Charlie Munger, who has died aged 99, was instrumental in helping Warren Buffett turn Berkshire Hathaway into an investment powerhouse.
Munger laid down the principles on which the pair built Berkshire, Buffett has said, helping him refine a philosophy that was initially shaped by value investing pioneer Benjamin Graham.
“The blueprint he gave me was simple: ‘Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices’,” Buffett, 93, said.
Over a more than 70-year career alongside the Wizard of Omaha, Munger became famous for his sharp wit about investing and life delivered during the group’s annual shareholders meetings.
Here are some of his best-known “zingers”:
“Take a simple idea and take it seriously.”
“Capitalism without failure is like religion without hell.”
“Show me the incentive and I will show you the outcome.”
“Every time you hear ebitda, just substitute it with bullshit.”
“There is more dementia about finance than there is about sex.”
“To say accounting for derivatives in America is a sewer is an insult to sewage.”
“If mutual fund directors are independent, then I’m the lead character in the Bolshoi Ballet.”
“It’s not the adultery I mind. It’s the embezzlement.”
“There are two types of mistakes: 1) doing nothing, what Warren calls ‘sucking my thumb’ and 2) buying with an eyedropper things we should be buying a lot of.”
“The worshipping at the altar of diversification, I think that is really crazy.”
“Acquire worldly wisdom and adjust your behaviour accordingly. If your new behaviour gives you a little temporary unpopularity with your peer group ... then to hell with them.”
“I think when you’re buying jewellery for the woman you love, financial considerations probably shouldn’t enter into it.”
“Our 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 recognisable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favourable, using resources available as a result of prudence and patience in the past.”
“A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc. Just avoid things like Aids situations, racing trains to the crossing, and doing cocaine. Develop good mental habits.”
“Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.”
“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.”
“It’s so simple. You spend less than you earn. Invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, et cetera et cetera. 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.”
“The best armour of old age is a well spent life preceding it.” – Copyright The Financial Times Limited 2023