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Birthday Tribute to Charlie Munger

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January 13, 2014 – Comments (0) | RELATED TICKERS: BRK-A

Board: Berkshire Hathaway

Author: JohnCLeven

Looks like the wise ole Munger became an nonagenarian on January 1st.

Here's to Charlie making it to 100!

To commemorate the occasion, here are some of my favorite quotes from Poor Charlie's Almanack:

“I consistently see people rise in life who are not the smartest, and sometimes not even the most diligent. But they are learning machines. They go to bed at night a little wiser than they were that morning. And boy, does that habit help, particularly when you have a long run ahead of you.” (I actually have this quote hanging on my wall)

“The number one idea”, Munger claims, “is to view a stock as an ownership of the business, and to judge the staying power of the business in terms of its durable competitive advantage. Look for more value in terms of discounted free cash flow than you are paying for. Move only when you have an advantage. It’s very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor. “

"If you buy a business just because it's undervalued, than you have to worry about selling it when it reaches its intrinsic value. That's hard. But if you can buy a few great companies, then you can sit on your ass. That's a good thing.”

“The idea of excessive diversification is madness.” “Our experience tends to confirm a long held notion that being prepared, on a few occasions in a lifetime, [and] to act promptly in scale,…will often dramatically improve the financial results of that lifetime.” “…All that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available, as a result of prudence and patience in the past.”

“It takes character to sit there with cash and do nothing. I didn’t get where I am today, by going after mediocre opportunities. "If you say no to 90% of investing ideas, you're not missing much.

“If Berkshire has made a modest progress, a good deal of it is because Warren and I are very good at destroying our own best-loved ideas. Any year that you don’t destroy one of your best-loved ideas is probably a wasted year.”

Keynes said “It’s not bringing in the new ideas that’d hard. It’s getting rid of the old ones.” And Einstein said it better, attributing his mental success to “curiosity, concentration, perseverance, and self-criticism.” By self- criticism he meant becoming good at destroying your own best loved and hardest-won ideas. If you can get really good at destroying your own wrong idea, that is a great gift.

And here are two longer pieces that everyone should read:
1) "The Psychology of Human Misjudgement"
http://www.rbcpa.com/Mungerspeech_june_95.pdf

and 2) How to turn $2 Million Into $2 Trillion
http://mungerisms.blogspot.com/2010/04/charlie-munger-turnin...

Cheers! 

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