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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.

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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More quotes by Charlie Munger

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I don't invest in what I don't understand. And I don't want to understand Facebook.
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Our biggest mistakes, were things we didn't do, companies we didn't buy.
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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.
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I'm right, and you're smart, and sooner or later you'll see I'm right.
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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.
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Knowing what you don't know is more useful than being brilliant.
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People always underestimate the ability of earth to increase its carrying capacity.
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We want very good leaders who have a lot of power.
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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.
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It's stupid the way people extrapolate the past -- and not slightly stupid, but massively stupid.
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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.
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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.
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It's not the bad ideas that do you in, but the good ones.
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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.
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When you locate a bargain, you must ask, 'Why me, God? Why am I the only one who could find this bargain?'
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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.
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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.
Charlie Munger
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A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business
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Just avoid things like racing trains to the crossing, doing cocaine, etc. Develop good mental habits.
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We don't like trading agony for money
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