One of the wisest people in history passed away last week. He was a high influence on the way I thought about investing and business. Here are some of my favorite quotes from the great Charlie Munger.
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1. "The big money is not in the buying and selling but in the waiting."
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This quote emphasizes the virtue of patience in investing. Charlie suggests that true wealth is generated not by frequent trading but by patiently holding onto investments over a long period.
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2. "It's not supposed to be easy. Anyone who finds it easy is stupid."
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Here, Charlie highlights the inherent challenges in investing. Successful investing requires effort and understanding, and anyone who thinks it's simple may be overlooking its complexities.
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3. "Knowing what you don't know is more useful than being brilliant."
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Charlie points out the importance of acknowledging one's limitations. Recognizing the boundaries of your knowledge can be more valuable than intelligence alone in making wise investment decisions.
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4. "Remember that reputation and integrity are your most valuable assetsβand can be lost in a heartbeat."
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This quote underscores the importance of maintaining integrity and a good reputation in the business and investing world. These are critical assets that, once lost, are difficult to regain.
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5. "Diversification is protection against ignorance. It makes little sense if you know what you are doing."
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He challenges the conventional wisdom of diversification, suggesting that it's more a tool for those who are unsure of their investment choices. For those who are knowledgeable and confident, concentration might be more rewarding.
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6. "A great business at a fair price is superior to a fair business at a great price."
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This emphasizes the value of investing in high-quality businesses. A good company purchased at a reasonable price is often a better investment than an average company bought cheaply.
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7. "If you keep doing what you've always done, you'll keep getting what you've always gotten."
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Munger encourages adaptability and learning. This quote suggests that to achieve different or better results, one must be willing to change strategies and approaches.
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8. "The first rule of compounding: Never interrupt it unnecessarily."
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This is a nod to the power of compounding interest or returns. Munger advises against actions that might disrupt the compounding process, such as unnecessary withdrawals or transactions.
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9. "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."
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Charlie suggests that avoiding foolish decisions can be more beneficial than trying to make brilliant ones. Consistently making sound, reasonable choices can lead to significant long-term benefits.
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10. "Risk comes from not knowing what you're doing."
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Ignorance is a primary source of investment risk. Understanding your investments deeply reduces risk, whereas a lack of knowledge increases it.
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