Charlie Munger touched on Costco, crypto, Russia, and other topics in one of his last interviews.
Warren Buffett's late business partner talked about trust, patience, and conviction in investing.
Here are Munger's 20 best quotes from his conversation on the "Invest Like The Best" podcast.
The legendary investor, who served as Warren Buffett's business partner and Berkshire Hathaway's vice-chairman for over four decades, died last week at age 99. Munger touched on why investing has grown harder, the importance of seizing opportunities, and many other subjects in a conversation with Stripe cofounder John Collison published as an "Invest Like The Best" episode.
Here are Munger's 20 best quotes from the podcast, lightly edited for length and clarity:
1. "Somebody says that old Joe has common sense. They don't mean that, they mean he's got uncommon sense. The people who are sensible on right away everything they deal with, they're uncommon, not common. Most people are a mass of crazy prejudices."
2. "When you get to the wealth-advisory business, you can hardly find a place in the world where so many high IQ people are doing so many dumb things. It's a hog heaven field for somebody who can develop anti-asininity because there is so much of it to be avoided."
3. "If you make your living selling things to other people that are good for them, that is safer and more profitable, averaged out, than selling them stuff that's bad for them like gambling, drugs, crazy religions, all kinds of things that are terrible for people."
4. "The trouble with investment is most businesses are going to perish. It's like evolution. Over a scale of 300 years, practically everything perishes. All great retailers, 90% of them have perished in the last 100 years. Kodak perished — all kinds of big things in other fields that looked permanent."
5. "I figure all investment is intrinsically damn difficult. Good ideas get bid to such high prices that they get dangerous. There's no investment that is so good you can't ruin it by raising the price higher and higher, because none of them are worth an infinite amount of money."
6. "A lot of what worked for us in the early days, we can't do anymore because the world is more competitive. The low-hanging fruit has all been picked, and we can't get fruit out of barren branches where the fruit has gone away. And so we have to go to something else."
7. "Of course it's gotten harder, way harder. It's gotten so hard that most of the people who are in wealth management have an almost zero chance of outperforming an unmanaged index like the S&P."
8. "Simple fact is that it's easier to find four things that are above average than it is to find 40. You're asking to find a gold mine in your backyard. How many gold mines are you going to find in your backyard? It's going to be very hard, and you're lucky if you get only a few in a lifetime. And then you have to be a combination of very patient and very aggressive. You have to sit patiently waiting, watching, surveying, hunting, and pounce very occasionally. You get four pounces in a lifetime that really work big time, and that's a very successful lifetime."
9. "In my lifetime, a guy who just bought the best common stocks and sat on his ass, would have made about 10% per annum before inflation. Maybe 8% after inflation. That is not the standard return that a man can expect from investment. That was a very unusual period in a very unusual place. And I do not anticipate that the average result is going to be nearly that good over the next 100 years."
10. "You have to know what you know and what you don't know. If you know the edge of your competency, you're a much safer thinker and a much safer investor. It's better for people to have an IQ of 160 and think it's 150, than an IQ of 160 and think it's 200. That guy is going to kill you because he doesn't know the edge of his own competence, and he thinks he knows everything."
11. "I'd rather have a brief telephone call with somebody I trust, than I would a 40-page contract prepared by the finest law firm in the world with somebody I don't trust."
12. "We lost money or broke even with NetJets for 10 to 12 years. And now it's just a gold mine of a business. Good is an understatement. That's not an adequate word."
13. "Costco didn't want people who stole merchandise, it didn't want the people who used bad checks, and it didn't want people cluttering up his goddamn parking lot without spending a hell of a lot of money in stores. So a membership system, where they accept only a certain kind of a member, all of a sudden now they've got nothing but people who buy a lot per trip."
14. "Win-win is one system, and me-win is another. Jack Welch had a me-win system. He wanted to be fanatic in abusing his buyers and pushing people and manipulating, and he thought it was his duty to make the earnings go up, and he kept comprising more and more. It worked short term, but it ruined the company long term."
15. "I think cryptocurrency is scumball activity. And I think by and large, the people who promote it are scumballs or delusional. And I don't know which is worse, being a scumball or delusional. But I think they're both pretty bad."
16. "You can call it a store of wealth, I call it a store of delusion. It's ideal for drug dealers, dope dealers, scam artists of various kinds. Every kind of criminal you can imagine. Very good in extortion, kidnapping. Why would we want a wonderful, crime-facilitating, new medium of exchange?"
17. "We've avoided bureaucracy. The way we've done it, mostly, is by not having anybody around. They can't be bureaucratic if they're not there."
18. "Look at the misery that's happened to the Russian people. They didn't like their old system with a bunch of serfs serving a bunch of landlords and so forth, corruption and so forth, so they went to something worse. They were rebelling against something that was awful, so they substituted something that turned out to be actually worse. It's hard to create a new form of government worse than Russian serfdom, but Russia has managed to do it."
19. "Imagine having a school of architecture in a place that is so stupid they build a dormitory where all the walls are slanted so much everybody gets seasick. That really happened at MIT."
20. "I'm way more popular in India and China than I am in my own country, and I don't mind that. I think it's peculiar that these high-IQ nerds in China and India love me, and in my own country, people think I'm a pompous old bastard."
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