In this piece, we will take a look at the 25 best quotes from Charlie Munger.

The announcement of Charlie Munger’s death by Berkshire Hathaway and his publishing company marked the end of an era in the finance industry. The firm and the Daily Journal took the world by surprise on November 28th when they announced that the legendary investor known best for being the right hand man of Warren Buffett had peacefully passed away in California.

Back when Mr. Munger started out in the industry, the world was quite different from what it is today. While airplanes had started to fly, the remarkable computing revolution that has taken the world by storm over the past two and a half decades was still in its infancy. Fresh off the heels of victory in the Second World War, Americans were getting a taste of big business and cinema, and economic prosperity ushered in by spending was creating wealth for everyone.

However, not all of this time period was rosy. In fact, Charlie Munger’s decades long career in the investment world also saw him placed dead center at the heart of one of America’s biggest financial crises – the savings and loan crisis that started out in the 1980s and would rage on for a decade. Mr. Munger was the CEO and Chairman of Wesco Financial back then, and Wesco was operating in the savings and loan – or thrift – industry through its Pasadena, California based thrift Mutual Savings. In the 1980s, the Federal Reserve was rapidly increasing interest rates just as it is now. These raised the borrowing costs for these financial firms, and they couldn’t recoup the money from the loans that they made – creating a fundamental imbalance in their business model.

As a testament to Mr. Munger’s business smarts, he transformed Wesco’s business by diversifying away from thrifts and investing in Fannie Mae and the New York based investment bank Salomon Inc. The diversification would lead to Wesco avoiding the inevitable crash of the S&L industry, but ironically, also embroiled Mr. Buffett and Mr. Munger in a crisis that shook the finance industry in the 1990s. Salomon (NYSE:SB) was acquired by the American insurance company Travelers in 1997, but before that, a scandal at the firm would be one of the first that Mr. Buffett would face in his career and see outsiders question the quality of his investments.

Back then Salomon was one of the biggest firms in the industry, but as Munger and Buffett would discover, its traders had been making illegal bets for U.S. Treasury bonds – a move reminiscent of the scandal that brought down one of the U.K.’s oldest merchant bank Barings in 1995. To make matters worse, the duo also found that Salomon’s chief executive officer and another executive also knew about these trades and failed to stop them. Munger was central in salvaging Salomon Bank, as he pressed for trader accountability and complete details of the illegal decisions. This era in his life would also see the billionaire investor draw from his experience in the legal industry (he was a graduate of the Harvard Law School) and ask his former colleagues in the legal industry to help with the bank’s legal problems.

His journey at Salomon wouldn’t be the end of Mr. Munger’s financial trysts. Over the years, he would be Mr. Buffett’s right hand man, as the Oracle amassed billions of dollars of stakes in today’s corporate mega giants such as The Coca-Cola Company (NYSE:KO) and Apple Inc. (NASDAQ:AAPL). These are some of Berkshire’s biggest investments, and as the firm’s vice chairman, Munger played a crucial role in helping Warren Buffett decide where to put the firm’s money. In fact, Coca-Cola has been one of Mr. Munger’s favorite companies, and during a seminal talk in 1996, the billionaire wondered how it could be possible that some of the smartest people in the world remained oblivious to the reasons behind the firm’s success.

Unlike Mr. Buffett though, Mr. Munger’s public investment portfolio also comes from his publication Daily Journal Corporation (NASDAQ:DJCO). Unlike Berkshire, the firm has invested in just four companies as of Q3 2023, but like Berkshire, it has kept its portfolio the same for years. These four stocks are Alibaba Group Holding Limited (NYSE:BABA), U.S. Bancorp (NYSE:USB), Wells Fargo & Company (NYSE:WFC), and Bank of America Corporation (NYSE:BAC) – and the portfolio’s only non financial firm has seen Mr. Munger attract criticism for not exiting the shares sooner as they have lost more than 52% over the last five years. Additionally, unlike Mr. Buffett, Mr. Munger also didn’t exit Wells Fargo after the bank became embroiled in one scandal after another.

Finally, just like Mr. Buffett, Mr. Munger also invested through his private portfolio. In fact, one notable Charlie Munger stock pick that’s absent from the Daily Journal’s portfolio is his investment in Costco Wholesale Corporation (NASDAQ:COST). SEC filings show that as of October 10, 2023, Mr. Munger directly owned 168,104 Costco Wholesale Corporation (NASDAQ:COST) shares and held an additional 19,565 shares through the Alfred C. Munger Foundation.

The Salomon crisis would see Mr. Buffett become the bank’s chief executive officer to restore its credibility among investors and the broader financial world, and the Oracle recalled his time at the bank and the criticality of Mr. Munger’s legal team later when he remarked:

The Salomon post, though far from fun, was interesting and worthwhile: In Fortune’s annual survey of America’s Most Admired Corporations, conducted last September, Salomon ranked second among 311 companies in the degree to which it improved its reputation. Additionally, Salomon Brothers, the securities subsidiary of Salomon Inc, reported record pre-tax earnings last year – 34% above the previous high.

Many people helped in the resolution of Salomon’s problems and the righting of the firm, but a few clearly deserve special mention. It is no exaggeration to say that without the combined efforts of Salomon executives Deryck Maughan, Bob Denham, Don Howard, and John Macfarlane, the firm very probably would not have survived. In their work, these men were tireless, effective, supportive and selfless, and I will forever be grateful to them.

Salomon’s lead lawyer in its Government matters, Ron Olson of Munger, Tolles & Olson, was also key to our success in getting through this trouble. The firm’s problems were not only severe, but complex. At least five authorities – the SEC, the Federal Reserve Bank of New York, the U.S. Treasury, the U.S. Attorney for the Southern District of New York, and the Antitrust Division of the Department of Justice – had important concerns about Salomon. If we were to resolve our problems in a coordinated and prompt manner, we needed a lawyer with exceptional legal, business and human skills. Ron had them all.

As Mr. Munger rests in peace, we decided to narrow down some of his top quotes to honor his memory and ensure that the lessons that he learned during his exemplary life are available for everyone to learn.

Our Methodology

To make our list of Charlie Munger’s best quotes, we scanned Goodreads and picked out the top 25 Charlie Munger quotes that had the most likes. All rights to these quotes belong to their respective publishers.

25 Best Quotes From Charlie Munger

25. “I think that, every time you see the word EBITDA, you should substitute the words “bullshit earnings.”

EBITDA, for the uninitiated, is called operating income in the finance industry and it measures the pre tax and interest money available to shareholders.

24. “Mimicking the herd invites regression to the mean (merely average performance).”

A scientific quote, regression to the mean is a principle that states that on a long enough horizon, all variables tend to cluster around the average. According to Mr. Munger, should one simply go with the crowd, then one’s actions will also be average.

23. “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success.”

Investing is not for the faint of heart, and sometimes, temperament outlasts talent.

22. “All I want to know is where I’m going to die so I’ll never go there.”

The fear of death is what every human being has to deal with, and the best we can do is to make our lives worth living.

21. “If 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.”

Probability is at the heart of the finance industry, with expected returns, normal distributions, and others being indispensable tools at a trader’s disposal.

20. “If something is too hard, we move on to something else. What could be simpler than that?”

Two steps back, one step forward.

19. “The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.”

Life is deterministic and our actions determine our fates to a large extent.

18. “The best armour of old age is a well spent life perfecting it.”

A life free of regrets is the best that anyone could ask for really. It’s also at the heart of retail billionaire Jeff Bezos’s success, who lives by the ‘Regret Minimization’ philosophy.

17. “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”

Guilty pleasures are quite common. But perhaps, guilty suffering is as well.

16. “Go to bed smarter than when you woke up.”

To evolve one must learn and understand new things every day.

15. “Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat.”

Reputation and integrity were central to Mr. Munger’s career, as evident in his handling of the Salomon crisis.

14. “People calculate too much and think too little.”

Sometimes, one needs to look at the bigger picture instead of just formulas.

13. “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.”

Learning from the experiences of others is one of the best ways to set up oneself for success.

12. “I 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 they were when they got up and boy does that help, particularly when you have a long run ahead of you.”

The more we learn, the better we are.

11. “What are the secret of success? -one word answer :”rational”

Rationality is the heart of progress. Eliminating cognitive biases and logical fallacies from one’s thinking can be transformative.

10. “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.”

The philosophy of Warren Buffett revolves around compounded returns. The returns from learning can also be compounded if one is a lifelong learner.

9. “We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”

Joseph Schumpeter’s law of creative destruction necessitates the replacement of the old with the new. This destruction can also help one break free from the shackles of old ideas.

8. “It takes character to sit with all that cash and to do nothing. I didn’t get top where I am by going after mediocre opportunities.

Sometimes, patience is the best investment decision.

7. “Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group…then to hell with them.”

Going against the herd is as important – sometimes even more – as learning from the wisdom of others.

6. “There is no better teacher than history in determining the future… There are answers worth billions of dollars in 30$ history book.”

Those who fail to learn from history are doomed to repeat it.

5. “How to find a good spouse? -the best single way is to deserve a good spouse.”

Only good people can help other good people grow and prosper.

4. “We both (Charlie Munger and Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.”

Clear headed thinking isn’t as easy as it sounds. According to Daniel Kahneman, most people wander through life unaware of the biases that shape their decisions.

3. “To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people.”

Nobody has ever made a billion dollars without sacrificing time, effort, and money. But are they all that is needed?

2. “Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”

Compounded returns are eternal – whether it’s in the financial or the personal realm.

1. In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads–and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

The ability to grow through learning has been emphasized by some of the most successful people in human history such as Bill Gates and Elon Musk.

Suggested articles:

• 25 Most Trustworthy Countries in the World
• 50 Most Popular Countries in the World in 2023
• Warren Buffett Sees Big Gains in These Small-Cap Stocks

Disclosure: None. 25 Best Quotes From Charlie Munger is originally published on Insider Monkey.