10 Underrated Charlie Munger Quotes

Early on in my career, I was gifted a copy of Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger. Up until that point, I was mainly a Buffett devotee, but quickly became fascinated by his business partner who took a slightly different approach and focused more on a broader subset of skills than just business and investing. I’ve been closely following Munger and trying to learn from his latticework of mental models ever since.

I got the chance to read an early copy of Tren Griffin’s excellent new book on Munger, Charlie Munger: The Complete Investor, and it didn’t disappoint. Here’s the blurb I wrote for the book:

Griffin is better than anyone else at explaining the most important ideas from the best and brightest minds in business and investing in a way people can easily understand. This book is overflowing with wisdom. Readers will receive a master’s degree in decision making, investing, human psychology, and much more. The definitive book on Warren Buffett’s business partner.

It’s not just a book about investing. It’s about understanding the complexities of human nature and learning how to make better decisions. This is probably one of the most highlighted books I’ve ever read because there’s just so much good stuff packed into it. What follows are 10 quotes from Munger I found in the book that I haven’t heard as much as some of his other more well-known quips.

On emotional intelligence:

A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.

On the availability heuristic:

An idea or fact is not worth more merely because it’s easily available to you.

On the importance of a rules-based process:

I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important.

On the power of simplicity:

Simplicity has a way of improving performance through enabling us to better understand what we are doing.

On overconfidence:

Most people who try [investing] don’t do well at it. But the trouble is that if even 90 percent are no good, everyone looks around and says, “I’m the 10 percent.”

On sales:

I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”

On admitting your mistakes:

I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.

On stock market losses:

You need patience, discipline, and an ability to take losses and adversity without going crazy.

On market efficiency:

I think it’s roughly right that the market is efficient, which makes it very hard to beat merely by being an intelligent investor. But I don’t think it’s totally efficient at all. And the difference between being totally efficient and somewhat efficient leaves an enormous opportunity for people like us to get these unusual records. It’s efficient enough, so it’s hard to have a great investment record. But it’s by no means impossible. Nor is it something that only a very few people can do. The top three or four percent of the investment management world will do fine.

On principles:

You ought to have an internal compass. So there should be all kinds of things you won’t do even though they’re perfectly legal. That’s the way we try to operate.

Do yourself a favor and pick up a copy:
Charlie Munger: The Complete Investor

Further Reading:
Charlie Munger’s Investing Principles
Charlie Munger on Human Misjudgement