Charlie Munger

Well, luckily I had the idea at a very early age that the safest way to try to get what you want is to try to deserve what you want.

It’s been my experience in life, if you just keep thinking and reading, you don’t have to work.

Berkshire, by design, had methodological advantages to supplement its better opportunities. It never had the equivalent of a ‘department of acquisitions’ under pressure to buy. And it never relied on advice from ‘helpers’ sure to be prejudiced in favor of transactions. And Buffett held self-delusion at bay as he underclaimed expertise while he knew better than most corporate executives what worked and what didn’t in business, aided by his long experience as a passive investor. And, finally, even when Berkshire was getting much better opportunities than most others, Buffett often displayed almost inhuman patience and seldom bought. For instance, during his first ten years in control of Berkshire, Buffett saw one business (textiles) move close to death and two new businesses come in, for a net gain of one.

We have three baskets for investing: yes, no and too tough to understand.

We have a passion for keeping things simple.

The idea of excessive diversification is madness. We don’t believe that widespread diversification will yield a good result. We believe almost all good investments will involve relatively low diversification. If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles, and when opportunities came along, you pounced on them with vigour. Berkshire in it’s history has made money betting on sure things.

I have always imagined that Paradise will be a kind of library.

His [Carl Braun at C. F. Braun Company] rule for all the Braun Company’s communication was called the Five W’s, you had to tell who was going to do what, where, when and why. And if you wrote a letter or directive in the Braun Company telling somebody to do something, and you didn’t tell him why, you could get fired. In fact, you would get fired if you did it twice. You might ask why is that so important? Well, again that’s a rule of psychology. Just as you think better if you array knowledge on a bunch of models that are basically answers to the question why, why, why, if you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply. Even it they don’t understand your reason, they’ll be more likely to comply.

When Warren lectures at business schools, he says ‘I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches – representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. ‘ He says ‘Under those rules, you’d really think carefully about what you did, and you’d be forced to load up what you’d really thought about. So you’d do so much better.’ Again, this is a concept that seems perfectly obvious to me. And to Warren it seems perfectly obvious. But this is one of the very few business classes in the United States where anybody will be saying so. It just isn’t the conventional wisdom. To me it’s obvious that the winner has to bet selectively. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.

If you stay rational yourself, the stupidity of the world helps you.

Other people are trying to be smart, all I’m trying to be is non-idiotic. I’ve found that’s all you have to do to get ahead in life, be non-idiotic and live a long time. It’s harder to be non-idiotic than most people think.