In the world of investing, certain names resonate as legends, shaping the landscape with their wisdom and foresight.
Charlie Munger, an investing genius and Warren Buffett’s partner at Berkshire Hathaway, passed away at age 99. He would have turned 100 on New Year’s Day.
Munger’s passing marks the end of an era, leaving behind a legacy that will continue to inspire and guide investors for generations to come.
On that note, let’s look at 10 noteworthy quotes from Charlie that I love and I hope you would find them useful too.
#1: What Is Value Investing?
“Value investing the way I regard it will never go out of style because value investing the way I can see it is always wanting to get more value than you pay for when you buy a stock. And that approach will never go out of style. Some people think that value investing is you chase companies which have a lot of cash and they’re in a lousy business or something. But I don’t define that as value investing. I think all good investing is value investing. It’s just that some people look for values in strong companies and some look for values in weak companies. But every value investor tries to get more value than he pays for.”
#2: How Not to Approach Investing
“Well, these things do happen in the market economy. You get crazy booms. Remember, the dot-com boom? When every little building in Silicon Valley ran at a huge price, and a few months later, they were about — 1/3 of them were vacant. There are these periods in capitalism. And I’ve been around for a long time, and my policy has always been to just ride them out. And I think that’s what shareholders do. In fact, what shareholders actually do is a lot of them crowd in to buying stocks on frenzy frequently on credit because they see that they’re going up. And of course, that’s a very dangerous way to invest. I think that shareholders should be more sensible and not crowd into stocks and just buy them just because they’re going up and they like to gamble.”
#3: Hold Stocks Through Various Market Cycles
“If you’re going to invest in stocks for the long term or real estate, of course there are going to be periods when there’s a lot of agony and other periods when there’s a boom. And I think you just have to learn to live through them. As Kipling said, treat those two imposters just the same. You have to deal with daylight and night. Does that bother you very much? No. Sometimes it’s night and sometimes it’s daylight. Sometimes it’s a boom. Sometimes it’s a bust. I believe in doing as well as you can and keep going as long as they let you.”
#4: Thoughts on Bitcoin
“So I don’t think Bitcoin is going to end up the medium of exchange for the world. It’s too volatile to serve well as a medium of exchange. And it’s really kind of an artificial substitute for gold. And since I never buy any gold, I never buy any Bitcoin. And I recommend that other people follow my practice. Bitcoin reminds me of what Oscar Wilde said about fox hunting, he said, it was the pursuit of the uneatable by the unspeakable.”
#5: Embrace Uncertainty
“Another thing, of course, is life will have terrible blows, horrible blows, unfair blows. Doesn’t matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and your duty was not to be submerged in self-pity, but to utilize the terrible blow in a constructive fashion. That is a very good idea.”
#6: Be a Learning Machine
“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.”
#7: Be Aware of Your Limitations
“I just try to avoid being stupid. I have a way of handling a lot of problems — I put them in what I call my ‘too hard pile,’ and just leave them there. I’m not trying to succeed in my ‘too hard pile.’”
#8: Avoid Being Stupid First
“My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.”
#9: A Simple Rule to Be Happy
“A happy life is very simple … The first rule of a happy life is low expectations. That’s one you can easily arrange. And if you have unrealistic expectations, you’re going to be miserable all your life.”
#10: More On Leading a Happy Life
“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful in spite of your troubles. You deal with reliable people and you do what you’re supposed to do. And all these simple rules work so well to make your life better. And they’re so trite. … And can you be cheerful when you’re absolutely mired in deep hatred and resentment? Of course you can’t. So why would you take it on?”
Charlie Munger was a complex and fascinating individual who left an indelible mark on the world of investing and beyond. Thank you your wisdom, Charlie.
SudhanP.com 