Charlie Munger
Vice chairman of Berkshire Hathaway and chairman of Wesco Financial from 1984 to 2011. Wrote Wesco's shareholder letters and gave the talks collected in Poor Charlie's Almanack. Died in 2023; this page reflects his complete public record.
Charlie Munger did not write this page. ppll compiled it from their own words, each linked to the source. Is this you? · Report a mistake
What they believe
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The safest way to try to get what one wants is to try to deserve it
the safest way to try and get what you want is to try and deserve what you want.
jamesclear.comSaid 13 May 2007This on korrents
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Good judgment can be sought mostly by collecting instances of bad judgment and pondering ways to avoid them, in the manner of inversion
First, 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.
fs.blogSaid c. 2005This on korrents
The bold line is korrents’ wording; the quote is theirs. These 2: what they wrote before what they said aloud, one per source, newest first.
Beliefs
Korrents What they believe 50 beliefs — each backed by an exact quote.
Each is a — compiled by korrents.com, not by them: the one-line wordings are korrents', the quotes are theirs.
Recent
The safest way to try to get what one wants is to try to deserve it
the safest way to try and get what you want is to try and deserve what you want.
2007 USC Law School Commencement Address Said 13 May 2007
Acquiring wisdom is a moral duty and not only something done to advance in life
wisdom acquisition is a moral duty. It’s not something you do just to advance in life. Wisdom acquisition is a moral duty.
2007 USC Law School Commencement Address Said 13 May 2007
Advancing in life depends more on what one learns later than on what one already knows
You 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.
2007 USC Law School Commencement Address Said 13 May 2007
Show 47 more
People who are learning machines rise in life even when they are not the smartest or the most diligent
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 when they got up and boy does that help—particularly when you have a long run ahead of you.
2007 USC Law School Commencement Address Said 13 May 2007
Knowing the big ideas of the disciplines well enough for an exam does not help; they have to sit in a mental latticework and be used automatically for life
And 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 Address Said 13 May 2007
Inversion frequently solves problems that nothing else will
Those 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.
2007 USC Law School Commencement Address Said 13 May 2007
Sloth and unreliability are what to avoid: an unreliable person craters whatever their virtues
Such an easy answer: sloth and unreliability.
2007 USC Law School Commencement Address Said 13 May 2007
One is not entitled to an opinion on a subject until one can state the arguments against one’s position better than its supporters
I’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.
2007 USC Law School Commencement Address Said 13 May 2007
One has to allow for the self-serving bias of everybody else, and failing to do so is foolish
You 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.
2007 USC Law School Commencement Address Said 13 May 2007
Envy, resentment, revenge and self-pity are disastrous modes of thought, and self-pity gets close to paranoia, which is very hard to reverse
Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity.
2007 USC Law School Commencement Address Said 13 May 2007
Objectivity maintenance routines are totally required for correct thinking
objectivity maintenance routines are totally required in life if you’re going to be a correct thinker.
2007 USC Law School Commencement Address Said 13 May 2007
Checklist routines avoid a lot of errors, and a checklist is the procedure that works best for putting elementary wisdom to use
Checklist 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.
2007 USC Law School Commencement Address Said 13 May 2007
There are two kinds of knowledge: that of those who really know, having paid the dues and having the aptitude, and that of those who have only learned to prattle the talk
In 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 Address Said 13 May 2007
The highest form civilization can reach is a seamless web of deserved trust: not much procedure, just totally reliable people correctly trusting one another
The highest form that civilization can reach is a seamless web of deserved trust. Not much procedure, just totally reliable people correctly trusting one another.
2007 USC Law School Commencement Address Said 13 May 2007
Good judgment can be sought mostly by collecting instances of bad judgment and pondering ways to avoid them, in the manner of inversion
First, 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
One should never think about something else when one should be thinking about the power of incentives
This 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Driven by incentives, a decent person drifts into immoral behavior to get what he wants and rationalizes it
A 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) Said c. 2005
Because of incentive-caused bias, a professional advisor’s advice deserves distrust, especially when it is especially good for the advisor
Widespread 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) Said c. 2005
The man-with-a-hammer tendency does not exempt smart people
Man-with-a-hammer tendency does not exempt smart people like Blanchard and Skinner. And it won’t exempt you if you don’t watch out.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Practicing fewer skills leads to man-with-a-hammer error and shrinks learning capacity, by leaving gaps in the latticework of theory
If 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) Said c. 2005
A thinking person needs to assemble their skills into a checklist used routinely, or will miss much that is important
It 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Reaching a conclusion quickly and then resisting any change in it naturally causes many errors of cognition
It 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Liking and loving act as a conditioning device that makes the lover ignore faults, comply with wishes, favor associated things and distort other facts
One 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) Said c. 2005
People have an automatic tendency to think and act as they see others around them thinking and acting
For 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Learning to ignore the examples of others when they are wrong is a skill few skills exceed in worth
Learn how to ignore the examples from others when they are wrong, because few skills are more worth having.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Many small steps toward disaster can carry a person too far to avoid it, because each step presents so little contrast with the present position
When 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) Said c. 2005
A loss hurts much more than an equal gain helps
The 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
The best antidote to excess self-regard is to force oneself to be more objective about oneself, one’s family and friends, one’s property and the value of one’s activity
The 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) Said c. 2005
Trained, habitual use of simple probability math is one standard antidote to foolish optimism
One 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.
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Learning is most easily assimilated and used when experience is hung on a latticework of theory answering the question Why
In 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?
The Psychology of Human Misjudgment (revised text, 2005) Said c. 2005
Pressure from many psychological tendencies at once accounts for extreme results such as the Milgram experiment and the success of some cults
This 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) Said c. 2005
Wesco was not just a smaller, equally good version of Berkshire -- each dollar of its book value was plainly worth less, and the gap was widening in Berkshire's favor.
Wesco is not an equally-good-but-smaller version of Berkshire Hathaway, better because its small size makes growth easier. Instead, each dollar of book value at Wesco continues plainly to provide much less intrinsic value than a similar dollar of book value at Berkshire Hathaway.
Wesco Financial Corporation 1997 Letter to Shareholders Said 13 Mar 1998
Facts that do not hang together on a latticework of theory are not held in a usable form
you 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
With only one or two models in use, a person is liable to torture reality to fit them, or to think they fit
you’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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Thinking with a single model is a disastrous way to think and to operate in the world, so multiple models are needed
It’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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Some 80 or 90 important models carry about 90% of the load in making a person worldly-wise, and only a handful carry the heaviest
80 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Without the elementary mathematics of probability in one’s repertoire, one gives everybody else a huge advantage
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. You’re giving a huge advantage to everybody else.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
The psychology of misjudgment is terribly important to learn, and terribly smart people make bonkers mistakes by failing to heed it
The 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Everyone has a circle of competence, and it is very hard to advance
Every person is going to have a circle of competence. And it’s going to be very hard to advance that circle.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Playing games where others have the aptitudes and one does not is close to certain to lose, so one has to find where one has an edge and stay inside one’s circle of competence
If 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
The wise bet heavily when the world offers them the odds, and not the rest of the time
And 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
It makes sense to load up on the very few good insights one has rather than pretend to know everything about everything at all times
And 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
In a lousy business, wonderful new inventions can give owners nothing, because the gains from improvements flow through to the customers
there 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Advantages of scale are very important to which businesses succeed and which fail
in terms of which businesses succeed and which businesses fail, advantages of scale are ungodly important.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Over the long term a stock is hard put to earn a much better return than the business underneath it earns
Over 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.
A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994) Said c. 1994
Learning only from one’s own experience, and minimizing what one learns from the good and bad experience of others, is a sure-shot producer of misery and second-rate achievement
My 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.
How to Guarantee a Life of Misery (Harvard School commencement address, 1986) Said 13 Jun 1986
Staying down after severe reverses guarantees being permanently mired in misery, since adversity is plentiful even for the lucky and wise
My 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.
How to Guarantee a Life of Misery (Harvard School commencement address, 1986) Said 13 Jun 1986
Many hard problems are best solved by addressing them backward, studying how to create non-X in order to create X
What 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) Said 13 Jun 1986
Most people process new and disconfirming information so that their original conclusion remains intact, whereas giving priority to disconfirming evidence was a large part of Darwin’s result
Darwin’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) Said 13 Jun 1986
Addiction can happen to anyone, through a subtle process whose bonds are too light to be felt until they are too strong to be broken
While susceptibility varies, addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken.
How to Guarantee a Life of Misery (Harvard School commencement address, 1986) Said 13 Jun 1986
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Where they publish
Newsletter Letters to Wesco Shareholders Annual letters to Wesco Financial shareholders, 1983 to 2009. No feed -- a static archive.
His own account of Wesco's results and reasoning, written every year while he chaired the company. Wesco merged fully into Berkshire Hathaway in 2011.
Links
Link verified 8 Sept 2026.
Books Poor Charlie's Almanack A compilation of his talks on mental models, business and rational thinking.
Eleven talks given over several decades, edited by his longtime friend Peter Kaufman, drawing on his approach to business, finance and decision-making.
Link verified 8 Sept 2026.
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