Munger Quatable Quotes

All intelligent investing is value investing – acquiring more than you are paying for. You must value the business in order to value the stock. The best thing a human being can do is to help another human being know more. Acquire worldly wisdom and adjust your behavior accordingly. If you are new, behavior gives you a little temporary unpopularity with your peer group then to hell with them. In my whole life, I have known no wise people (over a broad subject matter area) who did not read all the time – none, zero. 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. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. Then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available because of prudence and patience in the past. I find it quite useful to think of a free-Market economy – or partly free Market economy – as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well. The number one idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash flow than you are paying for. Move only when you have an advantage. Over the very long term, history shows that the chances of any business surviving in a manner agreeable to a company’s owners are slim at best. It is not given to human beings to have such talent that they can just know everything about everything all the time. However, it is given to human beings who work hard at it. Who look and sift the world for a mispriced bet – that they can occasionally find one. In addition, the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don’t. It is just that simple. Mimicking the herd invites regression to the mean. Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day. Acknowledging what you do not know is the dawning of wisdom. Above all, never fool yourself, and remember that you are the easiest person to fool. Determine value apart from price; progress apart from activity; wealth apart from size. Recognize reality even when you do not like it – especially when you don’t like it. Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat. I think records of accomplishment are very important. If you start early trying to have a perfect one in some simple thing like honesty, you are well on your way to success in this world. We try more to profit from always remembering the obvious than from grasping the esoteric. Intelligent people make decisions based on opportunity costs. If all you succeed in doing in life is getting rich by buying little pieces of paper, it is a failed life. Life is more than being shrewd in wealth accumulation. Someone will always be getting richer faster than you. This is not a tragedy. Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically you get ahead, but not necessarily in fast spurts. Nevertheless, 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. Over the long term, it’s hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you are not going to make much different than a six percent return – even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you will end up with one hell of a result. You must have the confidence to override people with more credentials than you whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. Nevertheless, there are also cases where you have to recognize that you have no wisdom to add – and that your best course is to trust some expert. The safest way to try to get what you want is to try to deserve what you want. It is such a simple idea. It is the golden rule. You want to deliver to the world what you would buy if you were on the other end. I am not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I have reached that state. Thinking that what is good for you is good for the wider civilization, and rationalizing foolish or evil conduct, based on your subconscious tendency to serve yourself, is a terrible way to think. If you do not allow for self-serving bias in the conduct of others, you are, again, a fool. Avoid working directly under somebody you do not admire and don’t want to be like. Intense interest in any subject is indispensable if you are really going to excel in it. Never, ever, think about something else when you should be thinking about the power of incentives. Fixable but unfixed bad performance is bad character and tends to create more of it, causing more damage to the excuse giver with each tolerated instance. Everybody engaged in complex work needs colleagues. Just the discipline of having to put your thoughts in Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail. In my whole life, I have known no wise people who did not read all the time-none, zero. You would be amazed at how much Warren 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