Wise Money: RIP Charlie Munger 1924-2023
Quote to Ponder
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” - Charlie Munger
Recommended Links
- Charlie Munger Tributes - WSJ
- Who is Charlie Munger? Wit and Wisdom From The World’s Most Irreverent Billionaire - Farnam Street
- The Munger Operating System: How to Live a Life That Really Works - Farnam Street
- What CalPERs Should Do With Their Endowment - Meb Faber
- This is a Wonderful Market for Dollar Cost Averaging - Ben Carlson
- This Midwest City is the Most Affordable Place to Retire - Travel and Leisure
Insight
In the world of investing, few figures have left as indelible a mark as Charlie Munger, the renowned vice chairman of Berkshire Hathaway. Munger, one of our heroes sadly passed away recently. He was not only Warren Buffett's longtime business partner but also an intellectual force in his own right. His approach to investing and life itself has left an enduring legacy that continues to inspire people around the globe.
Charlie Munger's unique mindset was centered around the concept of mental models – a framework for understanding the world by drawing on various disciplines, from psychology to economics. For example, the engineering concept of "Margin of Safety" can be applied to financial planning as the importance of having an emergency cash reserve. Munger believed that a diverse array of mental models such as this allowed for a more comprehensive understanding of complex problems, thereby enhancing decision-making capabilities.
Munger was a staunch advocate of rationality in decision-making. He emphasized the importance of avoiding cognitive biases and emotional decision traps that often plague investors. By approaching problems with a clear and rational mindset, Munger believed one could make more informed and objective decisions.
Charlie was also a voracious reader and a lifelong learner. His insatiable curiosity and commitment to continuous learning allowed him to accumulate a vast array of knowledge across diverse fields.
Munger, like Buffett, was known for his long-term perspective on investments. He believed in the power of compounding and the patience required for investments to truly flourish. He famously advocated for "getting rich slowly" through patience and sound decision-making while ignoring the day-to-day fluctuations of the market.
Before we wrap this up, we'll let you hear from that man himself. Here are our ur favorite Charlie Munger Quotes:
"Spend each day trying to be a little wiser than you were when you woke up."
"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."
"The big money is not in the buying or selling, but in the waiting."
"The first rule is not to fool yourself, and you are the easiest person to fool."
“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines."
“All I want to know is where I'm going to die so I'll never go there.”
“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.”
Charlie Munger's legacy extends far beyond his impressive investment track record. His emphasis on mental models, rationality, continuous learning, and a long-term perspective has left an indelible imprint on the world of investing. As we remember this icon, let us strive to incorporate Munger's wisdom into our own investment philosophies, navigating the markets with a robust perspective and a commitment to lifelong learning.