Top quotes by Charlie Munger

When someone takes their existing business and tries to transform it into something else - they fail. In technology that is often the case. Look at Kodak: it was the dominant imaging company in the world. They did fabulously during the great depression, but then wiped out the shareholders because of technological change. Votes: 26

Wall Street has too much wealth and political power. Votes: 20

Ben Franklin and Samuel Johnson, he credits their wisdom for his success. "They were both utterly brilliant men. And powerful communicators. Both have helped me all the way through life. Their lessons are easy to assimilate." Votes: 17

You have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double entry bookkeeping was a hell of an invention. Votes: 16

A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc. Votes: 16

If the same family were always on the bottom, then you'd have big resentments. But if DuPonts go down and Pampered Chef up, [that's good]. That much churn makes people think the system is fairer. Buffett: We don't like churn now, but we liked it more 30-40 years ago. Votes: 13

A banker who is allowed to borrow money at X and loan it out at X plus Y will just go crazy and do too much of it if the civilization doesn't have rules that prevent it. Votes: 12

I've been associated with Warren ( Buffett) so long, I thought I'd be just a footnote. Votes: 12

I think you'll make more money in the end with good ethics than bad. Even though there are some people who do very well, like Marc Rich-who plainly has never had any decent ethics, or seldom anyway. But in the end, Warren Buffett has done better than Marc Rich-in money-not just in reputation. Votes: 12

The hedge fund known as "Long Term Capital Management" collapsed last fall through overconfidence in its highly leveraged methods, despite I.Q.'s of its principals that must have averaged 160. Smart people aren't exempt from professional disasters from overconfidence. Often, they just run aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods. Votes: 11

Well in the history of the See's Candy Company they always say, "I never did it before, and I'm never going to do it again." And we cashier them. It would be evil not to, because terrible behavior spreads. Votes: 9

I'm proud to be associated with the value system at Berkshire Hathaway; I think you'll make more money in the end with good ethics than bad. Votes: 8

Wesco had a market capitalization of $40 million when we bought it [in the early 1970s]. It's $2 billion now. It's been a long slog to a perfectly respectable outcome - not as good as Berkshire Hathaway or Microsoft, but there's always someone in life who's done better. Votes: 8

If all you needed to do is to figure out what company is better than others, everyone would make a lot of money. But that is not the case. They keep raising the prices to the point when the odds change. Votes: 7

There's more honor in investment management than in investment banking. Votes: 7

If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet. Votes: 7

It takes almost no capital to open a new See's candy store. We're drowning in capital of our own that has almost no cost. It would be crazy to franchise stores like some capital-starved pancake house. We like owning our own stores as a matter of quality control. Votes: 7

If people tell you what you really don't want to hear what's unpleasant-there's an almost automatic reaction of antipathy. You have to train yourself out of it. Votes: 6

Creative accounting is an absolute curse to a civilization. One could argue that double-entry bookkeeping was one of history's great advances. Using accounting for fraud and folly is a disgrace. In a democracy, it often takes a scandal to trigger reform. Enron was the most obvious example of a business culture gone wrong in a long, long time. Votes: 6

What matters most: passion or competence that was born in? Berkshireis full of people who have a peculiar passion for their own business. I would argue passion is more important than brain power. Votes: 6

They [Mc Donalds] take people and give them a first job, which enables them to get a second job. They do a very good job of educating troubled young people to be good citizens and they're probably more successful than charter schools. Votes: 6

Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Votes: 6

The whole concept of dividing it up into 'value' and 'growth' strikes me as twaddle. It's convenient for a bunch of pension fund consultants to get fees prattling about and a way for one advisor to distinguish himself from another. But, to me, all intelligent investing is value investing. Votes: 5

I'm used to people with very high IQs knowing how to recognize reality, but there's a huge human tendency where it may be instructive to think that whatever you're doing to succeed is all right. Votes: 4

Fixable but unfixed bad performance is bad character and tends to create more of itself, causing more damage to the excuse giver with each tolerated instance. Votes: 4

I did not succeed in life by intelligence. I succeeded because I have a long attention span. Votes: 3

I have a black belt in chutzpah. I was born with it. Some people, like some of the women I know, have a black belt in spending. They were born with that. But what they gave me was a black belt in chutzpah. Votes: 3

Economists get very uncomfortable when you talk about virtue and vice. It doesn't lend itself to a lot of columns with numbers. But I would argue that there are big virtue effects in economics. I would say that the spreading of double-entry bookkeeping by the Monk, Fra Luce de Pacioli, was a big virtue effect in economics. It made business more controllable, and it made it more honest. Votes: 3

Don't confuse correlation and causation. Almost all great records eventually dwindle... Votes: 3

No wise pilot, no matter how great his talent and experience, fails to use his checklist. Votes: 3

You must have the confidence to override people with more credentials than you whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. But there are also cases where you have to recognize that you have no wisdom to add - and that your best course is to trust some expert. Votes: 0

A rough rule in life is that an organization foolish in one way in dealing with a complex system is all too likely to be foolish in another. Votes: 0

A lot of people think if you just had more process and more compliance -- checks and doublechecks and so forth -- you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust. Votes: 0

In my life there are not that many questions I can't properly deal with using my $40 adding machine and dog-eared compound interest table. Votes: 0

Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Votes: 0

I bet Richard Fuld doesn't have an ounce of contrition. It's just megalomania. When it's like that, you need rules to prevent catastrophe. When banks are borrowing the government's credit rating, you need rules to prevent stupid things. Votes: 0

Like the stocks of both Berkshire and Wesco to trade within hailing distance of what we think of as intrinsic value. When it runs up, we try to talk it down. That's not at all common in Corporate America, but that's the way we act. Votes: 0

My idea of a good place to shop is Costco - it has these heavily marbled fillet steaks. The idea of eating some wheat thing and washing it down with carrot juice has never appealed to me. Votes: 0

I see almost no change in the price of the composite product that flows through Costco I don't feel sorry for the people who pay $27 million for an 8,000-square-foot condo in Manhattan. So inflation comes in places. Votes: 0

Kellogg's and Campbell's moats have also shrunk due to the increased buying power of supermarkets and companies like Wal-Mart. The muscle power of Wal-Mart and Costco has increased dramatically. Votes: 0

In business we often find that the winning system goes almost ridiculously far in maximizing and or minimizing one or a few variables - like the discount warehouses of Costco. Votes: 0

You don't want to be like the motion picture exec who had so many people at his funeral, but they were there just make sure he was dead. Or how about the guy who, at his funeral, the priest said, "Won't anyone stand up and say anything nice for the deceased?" and finally someone said, "Well, his brother was worse." Votes: 0

Great investing requires a lot of delayed gratification. Votes: 0

The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame. Votes: 0

Most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact. They become people of whom Philip Wylie observed: "You couldn't 't squeeze a dime between what they already know and what they will never learn." Votes: 0

The idea of excessive diversification is madness. Votes: 0

In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting. Votes: 0

With Congress and the S.E.C. so heavily peopled by lawyers, and with lawyers having been so heavily involved in drafting financial disclosure documents now seen as bogus, there was a new "lawyer" joke every week. One such was: "The butcher says 'the reputation of lawyers has fallen dramatically', and the check-out clerk replies: "How do you fall dramatically off a pancake? Votes: 0

Finding a single investment that will return 20% per year for 40 years tends to happen only in dreamland. In the real world, you uncover an opportunity, and then you compare other opportunities with that. And you only invest in the most attractive opportunities. That's your opportunity cost. That's what you learn in freshman economics. The game hasn't changed at all. That's why Modern Portfolio Theory is so asinine. Votes: 0

In the corporate world, if you have analysts, due diligence, and no horse sense, you've just described hell. Votes: 0

The definition of hell in the legal system is: endless due process and no justice; (in the corporate world) it would be: endless due diligence and no horse sense. Votes: 0

Strategic plans cause more dumb decisions than anything else in America. Votes: 0

...being an effective teacher is a high calling. Votes: 0

We only want what success we can get despite encouraging others to share our general views about reality. Votes: 0

We try more to profit from always remembering the obvious than from grasping the esoteric. Votes: 0

I know just enough about thermodynamics to understand that if it takes too much fossil-fuel energy to create ethanol, that's a very stupid way to solve an energy problem. Votes: 0

The reason we avoid the word 'synergy' is because people generally claim more synergistic benefits than will come. Yes, it exists, but there are so many false promises.Berkshire is full of synergies - we don't avoid synergies, just claims of synergies. Votes: 0

Wells Fargo behaves better than the average big bank. But nobody's perfect. Votes: 0

I always like it when someone attractive to me agrees with me, so I have fond memories of Phil Fisher. The idea that it was hard to find good investments, so concentrate in a few, seems to me to be an obviously good idea. But 98% of the investment world doesn't think this way. Votes: 0

The ethos of not fooling yourself is one of the best you could possibly have. It's powerful because it's so rare. Votes: 0

The theory of modern education is that you need a general education before you specialize. And I think to some extent, before you're going to be a great stock picker, you need some general education. Votes: 0

The stupid and dishonest accountants allowed the genie of totally inappropriate accounting to descend on derivatives books. And once this has happened - people get status, etc. - it's impossible to get it back into the bottle. Votes: 0

It's hard to predict what will happen with two brands in a market. Sometimes they will behave in a gentlemanly way, and sometimes they'll pound each other. I know of no way to predict whether they'll compete moderately or to the death. If you could figure it out, you could make a lot of money. Votes: 0

...all man's desired geometric progressions, if a high rate of growth is chosen, at last come to grief on a finite earth. And the social system for man on earth is fair enough, eventually, that almost all massive cheating ends in disgrace. Votes: 0

If you want good behavior, don't pay on a commission basis. Our judges aren't paid so much a case. We keep them pretty well isolated with a fixed salary. Judges in this whole thing have come out pretty well - there have been relatively few scandals. Votes: 0

Darwin paid particular attention to disconfirming evidence. Objectivity maintenance routines are totally required in life if you're going to be a great thinker. Votes: 0

You must know the big ideas in the big disciplines, and use them routinely - all of them, not just a few. Most people are trained in one model - economics, for example - and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems. Votes: 0

Look at those hedge funds - you think they can wait? They don't know how to wait! I have sat for years at a time with $10 to $12 million in treasuries or municipals, just waiting, waiting...As Jesse Livermore said, 'The big money is not in the buying and selling...but in the waiting.' Votes: 0

I've heard that one-half of the students at elite schools want to go into private equity or hedge funds. They want to keep up with their age cohorts at Goldman. This can't possibly end well in terms of meeting these expectations. Votes: 0

It's a finite and very competitive world. All large aggregations of capital eventually find it hell on earth to grow and thus find a lower rate of return. Votes: 0

I do not think you can trust bankers to control themselves. They are like heroin addicts. Votes: 0

If the technology hadn't changed, [newspapers would] still be great businesses. Network TV [in its heyday,] anyone could run and do well. If Tom Murphy as running it, you'd do very well, but even your idiot nephew could do well. Fortunately, carbide cutting tools [such as those made by Iscar] don't have these types of substitutes. Votes: 0

Berkshire was built on the eternal verities: basic mathematics, basic horse sense, basic fear, and basic diagnosis of human nature to make predictions regarding human behavior. We stuck to the basics with a certain amount of discipline and it has worked out quite well. Votes: 0

You have to realize the truth of biologist Julian Huxley's idea that 'Life is just one damn relatedness after another' "So you must have the models, and you must see the relatedness and the effects from the relatedness. Votes: 0

If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor. Votes: 0

If you, like me, lived through 1973-74 or even the early 1990s... There was a waiting list to get OUT of the country club - that's when you know things are tough. If you live long enough, you'll see it. Votes: 0

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. Votes: 0

As I talk about strengths and weaknesses in academic economics, one interesting fact you are entitled to know is that I never took a course in economics. And with this striking lack of credentials, you may wonder why I have the chutzpah to be up here giving this talk. The answer is I have a black belt in chutzpah. I was born with it. Votes: 0

Invert, always invert. Votes: 0

The general culture of investment banking has deteriorated over the years. We did a $6 million deal years ago for Diversified Retailing and we were rigorously and intelligently screened. They bankers cared and wanted to protect their clients. The culture now is that anything that can be sold for a profit will be. 'Can you sell it?' is the moral test, and that's not an adequate test. Votes: 0

It's natural that you'd have more brains going into money management. There are so many huge incomes in money management and investment banking - it's like ants to sugar. There are huge incentives for a man to take up money management as opposed to, say, physics, and it's a lot easier. Votes: 0

I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, "My God, they're purple and green. Do fish really take these lures?" And he said, "Mister, I don't sell to fish." Investment managers are in the position of that fishing tackle salesman. Votes: 0

Crowd folly', the tendency of humans, under some circumstances, to resemble lemmings, explains much foolish thinking of brilliant men and much foolish behavior - like investment management practices of many foundations represented here today. It is sad that today each institutional investor apparently fears most of all that its investment practices will be different from practices of the rest of the crowd. Votes: 0

In investment management today, everybody wants not only to win, but to have a yearly outcome path that never diverges very much from a standard path except on the upside. Well, that is a very artificial, crazy construct. That's the equivalent in investment management to the custom of binding the feet of Chinese women Votes: 0

A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business Votes: 0

Understanding how to be a good investor makes you a better business manager and vice versa. Votes: 0

Those who keep learning, will keep rising in life Votes: 0

Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day. Votes: 0

I think liberal art faculties at major universities have views that are not very sound, at least on public policy issues - they may know a lot of French however. Votes: 0

...by regularly reading business newspaper and magazines I am exposed to an enormous amount of material at the micro level.. I find that what I see going on there pretty much informs me about what's happening at the macro level. Votes: 0

In Gillette's case, they keep surfing along new technology which is fairly simple by the standards of microchips. But it's hard for competitors to do. So they've been able to stay constantly near the edge of improvements in shaving. Votes: 0

Mimicking the herd invites regression to the mean. Votes: 0

...Missing out on some opportunity never bothers us. What's wrong with someone getting a little richer than you? It's crazy to worry about this.... Votes: 0

How do you compete against a true fanatic? You can only try to build the best possible moat and continuously attempt to widen it. Votes: 0

The general systems of money management [today] require people to pretend to do something they can't do and like something they don't. It's a terrible way to spend your life, but it's very well paid. Votes: 0

I regard the amount of brainpower going into money management as a national scandal. When some idiot would get rich, they'd say, 'Well, old Charlie was out in the field playing the big brass tuba on the day it rained gold.' A lot of people have become rich lately who were playing the tuba on the day it rained gold. Votes: 0

For some odd reason, I had an early and extreme multidisciplinary cast of mind. I couldn't stand reaching for a small idea in my own discipline when there was a big idea right over the fence in somebody else's discipline. So I just grabbed in all directions for the big ideas that would really work. Votes: 0

If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands. Votes: 0

Mutual funds charge 2% per year and then brokers switch people between funds, costing another 3-4 percentage points. The poor guy in the general public is getting a terrible product from the professionals. I think it's disgusting. It's much better to be part of a system that delivers value to the people who buy the product. But if it makes money, we tend to do it in this country. Votes: 0

The first chance you have to avoid a loss from a foolish loan is by refusing to make it; there is no second chance. Votes: 0

...If you take sales presentations and brokers of commercial real estate and businesses... I'm 70 years old, I've never seen one I thought was even within hailing distance of objective truth.... 'incentive-caused bias,' causes this terrible abuse. And many of the people who are doing it you would be glad to have married into your family compared to what you're otherwise going to get.... Votes: 0

Intelligent people make decisions based on opportunity costs. Votes: 0

After nearly making a terrible mistake not buying See's, we've made this mistake many times. We are apparently slow learners. These opportunity costs don't show up on financial statements, but have cost us many billions. Votes: 0

We're guessing at our future opportunity cost. Warrenis guessing that he'll have the opportunity to put capital out at high rates of return, so he's not willing to put it out at less than 10% now. But if we knew interest rates would stay at 1%, we'd change. Our hurdles reflect our estimate of future opportunity costs. Votes: 0

Obviously, consideration of costs is key, including opportunity costs. Of course capital isn't free. It's easy to figure out your cost of borrowing, but theorists went bonkers on the cost of equity capital. They say that if you're generating a 100% return on capital, then you shouldn't invest in something that generates an 80% return on capital. It's crazy. Votes: 0

Opportunity cost is a huge filter in life. If you've got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other. And that's the way we filter out buying opportunities. Votes: 0

I'd say 3/4 of advertising works on pure Pavlov. Think how association, pure association, works. Take Coca-Cola company (we're the biggest share-holder). They want to be associated with every wonderful image: heroics in the Olympics, wonderful music, you name it. They don't want to be associated with presidents' funerals and so-forth. Votes: 0

You'll find many markets where bottlers of Pepsi and Coke both make a lot of money and many others where they destroy most of the profitability of the two franchises. That must get down to the peculiarities of individual adjustment to market capitalism. I think you 'd have to know the people involved to fully understand what was happening. Votes: 0

Cicero's words also increased my personal satisfaction by supporting my long-standing rejection of a conventional point of view. Votes: 0

The quality of the medical care delivered, including the pharmaceutical industry, has improved a lot. I don't think it's crazy for a rich country like the USto spend 15% of GDP on healthcare, and if it rose to 16-17%, it's not a big worry. Votes: 0

I have concluded that most PhD economists under appraise the power of the common-stock-based "wealth effect", under current extreme conditions.. "wealth effects" involve mathematical puzzles that are not nearly so well worked out as physics theories and never can be. ...what has happened inJapan ... has shaken up academic economics, as it obviously should, creating strong worries about recession from "wealth effects" in reverse. Votes: 0

There is the sheer amount of Franklin's wisdom. And the talent. Franklin played four instruments. He was the nation's leading scientist and inventor, plus a leading author, statesman, and philanthropist. There has never been anyone like him. Votes: 0

In the 1930s, there as a stretch here you could borrow more against the real estate than you could sell it for. I think that's hat's going on in today's private-equity world. Votes: 0

If we mix only a moderate minority share of turds with the raisins each year, probably no one will recognize what will ultimately become a very large collection of turds. Votes: 0

I mean people are really crazy about minor decrements down. And then, if you act on them, then you get into reciprocation tendency, because you don't just reciprocate affection, you reciprocate animosity, and the whole thing can escalate. And so huge insanities can come from just subconsciously over-weighing the importance of what you're losing or almost getting and not getting. Votes: 0

There is bound to be a regression toward the mean. Votes: 0

The average result has to be the average result. By definition, everybody can't beat the market. As I always say, the iron rule of life is that only 20% of the people can be in the top fifth. That's just the way it is. Votes: 0

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. Votes: 0

Over the very long term, history shows that the chances of any business surviving in a manner agreeable to a company's owners are slim at best. Votes: 0

Quoting Demosthenes, 'For what each man wishes, that he also believes to be true.' I would rather make money playing a piano in a whorehouse than arguing that no cost is incurred when employees are paid in stock options instead of cash. I am not kidding. Votes: 0

A lot of share-buying, not bargain-seeking, is designed to prop stock prices up. Thirty to 40 years ago, it was very profitable to look at companies that were aggressively buying their own shares. They were motivated simply to buy below what it was worth. Votes: 0

"[Lawyers who file class-action securities suits] is not a group you would want to marry into your family. "That said, more than half the time the people being sued by the Lerach firm are guilty of outrageous conduct. The problem is, they don't mind (suing) the other half. They are an equal opportunity litigator." Votes: 0

We bought a doomed textile mill [Berkshire Hathaway] and a California S&L [Wesco] just before a calamity. Both were bought at a discount to liquidation value. Votes: 0

We're the tortoise that has outrun the hare because it chose the easy predictions. Votes: 0

A business model that relies on trickery is doomed to fail. Votes: 0

Berkshire has the lowest turnover of any major company in the U.S.The Walton family owns more of Wal-Mart than Buffett owns of Berkshire, so it isn't because of large holdings. It's because we have a really unusual shareholder body that thinks of itself as owners and not holders of little pieces of paper. Votes: 0

What do you want to avoid? Such an easy answer: sloth and unreliability. If you're unreliable it doesn't matter what your virtues are. You're going to crater immediately. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability. Votes: 0

Whenever you think something or some person is ruining your life, it's you. A victimization mentality is so debilitating. Votes: 0

I'd rather throw a viper down my shirt front than hire a compensation consultant. Votes: 0

Using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns - for example, See's [a candy company owned by Berkshire] usually loses money in two quarters of each year - and some terrible businesses can have steady results. Votes: 0

I think track records are very important. If you start early trying to have a perfect one in some simple thing like honesty, you're well on your way to success in this world. Votes: 0

When you locate a bargain, you must ask, 'Why me, God? Why am I the only one who could find this bargain?' Votes: 0

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. Votes: 0

People are trying to be smart - all I am trying to do is not to be idiotic, but it's harder than most people think. Votes: 0

I believe Costco does more for civilization than the Rockefeller Foundation. I think it's a better place. You get a bunch of very intelligent people sitting around trying to do good, I immediately get kind of suspicious and squirm in my seat. Votes: 0

The perfect example of Darwinism is what technology has done to businesses. Votes: 0

Gold is a great thing to sew into your garments if you're a Jewish family in Vienna in 1939, but I think civilized people don't buy gold, they invest in productive businesses. Votes: 0

There's danger in just shoveling out money to people who say, 'My life is a little harder than it used to be.' At a certain place you've got to say to the people, 'Suck it in and cope, buddy. Suck it in and cope.' Votes: 0

Just avoid things like racing trains to the crossing, doing cocaine, etc. Develop good mental habits. Votes: 0

If you buy something because it's undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That's hard. But if you buy a few great companies, then you can sit on your ass. That's a good thing. Votes: 0

The investment game always involves considering both quality and price, and the trick is to get more quality than you pay for in price. It's just that simple. Votes: 0

The basic concept of value to a private owner and being motivated when you're buying and selling securities by reference to intrinsic value instead of price momentum - I don't think that will ever be outdated. Votes: 0

What good is envy? It’s the one sin you can’t have any fun at. Votes: 0

We've got great flexibility and a certain discipline in terms of not doing some foolish thing just to be active - discipline in avoiding just doing any damn thing just because you can't stand inactivity. Votes: 0

Here's one truth that perhaps your typical investment counselor would disagree with: if you're comfortably rich and someone else is getting richer faster than you by, for example, investing in risky stocks, so what?! Someone will always be getting richer faster than you. This is not a tragedy. Votes: 0

The best thing a human being can do is to help another human being know more. Votes: 0

You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing. Votes: 0

Whoever makes you smarter a little earlier in life makes you better Votes: 0

Being short and seeing a promoter take the stock up is very irritating. It's not worth it to have that much irritation in your life. Votes: 0

If you have only a little capital and are young today, there are fewer opportunities than when I was young. Back then, we had just come out of a depression. Capitalism was a bad word. There had been abuses in the 1920s. A joke going around then was the guy who said, 'I bought stock for my old age and it worked - in six months, I feel like an old man!' "It's tougher for you, but that doesn't mean you won't do well - it just may take more time. But what the heck, you may live longer." Votes: 0

A lot of opportunities in life tend to last a short while, due to some temporary inefficiency... For each of us, really good investment opportunities aren't going to come along too often and won't last too long, so you've got to be ready to act and have a prepared mind. Votes: 0

It took us months of buying all the Coke stock we could to accumulate $1 billion worth - equal to 7% of the company. It's very hard to accumulate major positions. Votes: 0

I'm not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I've reached that state. Votes: 0

Just as a man working with his tools should know its limitations, a man working with his cognitive apparatus must know its limitations. Votes: 0

I find it quite useful to think of a free-market economy - or partly free market economy - as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well. Votes: 0

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. Votes: 0

It’s not greed that drives the world, but envy. Votes: 0

Berkshireis in the business of making easy predictions If a deal looks too hard, the partners simply shelve it. Votes: 0

The idea of caring is that someone is making money faster [than you are] is one of the deadly sins. 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? Votes: 0

It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that. Votes: 0

Economics is in many respects the queen of the soft sciences. It's expected to be better than the rest. It's my view that economics is better at the multi-disciplinary stuff than the rest of the soft science. And it's also my view that it's still lousy... Votes: 0

The interesting thing about it to me is the mindset. With all these "helpers" running around, they talk about doing deals. We talk about welcoming partners. The guy doing deals, he wants to do a deal and then unwind it in the near future. It's totally opposite for us. We like to build lasting relationships. I think our system will work better in the long term than flipping deals. I think there are so many of them [helpers] that they'll get in ea h other's way. I don't think they'll make enough money to meet their expectations, by flipping, flipping, flipping. Votes: 0

Part of [having uncommon sense] is being able to tune out folly, as opposed to recognizing wisdom. If you bat away many things, you don't clutter yourself. Votes: 0

Just keep your head down and do your best. Votes: 0

The game is to keep learning, and I don't think people are going to keep learning who don't like the learning process. Votes: 0

When it gets into these spikes, with shortages and uproar and so forth, people go bananas, but that's capitalism. Votes: 0

At Berkshire Hathaway we do not like to compete against Chinese manufacturers. Votes: 0

It's my guess that something like 5% of GDP goes to money management and itsattendant friction. I define it broadly - annuities, incentive pay, all trading, etc. Nobody else has used figures that high, but that's my guess. Worst of all, the people doing this are among the best and the brightest. Hundreds and thousands of engineers, etc. are going into hedge funds and investment banking. That is not an intelligent allocation of the brainpower of the civilization. Votes: 0

Never, ever, think about something else when you should be thinking about the power of incentives. Votes: 0

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 habit help, particularly when you have a long run ahead of you. Votes: 0

If you rise in life, you have to behave in a certain way. You can go to a strip club if you're a beer-swilling sand shoveler, but if you're the Bishop of Boston, you shouldn't go. Votes: 0

For society, the Internet is wonderful, but for capitalists, it will be a net negative. It will increase efficiency, but lots of things increase efficiency without increasing profits. It is way more likely to make American businesses less profitable than more profitable. This is perfectly obvious, but very little understood. Votes: 0

Let me know what your problem is, and I will try to make it more difficult for you. Votes: 0

Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. Votes: 0

One of the first big bubbles, of course, was the huge and horrible South Sea Bubble in England. And the aftermath was interesting. Many of you probably don't remember what happened after the South Sea Bubble, which caused an enormous financial contraction, and a lot of pain. They banned publicly traded stock in England for decades. Votes: 0

I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person's brain because it understands the most fundamental models- ones that will do most work per unit. Votes: 0

We like our current shareholders and don't want to entice anyone to become one. It would help current shareholders to hear our CEOs [of the Berkshireoperating subsidiaries], but we promised them they could spend 100% of their time on their business. We place no impediments on them running their businesses. Many have expressed to me how happy they are that they don't have to spend 25% of time on activities they didn't like. Votes: 0

Being rational is a moral Imperative. You should never be stupider than you need to be. Votes: 0

If you have competence, you know the edge. It wouldnt be a competence if you didnt know where the boundaries lie. Asking whether youve passed the boundary is a question that almost answers itself. Votes: 0

...People need to ask, "How do I play the hand that has been dealt me?" The world is not going to give you extra return just because you want it. You have to be very shrewd and hard working to get a little extra. It's so much easier to reduce your wants. There are a lot of smart people and a lot of them cheat, so it's not easy to win. Votes: 0

Even bright people are going to have limited, really valuable insights in a very competitive world when they're fighting against other very bright, hardworking people. 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. Votes: 0

Capitalism is a pretty brutal place. Votes: 0

The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor. Votes: 0

... some important factor doesn't lose its "share of force" just because some "expert" can better measure other types of force. Votes: 0

Clever derivatives broke dozens of companies. It killed them. Bankrupt. We don't need these kinds of innovation in finance. It's OK to be boring in finance. What we want is innovation in widgets. Votes: 0

The world is getting very much more competitive. Votes: 0

Berkshireis not as good as it was in terms of percentage compounding [going forward], but it's still a hell of a business. Votes: 0

To me, it's obvious that the winner has to bet very selectively. It's been obvious to me since very early in life. I don't know why it's not obvious to very many other people. Votes: 0

A foreign correspondent, after talking to me for a while, once said: "You don't seem smart enough to be so good at what you're doing. Do you have an explanation?" Votes: 0

It would be one of the most irritating experiences in the world to do a lot of work to uncover a fraud and then at have it go from X to 3X and at h the crooks happily partying with your money while you're meeting margin calls. Why would you want to go within hailing distance of that? Votes: 0

A board member should be perfectly willing to leave at any time and willing to make the tough calls. Votes: 0

It's dangerous to short stocks. Votes: 0

Black-Scholes is a know-nothing system. If you know nothing about value - only price - then Black-Scholes is a pretty good guess at what a 90-day option might be worth. But the minute you get into longer periods of time, it's crazy to get into Black-Scholes. For example, at Costco we issued stock options with strike prices of $30 and $60, and Black-Scholes valued the $60 ones higher. This is insane. Votes: 0

Don't do cocaine. Don't race trains. And avoid AIDS situations. Votes: 0

Show me the incentive and I will show you the outcome Votes: 0

Sears had layers and layers of people it didn't need. It was very bureaucratic. It was slow to think. And there was an established way of thinking. If you poked your head up with a new thought, the system kind of turned against you. It was everything in the way of a dysfunctional big bureaucracy that you would expect. Votes: 0

How you behave in one place, will help in surprising ways later. Votes: 0

The tradition of always looking for the answer in the most fundamental way available - that is a great tradition, and it saves a lot of time in this world. Votes: 0

It's a rare business that doesn't have a way worse future than it has a past. Votes: 0

Black-Scholes works for short-term options, but if it's a long-term option and you think you know something [about the underlying asset], it's insane to use Black-Scholes. Votes: 0

Over many decades, our usual practice is that if something we like goes down, we buy more and more. Sometimes something happens, you realize you’re wrong, and you get out. But if you develop correct confidence in your judgment, buy more and take advantage of stock prices. Votes: 0

If you're going to be an investor, you're going to make some investments where you don't have all the experience you need. But if you keep trying to get a little better over time, you'll start to make investments that are virtually certain to have a good outcome. The keys are discipline, hard work, and practice. It's like playing golf - you have to work on it. Votes: 0

Almost all good businesses engage in 'pain today, gain tomorrow' activities. Votes: 0

The beauty of a financial institution is that there are a lot of ways to go to hell in a bucket. You can push credit too far, do a dumb acquisition, leverage yourself excessively - it's not just derivatives [that can bring about your downfall]. Votes: 0

We don't like trading agony for money Votes: 0

Harvard and Yale concentrated with venture capitalists that got the best calls and brainpower. Very few firms made most of the money, and they made it in just a few periods. Everyone else returned between mediocre and lousy. When returns happened, envy rippled through institutional money management. The amount invested in venture capital went up 10 times post-1999. That later money was lost very quickly. It will happen again. I don't know anyone who successfully resists this stuff. It becomes a new orthodoxy. Votes: 0

Proper accounting is like engineering. You need a margin of safety. Thank God we don't design bridges and airplanes the way we do accounting. Votes: 0

If you always tell people why, they'll understand it better, they'll consider it more important, and they'll be more likely to comply. Votes: 0

We have a higher percentage of the intelligentsia engaged in buying and selling pieces of paper and promoting trading activity than in any past era. A lot of what I see now reminds me of Sodomand Gomorrah. You get activity feeding on itself, envy and imitation. It has happened in the past that there came bad consequences. Votes: 0

And maybe the cereal makers by and large have learned to be less crazy about fighting for market share-because if you get even one person who's hell-bent on gaining market share.... For example, if I were Kellogg and I decided that I had to have 60% of the market, I think I could take most of the profit out of cereals. I'd ruin Kellogg in the process. But I think I could do it. Votes: 0

We're emphasizing the knowable by predicting how certain people and companies will swim against the current. We're not predicting the fluctuation in the current. Votes: 0

We may well have a competitive advantage buying decent businesses at decent prices. But they won't be fabulous businesses and fabulous prices. There's too much competition and money out there, with many buyout specialists. Votes: 0

Everybody engaged in complex work needs colleagues. Just the discipline of having to put your thoughts in order with somebody else is a very useful thing.” Votes: 0

I think that, every time you saw the word EBITDA, you should substitute the word "bullshit" earnings. Votes: 0

The investment game is getting more and more competitive. Votes: 0

I won’t bet $100 against house odds between now and the grave. Votes: 0

It is an unfortunate fact that great and foolish excess can come into prices of common stocks in the aggregate. They are valued partly like bonds, based on roughly rational projections of use value in producing future cash. But they are also valued partly like Rembrandt paintings, purchased mostly because their prices have gone up, so far. Votes: 0

It's stupid the way people extrapolate the past -- and not slightly stupid, but massively stupid. Votes: 0

There must be some wisdom in the folk saying: Its the strong swimmers who drown. Votes: 0

Most people will see declining returns [due to inflation]. One of the great defenses if you're worried about inflation is not to have a lot of silly needs in your life - you don't need a lot of material goods. Votes: 0

The secret to happiness is to lower your expectations. ...that is what you compare your experience with. If your expectations and standards are very high and only allow yourself to be happy when things are exquisite, you'll never be happy and grateful. There will always be some flaw. But compare your experience with lower expectations, especially something not as good, and you'll find much in your experience of the world to love, cherish and enjoy, every single moment. Votes: 0

There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back. Votes: 0

Chris Davis [of the Davisfunds] has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn't do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn't remind you. Why not celebrate stupidities in both categories? Votes: 0

I never allow myself to have an opinion on anything that I don't know the other side's argument better than they do. Votes: 0

I think the idea that the hedge fund manager gets lower taxes than the taxi driver or the physics professor is insane. The legislators who leave that policy in place are derelict in their duties to be rational and fair. There are plenty of them in both political parties. It's totally outrageous. Votes: 0

I think the main figure that matters to all of us, including people in the media, is: How does GDP per capita grow? And those figures have been very good. There is a huge flux both up and down, so it isn't like we're all static in status. What's important is that pie grows. Votes: 0

[With] closet indexing....you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker. Votes: 0

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. Votes: 0

When you borrow a man's car, always return it with a tank of gas. Votes: 0

Size will hurt returns. Look at Berkshire Hathaway - the last five things Warren has done have generated returns that are splendid by historical standards, but now give him $100 billion in assets and measure outcomes across all of it, it doesn't look so good. We can only buy big positions, and the only time we can get big positions is during a horrible period of decline or stasis. That really doesn't happen very often. Votes: 0

You can hire your advisor and then just apply a windage factor, like I used to do when I was a rifle shooter. I'd just adjust for so many miles an hour wind. Or you can learn the basic elements of your advisor's trade. You don't have to learn very much, by the way, because if you learn just a little then you can make him explain why he's right. Votes: 0

Where you have complexity, by nature you can have fraud and mistakes. You'll have more of that than in a company that shovels sand from a river and sells it. This will always be true of financial companies, including ones run by governments. If you want accurate numbers from financial companies, you're in the wrong world. Votes: 0

We look for a horse with one chance in two of winning and which pays you three to one. Votes: 0

The name of the game is continuing to learn. Even if you're very well trained and have some natural aptitude, you still need to keep learning. Votes: 0

One metric catches people. We prefer businesses that drown in cash. An example of a different business is construction equipment. You work hard all year and there is your profit sitting in the yard. We avoid businesses like that. We prefer those that can write us a check at the end of the year. Votes: 0

For many of our shareholders, our stock is all they own, and we're acutely aware of that. Our culture [of conservatism] runs pretty deep. Votes: 0

So, economics should emulate physics' basic ethos, but its search for precision in physics-like formulas is almost always wrong in economics. Votes: 0

There are a lot of things in life way more important than money. All that said, some people do get confused. I play golf with a man who says, " What good is health? You can't buy money with it." Votes: 0

The SEC does way more good than harm - the last thing I would do is get rid of the SEC...if accounting were thoroughly fixed, a lot of other sins would go away. We're paying a huge price for deterioration of accounting. Votes: 0

I don't spend much time regretting the past, once I've taken my lesson from it. I don't dwell on it. Votes: 0

Berkshire's past record has been almost ridiculous. If Berkshirehad used even half the leverage of, say, Rupert Murdoch, it would be five times its current size. Votes: 0

I regard it as very unfair, but capitalism without failure is like religion without hell. Votes: 0

'Crowd folly', the tendency of humans, under some circumstances, to resemble lemmings, explains much foolish thinking of brilliant men and much foolish behavior - like investment management practices of many foundations represented here today. It is sad that today each institutional investor apparently fears most of all that its investment practices will be different from practices of the rest of the crowd. Votes: 0

I think we have lost our way when people like the [board of] governors and the CEO of the NYSE fail to realize they have a duty to the rest of us to act as exemplars. You do not want your first-grade school teacher to be fornicating on the floor or drinking alcohol in the closet and, similarly, you do not want your stock exchange to be setting the wrong moral example. Votes: 0

If you want to understand science, you have to understand math. In business, if you're enumerate, you're going to be a klutz. The good thing about business is that you don't have to know any higher math.... Votes: 0

Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Votes: 0

The ethical rule is from Samuel Johnson who believed that maintenance of easily removable ignorance by a responsible office holder was treacherous malfeasance in meeting moral obligation. The prudential rule is that underlying the old Warner & Swasey advertisement for machine tools: "The man who needs a new machine tool, and hasn't bought it, is already paying for it". The Warner & Swasey rule also applies, I believe, to thinking tools. If you don't have the right thinking tools, you, and the people you seek to help, are already suffering from your easily removable ignorance. Votes: 0

It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a mispriced bet - that they can occasionally find one. 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. It's just that simple. Votes: 0

There has never been a master plan. Anyone who wanted to do it, we fired because it takes on a life of its own and doesn't cover new reality. We want people taking into account new information. Votes: 0

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. Votes: 0

Of course I'm troubled by huge consumer debt levels - we've pushed consumer credit very hard in the US. Eventually, if it keeps growing, it will stop growing. As Herb Stein said, "If something cannot go on forever, it will stop." When it stops, it may be unpleasant. Other than Herb Stein's quote, I have no comment. But the things that trouble you are troubling me. Votes: 0

We've had the most massive creation of wealth for people a lot younger than those who formerly got wealth in the history of the world. The world is full of young people who really want to get rich, and when I left school nobody thought it was a reasonable possibility. Votes: 0

Wrigley is a great business, but that doesn't solve the problem. Buying great businesses at advantageous prices is very tough. Votes: 0

Opportunity comes to the prepared mind. Votes: 0

I call myself the assistant cult leader. Votes: 0

One of the smartest things a person can do is dampen investment expectations, especially with Berkshire. That would be mature and responsible. I like our model and we should do nicely Votes: 0

You must force yourself to consider opposing arguments. Especially when they challenge your best loved ideas. Votes: 0

Organized common (or uncommon) sense -- very basic knowledge -- is an enormously powerful tool. There are huge dangers with computers. People calculate too much and think too little. Votes: 0

Hard work, honesty, if you keep at it, will get you almost anything. Votes: 0

Mankind invented a system to cope with the fact that we are so intrinsically lousy at manipulating numbers. It's called the graph. Votes: 0

Our standard prescription for the know-nothing investor with a long-term time horizon is a no-load index fund. I think that works better than relying on your stock broker. The people who are telling you to do something else are all being paid by commissions or fees. The result is that while index fund investing is becoming more and more popular, by and large it's not the individual investors that are doing it. It's the institutions. Votes: 0

The way to win is to work, work, work, work and hope to have a few insights And you're probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It's just that simple. Votes: 0

Projections are put together by people who have an interest in a particular outcome, have a subconscious bias, and its apparent precision makes it fallacious. They remind me of Mark Twain's saying, 'A mine is a hole in the ground owned by a liar.' Projections in America are often a lie, although not an intentional one, but the worst kind because the forecaster often believes them himself. Votes: 0

You'll better understand the evil when top audit firms started selling fraudulent tax shelters when I tell you that one told me that they're better [than the others] because they only sold [the schemes] to their top-20 clients, so no-one would notice. Votes: 0

We believe there should be a huge area between everything you should do and everything you can do without getting into legal trouble. I don't think you should come anywhere near that line. We don't deserve much credit for this. It helps us make more money. I'd like to believe that we'd behave well even if it didn't work. But more often, we've made extra money from doing the right thing. Ben Franklin said I'm not moral because of it's the right thing to do - but because it's the best policy. Votes: 0

Once you start doing something bad, then it's easy to take the next step - and in the end, you're a moral sewer. Votes: 0

If only I had the influence with my wife and children that I have in some other quarters! Votes: 0

The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form "efficient market" theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience. Votes: 0

We don't train executives, we find them. If a mountain stands up like Everest, you don't have to be a genius to figure out that it's a high mountain. Votes: 0

I have a name for people who went to the extreme efficient market theory-which is "bonkers". It was an intellectually consistent theory that enabled them to do pretty mathematics. So I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality. Votes: 0

You don't have to have perfect wisdom to get very rich - just a bit better than average over a long period of time. Votes: 0

We have a passion for keeping things simple. Votes: 0

We have found in a long life that one competitor is frequently enough to ruin a business. Votes: 0

I think there's an awful lot of twaddle and bullshit on EVA. The whole game is to turn retained earnings into more earnings. EVA has ideas about cost of capital that make no sense. Of course, if a company generates high returns on capital and can maintain this over time, it will do well. But the mental system as a whole does not work. Votes: 0

While no real money came down, my family gave me a good education and a marvelous example of how people should behave, and in the end that was more valuable than money. Being surrounded by the right values from the beginning is an immense treasure. Warrenhad that. It even has a financial advantage. Votes: 0

...Over the long term, the eclipse rate of great civilizations being overtaken is 100%. So you know how it's going to end. (Laughter) I'm more optimistic about the staying power of what's good in this country. But just because you have a wonderful spouse doesn't mean you should treat her badly. You have the feeling that some of the old virtues [that made this country great] are lessening. But there's so much good and so much strength left that I would not expect this country to suddenly founder... Votes: 0

Although I am very interested in the subject of human misjudgment - and lord knows I've created a good bit of it - I don't think I've created my full statistical share, and I think that one of the reasons was I tried to do something about this terrible ignorance I left the Harvard Law School with. Votes: 0

If you can buy the best companies, over time the pricing takes care of itself. Votes: 0

Our biggest mistakes, were things we didn't do, companies we didn't buy. Votes: 0

The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does. For example, when we were in the textile business, which is a terrible commodity business, we were making low-end textiles-which are a real commodity product. And one day, the people came to Warren and said, "They've invented a new loom that we think will do twice as much work as our old ones." Votes: 0

It's a good habit to trumpet your failures and be quiet about your successes. Votes: 0

Expect hogs to eat a lot more in the presence of a lot of hog wash. Votes: 0

So you can get very remarkable investment results if you think more like a winning pari-mutuel player. Just think of it as a heavy odds against game full of craziness with an occasional mispriced something or other. And you're probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It's just that simple. Votes: 0

Those of us who have been very fortunate have a duty to give back. Whether one gives a lot as one goes along as I do or a little and then a lot [when one dies] as Warrendoes is a matter of personal preference. I would hate to have people ask me for money all day long. Votes: 0

Is anyone really surprised that Warren, who is the ultimate embodiment of concentrated decision-making power, picked somebody [Bill and Melinda Gates] who he thinks is like him in many important ways? It was a noble and sensible decision. Votes: 0

We’re partial to putting out large amounts of money where we won’t have to make another decision. Votes: 0

Practically everybody (1) overweighs the stuff that can be numbered, because it yields to the statistical techniques they’re taught in academia, and (2) doesn’t mix in the hard-to-measure stuff that may be more important. That is a mistake I’ve tried all my life to avoid, and I have no regrets for having done that. Votes: 0

If we've been a little more successful than other people, is because we always realised that the school of life was always open, and if you were not learning more you are falling behind. Votes: 0

If you don't allow for self-serving bias in the conduct of others, you are, again, a fool. Votes: 0

Part of that, I think, is being able to tune out folly, as distinguished from recognizing wisdom. You've got whole categories of things you just bat away so your brain isn't cluttered with them. That way, you're better able to pick up a few sensible things to do. Votes: 0

Bernie Ebbers and Ken Lay were caricatures - they were easy to spot. They were almost psychopaths. But it's much harder to spot problems at companies like Royal Dutch [Shell]. Votes: 0

The idea of excessive diversification is madness. Wide diversification, which necessarily includes investment in mediocre businesses, only guarantees ordinary results. Votes: 0

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. Votes: 0

...I'm very pleased when the smartest people come [to the U.S.] and almost never pleased when the very bottom of the mental barrel comes in.... Votes: 0

If you have the opportunities of Berkshire, an investment in gold is dumb. Votes: 0

The best armor of old age is a well-spent life preceding it. Votes: 0

An investment decision in the common stock of a company frequently involves a whole lot of factors interacting ... the one thing that causes the most trouble is when you combine a bunch of these together, you get this lollapalooza effect. Votes: 0

I talked to one accountant, a very nice fellow who I would have been glad to have his family marry into mine. He said, "What these other accounting firms have done is very unethical. The [tax avoidance scheme] works best if it's not found out [by the IRS], so we only give it to our best clients, not the rest, so it's unlikely to be discovered. So my firm is better than the others." [Laughter] I'm not kidding. And he was a perfectly nice man. People just follow the crowd...Their mind just drifts off in a ghastly way... Votes: 0

It's dishonourable to stay stupider than you need to be Votes: 0

Our approach has worked for us. Look at the fun we, our managers, and our shareholders are having. More people should copy us. It's not difficult, but it looks difficult because it's unconventional - it isn't the way things are normally done. We have low overhead, don't have quarterly goals and budgets or a standard personnel system, and our investing is much more concentrated than average. It's simple and common sense. Votes: 0

The only way to win is to work, work, work, work, and hope to have a few insights Votes: 0

As I continued through Cicero's pages, I found much more material celebrating my way of life ... Votes: 0

[In picking stocks] You really have to know a lot about business. You have to know a lot about competitive advantage. You have to know a lot about the maintainability of competitive advantage. You have to have a mind that quantifies things in terms of value. And you have to be able to compare those values with other values available in the stock market. Votes: 0

Since mistakes of omission don't appear in the financial statements, most people don't pay attention to them. We rub our noses in mistakes of omission - as we just did. Votes: 0

There's no way that you can live an adequate life without making many mistakes. Votes: 0

I believe that we are at or near the apex of a great civilization....In 50-100 years, if we're a poor third to some countries in Asia, I wouldn't be surprised. If I had to bet, the part of the world that will do best will be Asia. Votes: 0

It would be nice if this [finding really cheap stocks] happened all the time. Unfortunately, it doesn't. Votes: 0

I don't have too much interest in teaching other people how to get rich. And that isn't because I fear the competition or anything like that - Warrenhas always been very open about what he's learned, and I share that ethos. My personal behavior model is Lord Keynes: I wanted to get rich so I could be independent, and so I could do other things like give talks on the intersection of psychology and economics. I didn't want to turn it into a total obsession. Votes: 0

Any time anybody offers you anything with a big commission and a 200-page prospectus, don't buy it. Occasionally, you'll be wrong if you adopt "Munger's Rule". However, over a lifetime, you'll be a long way ahead-and you will miss a lot of unhappy experiences. Votes: 0

Obviously if you want to get good at something which is competitive, you have to think about it and practice a lot. You have to keep learning because world keeps changing and competitors keep learning. You have to go to bed wiser than you got up. As you try to master what you are trying to do – people who do that almost never fail utterly. Very few have ever failed with that approach. You may rise slowly, but you are sure to rise Votes: 0

Every business tries to turn this year's success into next year's greater success. It's hard for me to see why Microsoft is sinful to do this. If it's a sin, then I hope all of Berkshire Hathaway's subsidiaries are sinners. Someone whose salary is paid by U.S.taxpayers is happy to dramatically weaken the one place where we're winning big?! Votes: 0

Even if you assume that the whole economy would work better had we never had double taxation, having the envy and resentment of the richest paying low or no taxes screams of injustice. You have to have a fair system. Votes: 0

Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying eighteen percent. Votes: 0

And your brain doesn't naturally know how to think the way Zeckhauser knows how to play bridge. "for example," people do not react symmetrically to loss and gain. Well maybe a great bridge player like Zeckhauser does, but that's a trained response. Ordinary people, subconsciously affected by their inborn tendencies... Votes: 0

The liabilities are always 100 percent good. It's the assets you have to worry about. Votes: 0

If the value of a company doesn't just scream out at you, it's too close. Votes: 0

To finish first you have to first finish. Don't get in a position where you go back to go. What's interesting is that some guy whose grandfather was a lawyer and a judge-hurriedly going to Harvard Law with a wave of veterans-I was willing to go into so many different businesses. I was constantly going right into the other fellow's business and doing better than the other fellow did. The reason it was possible? Self-education- developing mental discipline, big ideas that really work. Votes: 0

...in terms of business mistakes that I've seen over a long lifetime, I would say that trying to minimize taxes too much is one of the great standard causes of really dumb mistakes. I see terrible mistakes from people being overly motivated by tax considerations. Warren and I personally don't drill oil wells. We pay our taxes. And we've done pretty well, so far. Anytime somebody offers you a tax shelter from here on in life, my advice would be don't buy it. Votes: 0

There's a lot wrong [with American universities]. I'd remove 3/4 of the faculty - everything but the hard sciences. But nobody's going to do that, so we'll have to live with the defects. It's amazing how wrongheaded [the teaching is]. There is fatal disconnectedness. You have these squirrelly people in each department who don't see the big picture. Votes: 0

The more hard lessons you can learn vicariously rather than through your own hard experience, the better. Votes: 0

I feel that by getting rich in the way I did, I think my own example has hurt my own country. Votes: 0

The Berkshire-style investors tend to be less diversified than other people. The academics have done a terrible disservice to intelligent investors by glorifying the idea of diversification. Because I just think the whole concept is literally almost insane. It emphasizes feeling good about not having your investment results depart very much from average investment results. But why would you get on the bandwagon like that if somebody didn't make you with a whip and a gun? Votes: 0

A different set of incentives from rising in an economic establishment where the rewards system, again, the reinforcement, comes from being a truffle hound. That's what Jacob Viner, the great economist called it: the truffle hound - an animal so bred and trained for one narrow purpose that he wasn't much good at anything else, and that is the reward system in a lot of academic departments. Votes: 0

'F.A.S.B' ... 'Financial Accounts Still Bogus'. Votes: 0

I think corporate managers should learn to be better investors because it would make them better managers. Votes: 0

Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won. Votes: 0

I also want to raise the possibility that there are, in the very long term, "virtue effects" in economics- for instance that widespread corrupt accounting will eventually create bad long term consequences as a sort of obverse effect from the virtue-based boost double-entry book-keeping gave to the heyday of Venice. I suggest that when the financial scene starts reminding you of Sodomand Gomorrah, you should fear practical consequences even if you like to participate in what is going on. Votes: 0

In the LBO field there is a buried "covariance" with marketable equities, toward disaster in generally bad business conditions, and competition is now extremely intense. Votes: 0

The total amount paid out in dividends is roughly equal to the amount lost in trading and investment advice, so net dividends to shareholders are zero. This is a very peculiar way to run a republic. Votes: 0

If you're going to buy something which compounds for 30 years at 15% per annum and you pay one 35% tax at the very end, the way that works out is that after taxes, you keep 13.3% per annum. In contrast, if you bought the same investment, but had to pay taxes every year of 35% out of the 15% that you earned, then your return would be 15% minus 35% of 15%-or only 9.75% per year compounded. So the difference there is over 3.5%. And what 3.5% does to the numbers over long holding periods like 30 years is truly eye-opening.... Votes: 0

Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return - even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result. Votes: 0

We believe that almost all really good investment records will involve relatively little diversification. The basic idea that it was hard to find good investments and that you wanted to be in good investments, and therefore, you'd just find a few of them that you knew a lot about and concentrate on those seemed to me such an obviously good idea. And indeed, it's proven to be an obviously good idea. Yet 98% of the investing world doesn't follow it. That's been good for us. Votes: 0

I don't want to understand Facebook. Votes: 0

I think we have some special talents. That being said, I think it's dangerous to rely on special talents - it's better to own lots of monopolistic businesses with unregulated prices. But that's not the world today. We have made money exercising our talents and will continue to do so. Votes: 0

I think that one should recognize reality even when one doesn't like it; indeed, especially when one doesn't like it. Votes: 0

This is a good life lesson: getting the right people into your system is the most important thing you can do. Votes: 0

If all you succeed in doing in life is getting rich by buying little pieces of paper, it's a failed life. Life is more than being shrewd in wealth accumulation. Votes: 0

The tax code gives you an enormous advantage if you can find some things you can just sit with. Votes: 0

We don't have any miraculous way of avoiding taxes at Wesco and Berkshire. Votes: 0

The game of investing is one of making better predictions about the future than other people. How are you going to do that? One way is to limit your tries to areas of competence. If you try to predict the future of everything, you attempt too much. Votes: 0

I think there's something to be said for developing the disposition to own stocks without fretting. Votes: 0

It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling to parlay their existing advantage into dominance on the Internet. But it is way less sure [that this will occur] than the certainty 20 years ago that the basic business would grow steadily, so there's more downside risk. The perfectly fabulous economics of this business could become grievously impaired." Votes: 0

Failure to handle psychological denial is a common way for people to go broke. You've made an enormous commitment to something.You've poured effort and money in. And the more you put in, the more that the whole consistency principle makes you think. Votes: 0

We get these questions a lot from the enterprising young. It's a very intelligent question: You look at some old guy who's rich and you ask, 'How can I become like you, except faster?' Votes: 0

Of course the self-serving bias is something you want to get out of yourself. Thinking that what's good for you is good for the wider civilization and rationalizing all these ridiculous conclusions based on this subconscious tendency to serve one's self is a terribly inaccurate way to think. Votes: 0

The old culture had come out of poverty, out of English customs. Votes: 0

Financial institutions make us nervous when they're trying to do well. Votes: 0

It would be easier to screw up American Express than Coke or Gillette, but it's an immensely strong business. Votes: 0

I'm a bull on Berkshire Hathaway. There may be some considerable waiting, but I think there are some good days ahead. Votes: 0

At most corporations if you make an acquisition and it turns out to be a disaster, all the paperwork and presentations that caused the dumb acquisition to be made are quickly forgotten. You've got denial, you've got everything in the world. You've got Pavlovian association tendency. Nobody even wants to even be associated with the damned thing or even mention it. At Johnson & Johnson, they make everybody revisit their old acquisitions and wade through the presentations. That is a very smart thing to do. And by the way, I do the same thing routinely. Votes: 0

Beta and modern portfolio theory and the like - none of it makes any sense to me. Votes: 0

For years I have read the morning paper and harrumphed. There's a lot to harrumph about now. Votes: 0

Is there such thing as a cheerful pessimist? That's what I am. Votes: 0

Stock-picking is like gambling: those who win well, seldom bet, but when they do, they bet heavily. Votes: 0

Personally, I’ve gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically conclusions in various ways — which, by and large, are useful — but which often malfunction? One approach is rationality… And the other is to evaluate the psychological factors that cause subconscious conclusions — many of which are wrong. Votes: 0

I’d say that Berkshire Hathaway’s system is adapting to the nature of the investment problem as it really is. We’ve really made the money out of high quality businesses. In some cases, we bought the whole business. And in some cases, we just bought a big block of stock. But when you analyze what happened, the big money’s been made in the high quality businesses. And most of the other people who’ve made a lot of money have done so in high quality businesses. Votes: 0

I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I've seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not. Votes: 0

It's simplicity itself that its future will be way worse than its past. Votes: 0

We have to have a special insight, or we'll put it in the 'too tough' basket. All of you have to look for a special area of competency and focus on that. Votes: 0

People like the robber barons assumed that the doctrine of the survival of the fittest authenticated them as deserving power. You know, "I'm the richest. Therefore, I'm the best. God's in his heaven, etc." And that reaction of the robber barons was so irritating to people that it made it unfashionable to think of an economy as an ecosystem. But the truth is that it is a lot like an ecosystem. And you get many of the same results. Votes: 0

You could argue that [the decline of public schools] is one of the major disasters in our lifetimes. We took one of the greatest successes in the history of the earth and turned it into one of the greatest disasters in the history of the earth. Votes: 0

It's not supposed to be easy. Anyone who finds it easy is stupid. Votes: 0

Learn how to ignore the examples from others when they are wrong, because few skills are more worth having. Votes: 0

It's human nature to extrapolate the recent past into the future, but it's terrible that managements go along with this. Votes: 0

Some years ago one oil company bought a fertilizer company, and every other major oil company practically ran out and bought a fertilizer company. And there was no more damned reason for all these oil companies to buy fertilizer companies, but they didn't know exactly what to do, and if Exxon was doing it, it was good enough for Mobil and vice versa. Votes: 0

Economic systems work better when there's an extreme reliability ethos. And the traditional way to get a reliability ethos, at least in past generations in America, was through religion. The religions instilled guilt. ... And this guilt, derived from religion, has been a huge driver of a reliability ethos, which has been very helpful to economic outcomes for man. Votes: 0

It's not a competency if you don't know the edge of it. Votes: 0

The normal expectancy of the average investor - for example, the pension funds of AT&T or IBM - is 6% for a long time. Votes: 0

And, partly, I had found that theory-structure was a superpower in helping one get what one wanted. As I had early discovered in school wherein I had excelled without labor, guided by theory, while many others, without mastery of theory failed despite monstrous effort. Better theory I thought had always worked for me and, if now available could make me acquire capital and independence faster and better assist everything I loved. Votes: 0

Even in pure mathematics they can't remove all paradox, and the rest of us should also recognize we are going to have to endure a lot of paradox, like it or not. Votes: 0

Avoid evil, particularly if they're attractive members of the opposite sex. Votes: 0

If it happens every year like clockwork, what's so extraordinary about it? Votes: 0

[GEICO] got to thinking that, because they were making a lot of money, they knew everything. And they suffered huge losses. All they had to do was to cut out all the folly and go back to the perfectly wonderful business that was lying there. Votes: 0

It's not the bad ideas that do you in, but the good ones. Votes: 0

Early Charlie Munger is a horrible career model for the young because not enough was delivered to civilization in return for what was wrested from capitalism. And other similar career models are even worse. Votes: 0

Intense interest in any subject is indispensable if you're really going to excel in it. Votes: 0

We tend to buy things - a lot of things - where we don't know exactly what will happen, but the outcome will be decent. Votes: 0

Good businesses can survive a little bad management. Votes: 0

To atone, I teach and try to set an example...I love spreading this stuff around. Just because it's trite doesn't mean it isn't right. In fact, I like to say, 'If it's trite, it's right.' Votes: 0

No CEO examining books today understands what the hell is going on. Votes: 0

This is an amazingly sound place. We are more disaster-resistant than most other places. We haven't pushed it as hard as other people would have pushed it. I don't want to go back to Go. I've been to Go. A lot of our shareholders have a majority of their net worth in Berkshire, and they don't want to go back to Go either. Votes: 0

Anyone with an engineering frame of mind will look at [accounting standards] and want to throw up. Votes: 0

The Internet bubble circa 2000 is the most extreme in modern capitalism. In the 1930s, we had the worst depression in 600 years. Today is almost as extreme in the opposite way. Votes: 0

I think it would be a great improvement if there were no D&O insurance . The counter-argument is that no-one with any money would serve on a board. But I think net net you'd be better off. Votes: 0

I don't think vengeance is much good. Votes: 0

A few public hangings will really change behavior. One of our Presidents said if he could execute three people each year for no cause, it would make it a lot easier to govern. When someone said that's not enough, he said, "Oh yes it is, because I'd publish the list of people under consideration." Votes: 0

One could imagine a period like Japan13 years ago, however, in which indexing over time wouldn't work. Votes: 0

I think I've been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it. Votes: 0

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 Votes: 0

To some extent, stocks are like Rembrandts. They sell based on what they've sold in the past. Bonds are much more rational. No-one thinks a bond's value will soar to the moon. Votes: 0

Three rules for a career: 1) Don’t sell anything you wouldn’t buy yourself; 2) Don’t work for anyone you don’t respect and admire; and 3) Work only with people you enjoy. Votes: 0

If you get into the mental habit of relating what you're reading to the basic structure of the underlying ideas being demonstrated, you gradually accumulate some wisdom. Votes: 0

The laws of thermodynamic s are such that if the water is getting warmer - and I believe it is - the energy of the weather is going to go up. Votes: 0

Bull markets go to people's heads. If you're a duck on a pond, and it's rising due to a downpour, you start going up in the world. But you think it's you, not the pond. Votes: 0

With so much money riding on reported numbers, human nature is to manipulate them. And with so many doing it, you get Serpico effects, where everyone rationalizes that it's okay because everyone else is doing it. It is always thus. Votes: 0

Suppose you were a real estate investor with a 1/3 interest in the best apartment complex in town, the best mall, and the best office building. Would you feel like a poor, undiversified investor? No! But as soon as you get into stocks, people feel this way. Partly, people need to justify their fees. Votes: 0

Choose clients as you would friends. Votes: 0

Of course you want to drive that out of yourself because you want to be wise, not foolish. You also have to allow for the self-serving bias of everybody else because most people are not going to remove it all that successfully, the human condition being what it is. If you don't allow for self-serving bias in your conduct, again you're a fool. Votes: 0

It never ceases to amaze me to see how much territory can be grasped if one merely masters and consistently uses all the obvious and easily learned principles. Votes: 0

Someone will always be getting richer faster than you. This is not a tragedy. Votes: 0

Acknowledging what you don't know is the dawning of wisdom. Votes: 0

Our success has come from the lack of oversight we've provided, and our success will continue to be from a lack of oversight. But if you're going to provide minimal oversight, you have to buy carefully. It's a different model from GE's. GE's works - it's just very different from ours. Votes: 0

The only intelligence investing is value investing...to acquire more than one is paying for. Votes: 0

Without numerical fluency, in the part of life most of us inhibit, you are like a one-legged man in an ass-kicking contest. Votes: 0

I think that if you have a single payer system and an opt-out for people who want to pay more [for better service, etc.], I think it would be better - and I think we'll eventually get there. It wouldn't be better at the top - [our current system] is the best in the world at the top. But the waste in the present system is awesome and we do get some very perverse incentives. Votes: 0

I'm right, and you're smart, and sooner or later you'll see I'm right. Votes: 0

Warren spends 70 hours a week thinking about investing . Votes: 0

Everyone caved, adopted loose [accounting] standards, and created exotic derivatives linked to theoretical models. As a result, all kinds of earnings, blessed by accountants, are not really being earned. When you reach for the money, it melts away. It was never there. It [accounting for derivatives] is just disgusting. It is a sewer, and if I'm right, there will be hell to pay in due course. All of you will have to prepare to deal with a blow-up of derivative books. Votes: 0

When I run into a paradox I think either I'm a total horse's ass to have gotten to this point, or I'm fruitfully near the edge of my discipline. It adds excitement to life to wonder which it is. Votes: 0

Why should it be easy to do something that, if done well, two or three times, will make your family rich for life? Votes: 0

Another thing I think should be avoided is extremely intense ideology because it cabbages up one's mind. You see it a lot with T.V. preachers (many have minds made of cabbage) but it can also happen with political ideology. When you're young it's easy to drift into loyalties and when you announce that you're a loyal member and you start shouting the orthodox ideology out, what you're doing is pounding it in, pounding it in, and you're gradually ruining your mind. So you want to be very, very careful of this ideology. It's a big danger. Votes: 0

The cash register did more for human morality than the Congregational Church. It was a really powerful phenomenon to make an economic system work better, just as, in reverse, a system that can be easily defrauded ruins a civilization. A system that's very hard to defraud, like a cash register, helped the economic performance of a civilization by reducing vice, but very few people within economics talk about it in those terms. Votes: 0

I don't want to sell credit to people who are going to hurt themselves with it. You should only sell products that are good for the people who use them. Some disagree with this, but I know I'm right. That is to say, you're talking to a Republican who admires Elizabeth Warren. Votes: 0

Investing is where you find a few great companies and then sit on your ass. Votes: 0

I think the foundation at Berkshire [Buffett's stake in Berkshirewill pass to the Buffett Foundation upon his death] will be a plus because there will be a continuation of the culture. We'd still take in fine businesses run by people who love them. Votes: 0

Why would you want to invest with a guy whose thought process says, "If a second layer of fees is good, then let's add a third layer. Votes: 0

Litigation is notoriously time-consuming, inefficient, costly and unpredictable. Votes: 0

...the cost of being a publicly traded stock has gone way, way up. It doesn't make sense for a little company to be public anymore. A lot of little companies are going private to be rid of these burdensome requirements.... Votes: 0

I don't invest in what I don't understand. And I don't want to understand Facebook. Votes: 0

See's candy company was the first high-quality business we ever bought. Votes: 0

We don't have an isolated group [of senior managers] surrounded by servants. Berkshire's headquarters is a tiny little suite. We just came back from Berkshire's board meeting; it had moved up to the board room of the Kiewit company and [it was so large and luxurious that] I felt uncomfortable. Votes: 0

We don't claim to have perfect morals, but at least we have a huge area of things that, while legal, are beneath us. We won't do them. Currently, there's a culture in Americathat says that anything that won't send you to prison is OK. Votes: 0

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. And then 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. Votes: 0

Fancy computers are engaging in legalized front-running. The profits are clearly coming from the rest of us - our college endowments and our pensions. Why is this legal? What the hell is the government thinking? It's like letting rats into a restaurant. Votes: 0

How should the best parts of psychology and economics interrelate in an enlightened economist's mind?... I think that these behavioral economics...or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology. Votes: 0

You have a real asset-price bubble in places like parts of California and the suburbs of Washington, D.C. Votes: 0

There’s no way that you can live an adequate life without many mistakes. In fact, one trick in life is to get so you can handle mistakes. Failure to handle psychological denial is a common way for people to go broke. Votes: 0

It's very useful to have a good grasp of all the big ideas in hard and soft science. A, it gives perspective. B, it gives a way for you to organize and file away experience in your head, so to speak. Votes: 0

It's been my experience in life if you just keep thinking and reading, you don't have to work. Votes: 0

People always underestimate the ability of earth to increase its carrying capacity. Votes: 0

Avoid working directly under somebody you don't admire and don't want to be like. Votes: 0

I knew a guy who had $5 million and owned his house free and clear. But he wanted to make a bit more money to support his spending, so at the peak of the internet bubble he was selling puts on internet stocks. He lost all of his money and his house and now works in a restaurant. It's not a smart thing for the country to legalize gambling [in the stock market] and make it very accessible. Votes: 0

I think democracies are prone to inflation because politicians will naturally spend [excessively] - they have the power to print money and will use money to get votes. If you look at inflation under the Roman Empire, with absolute rulers, they had much greater inflation, so we don't set the record. It happens over the long-term under any form of government. Votes: 0

How could economics not be behavioral? If it isn't behavioral, what the hell is it? Votes: 0

Warren is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you. Votes: 0

The harder you work, the more confidence you get. But you may be working hard on something that is false. Votes: 0

I think gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939, but civilized people don't buy gold, they invest in productive businesses. Votes: 0

What's the best way to get a good spouse? The best single way is to deserve a good spouse because a good spouse is by definition not nuts. Votes: 0

To us, investing is the equivalent of going out and betting against the pari-mutuel system. We look for a horse with one chance in two of winning, and that pays three to one. In other words, we're looking for a mispriced gamble. That's what investing is, and you have to know enough to know whether the gamble is mispriced. Votes: 0

If it is wisdom you're after, you're going to spend a lot of time on your ass reading. Votes: 0

We have never had the will to enforce the immigration laws. What you see is what you'll continue to get. Votes: 0

Knowing what you don't know is more useful than being brilliant. Votes: 0

To say accounting for derivatives is Americais a sewer is an insult to sewage. Votes: 0

I like people admitting they were complete stupid horses' asses. I know I'll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn. Votes: 0

People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts. Votes: 0

Trying to prioritize among things we're unlikely to do is pretty fruitless. Votes: 0

Some people seem to think there's no trouble just because it hasn't happened yet. If you jump out the window at the 42nd floor and you're still doing fine as you pass the 27th floor, that doesn't mean you don't have a serious problem. I would want to address the problem right now. Votes: 0

When we were young, there weren't very many smart people in the investment world. You should have seen the people in the bank trust departments. Now, there are armies of smart people at private investment funds, etc . If there were a crisis now, there would be a lot more people with a lot of money ready to take advantage. Votes: 0

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. It's just that simple. Votes: 0

We want very good leaders who have a lot of power. Votes: 0

I agree with Peter Drucker that the culture and legal systems of the United Statesare especially favorable to shareholder interests, compared to other interests and compared to most other countries. Indeed, there are many other countries where any good going to public shareholders has a very low priority and almost every other constituency stands higher in line. Votes: 0

If you turn on the television, you'll find the mothers of the most obvious criminals that man could ever diagnose, and they all think their sons are innocent. That's simple psychological denial. The reality is too painful to bear, so you just distort it until it's bearable. We all do that to some extent, and it's a common psychological misjudgment that causes terrible problems. Votes: 0

People calculate too much and think too little. Votes: 0

You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them. Votes: 0

All the equity investors, in total, will surely bear a performance disadvantage per annum equal to the total croupiers' costs they have jointly elected to bear. This is an inescapable fact of life. And it is also inescapable that exactly half of the investors will get a result below the median result after the croupiers' take, which median result may well be somewhere between unexciting and lousy. Votes: 0

In my whole life, I have known no wise people who didn't read all the time - none ... ZERO. Votes: 0

Rationality is not just something you do so that you can make more money, it is a binding principle. Rationality is a really good idea. You must avoid the nonsense that is conventional in one's own time. It requires developing systems of thought that improve your batting average over time. Votes: 0

In fact I've probably never seen such a wide moat. Votes: 0

I think the notion that liquidity of tradable common stock is a great contributor to capitalism is mostly twaddle. The liquidity gives us these crazy booms, so it has as many problems as virtues. Votes: 0

If you don't keep learning, other people will pass you by. Temperament alone won't do it - you need a lot of curiosity for a long, long time. Votes: 0

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 - at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out. Votes: 0

The lawyers have escaped most criticism [and undeservedly so]. The tax shelters [were approved by lawyers, who got paid huge commissions to do so] and every miscreant had a high-falutin' lawyer at his side. Why don't more law firms vote with their feet and not take clients who have signs on them that say, "I'm a skunk and will be hard to handle?" I've noticed that firms that avoid trouble over long periods of time have an institutional process that tunes bad clients out. Boy, if I were running a law firm, I'd want a system like that because a lot of firms have a lot of bad clients. Votes: 0

We have the same problem as everyone else: It's very hard to predict the future... Votes: 0

When you mix raisins and turds, you've still got turds. Votes: 0

The interesting thing is the field is so big - it's enormous. One thing a modern civilization needs is energy. Votes: 0

Berkshire's whole record has been achieved without paying one ounce of attention to the efficient market theory in its hard form. And not one ounce of attention to the descendants of that idea, which came out of academic economics and went into corporate finance and morphed into such obscenities as the capital asset pricing model, which we also paid no attention to. I think you'd have to believe in the tooth fairy to believe that you could easily outperform the market by seven-percentage points per annum just by investing in high volatility stocks. Votes: 0

If you have competence, you pretty much know its boundaries already. To ask the question (of whether you are past the boundary) is to answer it. Votes: 0

It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities. Votes: 0

The big money is not in the buying and selling ... but in the waiting. Votes: 0

Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world. Votes: 0

All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock. Votes: 0

Well the open-outcry auction is just made to turn the brain into mush: you've got social proof, the other guy is bidding, you get reciprocation tendency, you get deprival super-reaction syndrome, the thing is going away... I mean it just absolutely is designed to manipulate people into idiotic behavior. Votes: 0

Your life must focus on the maximization of objectivity. Votes: 0

If you can get good at destroying your own wrong ideas, that is a great gift. Votes: 0

A great business at a fair price is superior to a fair business at a great price. Votes: 0

Accounting incomes were reduced by discrepancy [ but] "the net amount paid by lawyers for lawyerly discrepancy is close to zippo. In this case, the goddess of justice was blind. Votes: 0

We have a history when things are really horrible of wading in when no one else will. Votes: 0

Go to bed smarter than when you woke up. Votes: 0

Well, the questioner came from Singapore which has perhaps the best economic record in the history of developing an economy and therefore he referred to 15% per annum as modest. It's not modest-it's arrogant. Only someone from Singapore would call it modest. Votes: 0

The model I like to sort of simplify the notion of what goes on in a market for common stocks is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet. That's what happens in the stock market. Votes: 0

I have what I call an iron prescription that helps me keep sane when I naturally drift toward preferring one ideology over another and that is: I say that I'm not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people who support it. I think only when I've reached that state am I qualified to speak. This business of not drifting into extreme ideology is a very, very important thing in life Votes: 0

An idea or a fact is not worth more merely because it's more available to you. Votes: 0

I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk. Votes: 0

There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested - there's never any cash. It reminds me of the guy who looks at all of his equipment and says, 'There's all of my profit.' We hate that kind of business. Votes: 0

All I want to know is where I’m going to die, so I’ll never go there Votes: 0

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. Votes: 0

We have a high moral responsibility to be rational Votes: 0

You must value the business in order to value the stock. Votes: 0

A lot of our respected financial institutions are just casinos in drag. Votes: 0

It's in the nature of stock markets to go way down from time to time. There's no system to avoid bad markets. You can't do it unless you try to time the market, which is a seriously dumb thing to do. Conservative investing with steady savings without expecting miracles is the way to go. Votes: 0

Most people are too fretful, they worry to much. Success means being very patient, but aggressive when it's time. Votes: 0

If (investing) weren't a little difficult, everybody would be rich. Votes: 0

The game of life is the game of everlasting learning. At least it is if you want to win. Votes: 0

The safest way to get what you want is to deserve what you want. Votes: 0

Those who will not face improvements because they are changes, will face changes that are not improvements. Votes: 0

Common stock investors can make money by predicting the outcomes of practice evolution. You can't derive this by fundamental analysis - you must think biologically. Votes: 0

Recognize reality even when you don't like it-especially when you don't like it. Votes: 0

Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer. Votes: 0

A director who gets $150,000 per year from a company and needs the money is not independent. Votes: 0

There are always people who will be better at some thing than you are. Votes: 0

All sensible investing is value investing Votes: 0

You need to have a passionate interest in why things are happening. That cast of mind, kept over long periods, gradually improves your ability to focus on reality. If you don't have the cast of mind, you're destined for failure even if you have a high I.Q. Votes: 0

Determine value apart from price; progress apart from activity; wealth apart from size. Votes: 0

You're 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. Votes: 0

You have to learn to be a follower before you become a leader. Votes: 0

I get flack for saying [when I visit a college and give a speech], "This is a nice college, but the really great educator is McDonald's." They hate me for saying this and think I'm a slimy creature. But McDonald's hires people with bad work habits, trains them, and teaches them to come to work on time and have good work habits. I think a lot of what goes on there is better than at Harvard. Votes: 0

Spend each day trying to be a little wiser than you were when you woke up. Votes: 0

Deliver to the world what you would buy if you were on the other end. Votes: 0

Step by step you get ahead, but rarely in fast spurts. Votes: 0

To the man with only a hammer, every problem looks like a nail. Votes: 0

The safest way to try to get what you want is to try to deserve what you want. It's such a simple idea. It's the golden rule. You want to deliver to the world what you would buy if you were on the other end. Votes: 0

Any year that you don't destroy one of your best-loved ideas is probably a wasted year Votes: 0

We get these questions a lot from the enterprising young. It's a very intelligent question: You look at some old guy who's rich and you ask, 'How can I become like you, except faster?' Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts... Slug it out one inch at a time, day by day, at the end of the day -- if you live long enough -- most people get what they deserve. Votes: 0

What's fascinating . . .is that you could now have a business that might have been selling for $10 billion where the business itself could probably not have borrowed even $100 million. But the owners of that business, because its public, could borrow many billions of dollars on their little pieces of paper- because they had these market valuations. But as a private business, the company itself couldn't borrow even 1/20th of what the individuals could borrow. Votes: 0

You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long, time. Votes: 0

Accounting is a big subject and there are huge forces in play. The entire momentum of existing thinking and existing custom is in a direction that allows terrible follies to happen, and the terrible follies have terrible consequences. Votes: 0

I would argue that a majority of the horrors we face would not have happened if the accounting profession developed and enforced better accounting. Votes: 0

Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sides show a large profit from the same trade. Votes: 0

Remember that reputation and integrity are your most valuable assets - and can be lost in a heartbeat. Votes: 0

I try to get rid of people who always confidently answer questions about which they don't have any real knowledge. Votes: 0

Tthe first rule is that 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.... You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. Votes: 0

There are exceptional loyalties and there are old fashion ideas about how you get loyalties, and after all the auditorium is full of people who have co-owned shares with the managers for many decades, and in many cases they co-invested when everyone was young and obscure. Also when you come back to a place like that you are celebrating old loyalties, and of course the basic idea behind so much of Berkshire is the old fashioned idea that the best way to get loyalty is to deserve loyalty. Votes: 0

You need a different checklist and different mental models for different companies. I can never make it easy by saying, 'Here are three things.' You have to derive it yourself to ingrain it in your head for the rest of your life. Votes: 0