on Xi Jinping

I have more optimism about the leader of the Chinese Party than most people do.  He's done a lot right, too.  He led a big anti-corruption drive.  He's done a lot of things right...  Where is there a place where the government is perfect in the world of sin and sorrow?  Democracies aren't that brilliantly run either.  

So it's natural to have some decisions made by government that don't work well.  It's natural to have decisions in each individual life that don't work very well.  We live in a world of sin, sorrow and mis-decision.  That's what human beings get to cope with in their days of life.  So I don't expect the world to be free of folly and mistakes and so forth.  I just hope I'm invested with people who have more good judgment than bad judgment.  I don't know anybody who's right all the time.

~ Charlie Munger, CNBC interview, 4:10 mark, February 16, 2023

Charlie Munger on investing in China

You can buy better, stronger companies at a cheaper valuation in China than you can in the United States.  So the extra risk can be worth running given the extra value you can get.  That's why we're in China.  It isn't like we prefer being in some foreign country.

~ Charlie Munger, CNBC interview, 3:10 mark, February 16, 2023

Charlie Munger on personality types to avoid

Crooks, crazies, egomaniacs, people full of resentment, people full of self-pity, people who feel like victims, there's a lot of things that aren't going to work for you.  Figure out what they are, then avoid them like the plague.

~ Charlie Munger

Warren Buffett and Charlie Munger on cryptocurrencies (2018)

Warren Buffett: There's nothing being produced in the way of value from the asset.  You also have the problem that it draws in a lot of charlatans... who are trying to create various sorts of exchanges...  It's something where people who are of less-than-stellar character see an opportunity to clip people who are trying to get rich because their neighbor's getting rich buying this stuff that neither one understands.  It will come to a bad ending.  Charlie.

Charlie Munger: Well, I like cryptocurrencies a lot less than you do.  And so to me it's just dimentia.  And I think the people who are professional traders who go into cryptocurrencies, it's just disgusting.  It's like somebody else is trading turds and you decide "I can't be left out."

~ 2018 Berkshire Hathaway Annual Meeting, May 5, 2018

Charlie Munger on mistakes

I like people admitting  they were complete horses' asses.  I know I'll perform better if I rub my nose in my mistakes.  This is a wonderful trick to learn.

~ Charlie Munger 

Rolf Dobelli quotes Charlie Munger on the "man with the hammer tendency"

"If your only tool is a hammer, all your problems will be nails," said Mark Twain - a quote that sums up the déformation professionnelle perfectly.  Charlie Munger, Warren Buffett's business partner, named the effect the "man with the hammer tendency" after Twain: "But that's a perfectly disastrous way to think and a perfectly disastrous way to operate in the world.  So you've got to have multiple models.  And the models have to come from multiple disciplines - because all the wisdom of the world is not to be found in one little academic department."

~ Rolf Dobelli, The Art of Thinking Clearly, "Those Wielding Hammers See Only Nails," pp. 275-276

Charlie Munger on work ethic

The only way to win is to work, work, work, work, and hope to have a few insights.

~ Charlie Munger

Charlie Munger on trust

Of all forms of pride, perhaps the most desirable is a justified pride in being trustworthy.

~ Charlie Munger

Tren Griffin on Charlie Munger's multi-model approach

In Munger's view, it is better to be worldly wise than to spend time working with a single model that is precisely wrong.   A multiple-model approach that is only approximately right will produce a far better outcome in anything that involves people or a social system.

~ Tren Griffin, senior director of strategy at Microsoft

Charlie Munger on success and failure

It's a good habit to trumpet your failures and be quiet about your successes.

~ Charlie Munger

Charlie Munger on the rise of Hitler

What brought in Hitler was the combination of the Weimar inflation where they utterly destroyed the savings of the middle class in Germany followed by the Great Depression.  It was a one-two punch.  And Hitler came in - crazy demagogue - with 40% of the votes and pretty soon we had a dictator hell-bent for world war.  So the history [of inflation] is not pleasant.  And Germany was a very advanced and civilized nation, the Germany that Hitler took over.  Now I always say that the interesting thing about that was little Albert Einstein, a little Jewish boy, got his entire primary education with the insistence of the Catholic Church in Germany.  Now that is a very civilized nation.  So if you let your nation deteriorate too much, what you get is a Hitler.

~ Charlie Munger, Yahoo Finance interview with Andy Serwer, 5:00 mark, February 16, 2022

Charlie Munger on victimhood vs. soldiering through

Some people just naturally complain and other people just naturally put their head down and sail through it - soldier through it.  Warren and I believe in soldiering through without too much fuss.  I have the theory that the dumbest thing you can do in life is to ever feel like a victim.  And any politician that makes people feel like victims, I automatically dislike.  I never saw any good to come of feeling like a victim.  Even if you are a victim I think it's a mistake.

The Chinese were living in poverty, subsistence agriculture, in caves and so on.  Real poverty, hundreds of millions of them.  They worked their way out of poverty.  And look at them now.  How would it have worked if they'd known "we'll vote ourselves rich, we'll raise the minimum wage?"  It's just so much better to use the Chinese way.  They just soldiered through and worked their way out.

~ Charlie Munger, "Charles Munger Interview - Becoming Warren Buffett," 7:00 mark, HBO / Kunhardt Film Foundation, July 20, 2021

Charlie Munger on Warren Buffett's relationship with his father

Warren's father was a strong ideologue, real old fashioned right wing ideologue, as was his grandfather.  His father was so intense about it that Warren just decided that it was a mistake, that it cabbaged up your head to be that much of an ideologue.  So he loved his father, but he didn't want to become that much of a true believer in anything.  And so he avoided it.

~ Charlie Munger, "Charles Munger Interview - Becoming Warren Buffett," 7:00 mark, HBO / Kunhardt Film Foundation, July 20, 2021

Charlie Munger on investing and avoiding mistakes

It is remarkable how much long term advantage people like us have gotten trying to be consistently not stupid, instead of trying to be very intelligent.

~ Charlie Munger

Charlie Munger on compounding

The first rule of compounding: Never interrupt it unnecessarily.

~ Charlie Munger

(As quoted by Chris Mayer, "The First Rule of Compunding," Woodlock House Family Capital blog, September 7, 2021.)

Charlie Munger on investing and low time preference

It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.

~ Charlie Munger

Charlie Munger on the balance between competency and gumption

You have to strike the right balance between competency or knowledge on the one hand and gumption on the other. Too much competency and no gumption is no good.  And if you don't know your circle of competence, then too much gumption will get you killed.  But the more you know the limits to your knowledge, the more valuable gumption is.

~ Charlie Munger

(As quoted by Jason Zweig, "A Fireside Chat With Charlie Munger," The Wall Street Journal, September 12, 2014

Charlie Munger on dedication to reality

Your life must focus on the maximization of objectivity.

~ Charlie Munger