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The number one idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash-flow than you are paying for. Move only when you have an advantage.

Charlie Munger

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Charlie Munger
Age: 100
Born: 1924
Born: January 1
Business Person
Financier
Investor
Lawyer
Omaha
Nebraska
Charlie Thomas Munger
Charles T. Munger
Charles Thomas Munger
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Judging
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Quality
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View
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Investing
Discounted

More quotes by Charlie Munger

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Intelligent people make decisions based on opportunity costs.
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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.
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There's more honor in investment management than in investment banking.
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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.
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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.
Charlie Munger
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Mimicking the herd invites regression to the mean.
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...being an effective teacher is a high calling.
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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.
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It's been my experience in life if you just keep thinking and reading, you don't have to work.
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Any year that you don't destroy one of your best-loved ideas is probably a wasted year
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Is there such thing as a cheerful pessimist? That's what I am.
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Avoid working directly under somebody you don't admire and don't want to be like.
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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.
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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.
Charlie Munger
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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.
Charlie Munger
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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
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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.
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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.
Charlie Munger
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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.
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Financial institutions make us nervous when they're trying to do well.
Charlie Munger