Quotessence
Home / Authors / Charlie Munger
Charlie Munger

Charlie Munger Quotes

Business person

Filter quotes by topic

AllIfsPeopleThinkingInvestingWayWantKnowsWorldLongWells

Famous Charlie Munger Quotes

“Creative accounting is an absolute curse to a civilization. One could argue that double-entry bookkeeping was one of history's great advances. Using accounting for fraud and folly is a disgrace. In a democracy, it often takes a scandal to trigger reform. Enron was the most obvious example of a business culture gone wrong in a long, long time.”

LongCultureGoneCreativeDemocracyExampleCivilizationLong TimeAbsolutesObviousArguingReformCurseFollyFraudScandalTriggersDisgraceEntryAccountingEnronBookkeepingEnron Scandal
Author:Charlie Munger
Create image

“I also want to raise the possibility that there are, in the very long term, "virtue effects" in economics- for instance that widespread corrupt accounting will eventually create bad long term consequences as a sort of obverse effect from the virtue-based boost double-entry book-keeping gave to the heyday of Venice. I suggest that when the financial scene starts reminding you of Sodomand Gomorrah, you should fear practical consequences even if you like to participate in what is going on.”

IfsWantShouldLongBookTermVirtueEffectsPossibilitySceneConsequenceEconomicsRaisesFinancialPracticalsInstanceLong TermVeniceEntryAccountingRemindingBoostHeyday
Author:Charlie Munger
Create image

“At most corporations if you make an acquisition and it turns out to be a disaster, all the paperwork and presentations that caused the dumb acquisition to be made are quickly forgotten. You've got denial, you've got everything in the world. You've got Pavlovian association tendency. Nobody even wants to even be associated with the damned thing or even mention it. At Johnson & Johnson, they make everybody revisit their old acquisitions and wade through the presentations. That is a very smart thing to do. And by the way, I do the same thing routinely.”

IfsWorldWayWantMadeTurnsSmartForgottenDisasterTendenciesDumbDenialCorporationsThings To DoAssociationJohnsonPresentationAcquisitionVery SmartWadePaperwork
Author:Charlie Munger
Create image

“I'd say 3/4 of advertising works on pure Pavlov. Think how association, pure association, works. Take Coca-Cola company (we're the biggest share-holder). They want to be associated with every wonderful image: heroics in the Olympics, wonderful music, you name it. They don't want to be associated with presidents' funerals and so-forth.”

ThinkingWantNamesPresidentCompanyWonderfulSharePureAdvertisingFuneralAssociationOlympicsCoca ColaPavlov
Author:Charlie Munger
Create image

“If you have only a little capital and are young today, there are fewer opportunities than when I was young. Back then, we had just come out of a depression. Capitalism was a bad word. There had been abuses in the 1920s. A joke going around then was the guy who said, 'I bought stock for my old age and it worked - in six months, I feel like an old man!' "It's tougher for you, but that doesn't mean you won't do well - it just may take more time. But what the heck, you may live longer."”

IfsMenFeelsWellsMayMeanLittlesSaidAgeTodayYoungGuyOpportunityMonthsSixJokesCapitalismAbuseOld AgeMore TimeOld ManFewerSix MonthsBad Word
Author:Charlie Munger
Create image

“Another thing I think should be avoided is extremely intense ideology because it cabbages up one's mind. You see it a lot with T.V. preachers (many have minds made of cabbage) but it can also happen with political ideology. When you're young it's easy to drift into loyalties and when you announce that you're a loyal member and you start shouting the orthodox ideology out, what you're doing is pounding it in, pounding it in, and you're gradually ruining your mind. So you want to be very, very careful of this ideology. It's a big danger.”

ThinkingWantShouldMindMadeBigsHappensYoungPoliticalEasyDangerMembersCarefulLoyaltyIntenseIdeologyOrthodoxLoyalPreacherAvoidedShoutingCabbagePolitical Ideology
Author:Charlie Munger
Create image

“I have what I call an iron prescription that helps me keep sane when I naturally drift toward preferring one ideology over another and that is: I say that I'm not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people who support it. I think only when I've reached that state am I qualified to speak. This business of not drifting into extreme ideology is a very, very important thing in life”

PeopleThinkingI CanImportantStatesHelpingSpeakOpinionSupportSubjectsPositionArgumentImportant ThingsExtremesIdeologyHelp MeIronSaneThings In LifeEntitledQualifiedPrescriptionsDrifting
Author:Charlie Munger
Create image

“Of course you want to drive that out of yourself because you want to be wise, not foolish. You also have to allow for the self-serving bias of everybody else because most people are not going to remove it all that successfully, the human condition being what it is. If you don't allow for self-serving bias in your conduct, again you're a fool.”

PeopleIfsWantHumansSelfCoursesWiseConditionsFoolFoolishRemoveServingHuman ConditionBiasBeing WiseSelf Serving
Author:Charlie Munger
Create image

“What's fascinating . . .is that you could now have a business that might have been selling for $10 billion where the business itself could probably not have borrowed even $100 million. But the owners of that business, because its public, could borrow many billions of dollars on their little pieces of paper- because they had these market valuations. But as a private business, the company itself couldn't borrow even 1/20th of what the individuals could borrow.”

LittlesHas BeensMightIndividualCompanyMillionsPiecesPaperDollarsBillionsSellingFascinatingOwnersMight Have BeenBorrowedValuation
Author:Charlie Munger
Create image

“How should the best parts of psychology and economics interrelate in an enlightened economist's mind?... I think that these behavioral economics...or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology.”

ThinkingShouldMindLittlesHardPsychologyEconomicsEnlightenedEconomistAccommodateBendingBehavioral Economics
Author:Charlie Munger
Create image

“Black-Scholes is a know-nothing system. If you know nothing about value - only price - then Black-Scholes is a pretty good guess at what a 90-day option might be worth. But the minute you get into longer periods of time, it's crazy to get into Black-Scholes. For example, at Costco we issued stock options with strike prices of $30 and $60, and Black-Scholes valued the $60 ones higher. This is insane.”

IfsKnowsMightValuesBlackCrazyMinutesExampleHigherPeriodsStrikesInsaneScholesCostcoStock Options
Author:Charlie Munger
Create image

“And your brain doesn't naturally know how to think the way Zeckhauser knows how to play bridge. "for example," people do not react symmetrically to loss and gain. Well maybe a great bridge player like Zeckhauser does, but that's a trained response. Ordinary people, subconsciously affected by their inborn tendencies.”

PeopleThinkingKnowsWayWellsDoePlayLossBrainKnow HowPlayerExampleOrdinaryGainsResponseTendenciesBridgesAffectedOrdinary People
Author:Charlie Munger
Create image

“One of the first big bubbles, of course, was the huge and horrible South Sea Bubble in England. And the aftermath was interesting. Many of you probably don't remember what happened after the South Sea Bubble, which caused an enormous financial contraction, and a lot of pain. They banned publicly traded stock in England for decades.”

FirstsBigsPainRememberCoursesInterestingHappenedSeaHugeEnglandSouthFinancialDecadesEnormousHorribleBubblesBannedAftermathContractions
Author:Charlie Munger
Create image