Warren Buffett's business partner and vice chairman of Berkshire Hathaway; also chaired Wesco Financial Corporation from 1984 to 2011, where he wrote its annual letters himself.
Charlie Munger did not write this page.
We collected these quotes from things they published elsewhere, and every quote links to where it was said. They have no account here and have not endorsed this site. Quotes are word for word; the short line under each one is our own restatement, not their wording.
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Each column is a stretch of time in which the same views came up; a new column starts when one appears or goes quiet. Quiet means nothing on it in our sources for that stretch, which is not the same as a change of mind; Dropped means they said they no longer hold it; tap the card for which claim and when. Revised means the view carries on but one of its claims was dropped. Each row is one view, in the same place all the way along. The number is how many claims in that stretch; we hold 5 in 1986, 0 in 1987, 0 in 1988, 0 in 1989, 0 in 1990, 0 in 1991, 0 in 1992, 0 in 1993, 0 in 1994, 0 in 1995, 0 in 1996, 0 in 1997, 1 in 1998, 0 in 1999, 0 in 2000, 0 in 2001, 0 in 2002, 0 in 2003, 0 in 2004, 0 in 2005, 0 in 2006, 14 in 2007.
Carry a latticework of many models from many fields; with one or two, you bend reality to fit them
Our label. 8 claims in Charlie Munger's own words.
Their words80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.
Their wordsIt’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.
Their wordsyou’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does.
Their wordsyou can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.
Their wordsIn general, learning is most easily assimilated and used when, life long, people consistently hang their experience, actual and vicarious, on a lattice- work of theory answering the question: Why?
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayIf he reduces the number of skills he practices and, therefore, the number of skills he retains, he will naturally drift into error from man with a hammer tendency. His learning capacity will also shrink as he creates gaps in the latticework of theory he needs as a framework for understanding new experience.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsIf he reduces the number of skills he practices and, therefore, the number of skills he retains, he will naturally drift into error from man with a hammer tendency. His learning capacity will also shrink as he creates gaps in the latticework of theory he needs as a framework for understanding new experience.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayAnd it doesn’t help you just to know them enough just so you can prattle them back on an exam and get an A. You have to learn these things in such a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life.↗2007 USC Law School Commencement Addressjamesclear.com · 13 May 2007All korrents from this piece
Their wordsAnd it doesn’t help you just to know them enough just so you can prattle them back on an exam and get an A. You have to learn these things in such a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayDarwin’s result was due in large measure to his working method, which violated all my rules for misery and particularly emphasized a backward twist in that he always gave priority attention to evidence tending to disconfirm whatever cherished and hard-won theory he already had. In contrast, most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact.↗How to Guarantee a Life of Misery (Harvard School commencement address, 1986)jamesclear.com · 13 Jun 1986All korrents from this piece
Their wordsDarwin’s result was due in large measure to his working method, which violated all my rules for misery and particularly emphasized a backward twist in that he always gave priority attention to evidence tending to disconfirm whatever cherished and hard-won theory he already had. In contrast, most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact.
Their wordsThe elementary part of psychology—the psychology of misjudgment, as I call it—is a terribly important thing to learn. There are about 20 little principles. And they interact, so it gets slightly complicated. But the guts of it is unbelievably important. Terribly smart people make totally bonkers mistakes by failing to pay heed to it.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayThis tendency was not in any of the psychology texts I once examined, at least in any coherent fashion, yet it dominates life. It accounts for the extreme result in the Milgram experiment and the extreme success of some cults that have stumbled through practice evolution into bringing pressure from many psychological tendencies to bear at the same time on conversion targets.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsThis tendency was not in any of the psychology texts I once examined, at least in any coherent fashion, yet it dominates life. It accounts for the extreme result in the Milgram experiment and the extreme success of some cults that have stumbled through practice evolution into bringing pressure from many psychological tendencies to bear at the same time on conversion targets.
Their wordsThe quantity of man’s pleasure from a ten- dollar gain does not exactly match the quantity of his displeasure from a ten-dollar loss. That is, the loss seems to hurt much more than the gain seems to help.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayWhen a man’s steps are consecutively taken toward disaster, with each step being very small, the brain’s Contrast-Misreaction Tendency will often let the man go too far toward disaster to be able to avoid it. This happens because each step presents so small a contrast from his present position.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsWhen a man’s steps are consecutively taken toward disaster, with each step being very small, the brain’s Contrast-Misreaction Tendency will often let the man go too far toward disaster to be able to avoid it. This happens because each step presents so small a contrast from his present position.
Their wordsFor some such reason, man’s evolution left him with Social-Proof Tendency, an automatic tendency to think and act as he sees others around him thinking and acting.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayOne very practical consequence of Liking/ Loving Tendency is that it acts as a conditioning device that makes the liker or lover tend (1) to ignore faults of, and comply with wishes of, the object of his affection, (2) to favor people, products, and actions merely associated with the object of his affection (as we shall see when we get to “Influence-from-Mere-Association Tendency,” and (3) to distort other facts to facilitate love.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsOne very practical consequence of Liking/ Loving Tendency is that it acts as a conditioning device that makes the liker or lover tend (1) to ignore faults of, and comply with wishes of, the object of his affection, (2) to favor people, products, and actions merely associated with the object of his affection (as we shall see when we get to “Influence-from-Mere-Association Tendency,” and (3) to distort other facts to facilitate love.
Their wordsIt is easy to see that a quickly reached conclusion, triggered by Doubt-Avoidance Tendency, when combined with a tendency to resist any change in that conclusion, will naturally cause a lot of errors in cognition for modern man.
Their wordsYou also have to allow for the self-serving bias of everybody else, because most people are not gonna remove it all that successfully, the only condition being what it is. If you don’t allow for self-serving bias in your conduct, again, you’re a fool.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayThe best antidote to folly from an excess of self-regard is to force yourself to be more objective when you are thinking about yourself, your family and friends, your property, and the value of your past and future activity. This isn’t easy to do well and won’t work perfectly, but it will work much better than simply letting psychological nature take its normal course.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsThe best antidote to folly from an excess of self-regard is to force yourself to be more objective when you are thinking about yourself, your family and friends, your property, and the value of your past and future activity. This isn’t easy to do well and won’t work perfectly, but it will work much better than simply letting psychological nature take its normal course.
Their wordsIt is also essential for a thinking man to assemble his skills into a checklist that he routinely uses. Any other mode of operation will cause him to miss much that is important.
Their wordsChecklist routines avoid a lot of errors. You should have all this elementary wisdom and then you should go through and have a checklist in order to use it. There is no other procedure that will work as well.
Their wordsI’m not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it.” I think only when I reach that stage am I qualified to speak.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayWhat Carson did was to approach the study of how to create X by turning the question backward, that is, by studying how to create non-X. The great algebraist, Jacobi, had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward.↗How to Guarantee a Life of Misery (Harvard School commencement address, 1986)jamesclear.com · 13 Jun 1986All korrents from this piece
Their wordsWhat Carson did was to approach the study of how to create X by turning the question backward, that is, by studying how to create non-X. The great algebraist, Jacobi, had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward.
Their wordsMy third prescription for misery is to go down and stay down when you get your first, second, third severe reverse in the battle of life. Because there is so much adversity out there, even for the lucky and wise, this will guarantee that, in due course, you will be permanently mired in misery.
Their wordsMy second prescription for misery is to learn everything you possibly can from your own personal experience, minimizing what you learn vicariously from the good and bad experience of others, living and dead. This prescription is a sure-shot producer of misery and second-rate achievement.
Their wordsFirst, I had long looked for insight by inversion in the intense manner counseled by the great algebraist, Jacobi: “Invert, always invert.” I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes.
Their wordsThose of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve. And in life, unless you’re more gifted than Einstein, inversion will help you solve problems that you can’t solve in other ways.
Their wordsAnd it makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. You’re much more likely to do well if you start out to do something feasible instead of something that isn’t feasible.
Their wordsAnd the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t.
Their wordsIf you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.
Their wordsIf you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest. You’re giving a huge advantage to everybody else.
Their wordsOne standard antidote to foolish optimism is trained, habitual use of the simple probability math of Fermat and Pascal, taught in my youth to high school sophomores.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayIn this world, we have two kinds of knowledge. One is Planck knowledge—the people who really know. They’ve paid the dues, they have the aptitude. Then, we’ve got chauffeur knowledge—they have learned to prattle the talk and they have a big head of hair. They may have fine timbre in the voice. They really make a hell of an impression. But in the end, they’ve got chauffeur knowledge.↗2007 USC Law School Commencement Addressjamesclear.com · 13 May 2007All korrents from this piece
Their wordsIn this world, we have two kinds of knowledge. One is Planck knowledge—the people who really know. They’ve paid the dues, they have the aptitude. Then, we’ve got chauffeur knowledge—they have learned to prattle the talk and they have a big head of hair. They may have fine timbre in the voice. They really make a hell of an impression. But in the end, they’ve got chauffeur knowledge.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayWidespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsWidespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayA man has an acculturated nature making him a pretty decent fellow, and yet, driven both consciously and subconsciously by incentives, he drifts into immoral behavior in order to get what he wants, a result he facilitates by rationalizing his bad behavior, like the salesmen at Xerox who harmed customers in order to maximize their sales commissions.↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog · c. 2005All korrents from this piece
Their wordsA man has an acculturated nature making him a pretty decent fellow, and yet, driven both consciously and subconsciously by incentives, he drifts into immoral behavior in order to get what he wants, a result he facilitates by rationalizing his bad behavior, like the salesmen at Xerox who harmed customers in order to maximize their sales commissions.
Their wordsThis maxim is a wise guide to a great and simple precaution in life: Never, ever, think about something else when you should be thinking about the power of incentives.
Charlie MungerWarren Buffett's business partner and vice chairman of Berkshire HathawayI constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than when they got up and boy does that help—particularly when you have a long run ahead of you.↗2007 USC Law School Commencement Addressjamesclear.com · 13 May 2007All korrents from this piece
Their wordsI constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than when they got up and boy does that help—particularly when you have a long run ahead of you.
Their wordsYou are not going to get very far in life based on what you already know. You’re going to advance in life by what you’re going to learn after you leave here.
Their wordsOver the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6% return—even if you originally buy it at a huge discount.
Their wordsthere are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that’s still going to be lousy. The money still won’t come to you. All of the advantages from great improvements are going to flow through to the customers.
Their wordsThe highest form that civilization can reach is a seamless web of deserved trust. Not much procedure, just totally reliable people correctly trusting one another.