The sad news of Charlie Munger’s passing on November 28, 2023 at the ripe age of 99 caused many to reflect on the ample teachings and learnings that Mr. Munger has preached over the years, specifically around investing, behavioural psychology as it relates to investing, and life in general. An American businessman, investor, and philanthropist, Charlie Munger was the Vice Chairman and right hand man of Warren Buffet at Berkshire Hathaway (along with plenty other accolades and current/past board positions).
I had the opportunity to attend the Berkshire Hathaway annual shareholder meeting in Omaha in April 2021. I sat in on the day filled events consisting of Buffet and Munger overviewing the financial performance of the company, doing Q&A with the audience, and going over various shareholder proposals for voting. For an investing nerd like me, and a BRK.B shareholder, I had plenty of fun listening to these two preach about investing while constantly poking fun at each other, and showing their contempt for the misinformed and misguided in the finance world.
I wanted to write this post as a commemoration to someone whom I highly respect, and whose teachings play a large role in my own investing philosophy. This post highlights and summarizes several key quotes and lessons that Mr. Munger had spoken to over the years across Berkshire Hathaway shareholder meetings, campus lectures, public interviews, and published works. Here are a some of these gems:
1) " 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. You'd 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." ― Charles T. Munger, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
Mr. Munger emphasizes the importance of continuous learning, and he believes that reading widely is crucial to developing a broad understanding of various subjects, which is essential for making informed decisions.
2) “Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve." ― Charles T. Munger, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
Mr. Munger advocates for personal growth and the pursuit of wisdom. By approaching each day with a commitment to learning and self-improvement, individuals can accumulate knowledge and make better decisions over time.
3) "The best thing a human being can do is to help another human being know more." -Charles T. Munger
Mr. Munger values knowledge sharing and the idea of helping others. By contributing to the education and understanding of others, individuals can have a positive impact on the world.
4) ”All I want to know is where I'm going to die, so I'll never go there." ― Charles T. Munger, Life Is Short And So Is This Book
Mr. Munger emphasizes the importance of avoiding pitfalls and learning from mistakes. By understanding potential risks and their consequences, one can make better decisions to minimize negative outcomes.
5) "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." — Charles T. Munger
Mr. Munger stresses the value of avoiding common errors and maintaining a consistently rational approach. It's not always about being the smartest person in the room but about avoiding foolish decisions.
6) "What I’m saying here is that the human mind is a lot like the human egg, and the human egg has a shut-off device. When one sperm gets in, it shuts down so the next one can’t get in. The human mind has a big tendency of the same sort. And here again, it doesn’t just catch ordinary mortals; it catches the deans of physics. According to Max Planck, the really innovative, important new physics was never really accepted by the old guard. Instead a new guard came along that was less brain-blocked by its previous conclusions. And if Max Planck’s crowd had this consistency and commitment tendency that kept their old inclusions intact in spite of disconfirming evidence, you can imagine what the crowd that you and I are part of behaves like.” -Charles T. Munger, The Psychology of Human Misjudgement speech at Harvard University circa June 1995
Mr. Munger uses this analogy to highlight the human tendency to accept a single explanation and resist alternative viewpoints. It's a cautionary note against close-mindedness and the importance of considering multiple perspectives.
7) "It's waiting that helps you as an investor, and a lot of people just can't stand to wait." -Charles T. Munger
Mr. Munger underscores the value of patience in investing. Successful investors often need to wait for the right opportunities and not succumb to the impulse of constantly making changes to their portfolio.
8) "The big money is not in the buying and selling, but in the waiting." -Charles T. Munger
Similar to the previous quote, Mr. Munger emphasizes that the real profits in investing come from having the patience to hold onto investments for the long term, and allowing them to grow and compound over time.
9) "It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities." ― Charles T. Munger, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
Mr. Munger highlights the discipline required to resist the temptation to invest in suboptimal opportunities. Successful investors know when to be patient and wait for high-quality investments rather than settling for mediocre ones.
10) "The first rule of compounding: Never interrupt it unnecessarily." ― Charles T. Munger
Mr. Munger stresses the importance of allowing investments to compound over time without unnecessary interference. Constantly buying and selling can disrupt the compounding process and hinder long-term wealth accumulation.
If you want to read more about Charlie Munger’s investing lessons and teachings, refer to some of these published works:
Charles T. Munger, Charlie Munger: The Complete Investor Value Investing: A Value Investor's Journey Through the Unknown...
Charles T. Munger, Life Is Short And So Is This Book
Charles T. Munger, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
Charles T. Munger, Superforecasting: The Art and Science of Prediction
Charles T. Munger, The Psychology of Human Misjudgement
Daniel Pecaut, Corey Wrenn, University of Berkshire Hathaway: 30 Years of Lessons Learned from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting
Peter Bevelin, Seeking Wisdom, From Darwin to Munger
Here is a link to his guest lecture speech at Harvard University in 1995 on the Psychology of Human Misjudgement. It’s 76 minutes long, but a worthwhile listen in my opinion!
And to end off this post, here is one last quote to leave you with that is one of my favorites, not only as it pertains to investing, but to life in general:
“To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people.” ― Charles T. Munger