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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.

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
Thinking
Short
Works
Term
Underlying
Use
Asset
Black
Options
Long
Option
Something
Assets
Think
Insane

More quotes by Charlie Munger

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It's not the bad ideas that do you in, but the good ones.
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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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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.
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It's not supposed to be easy. Anyone who finds it easy is stupid.
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If (investing) weren't a little difficult, everybody would be rich.
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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.
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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.
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You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long, time.
Charlie Munger
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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.
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You've got to have models in your head and you've got to array you experience - both vicarious and direct - onto this latticework of mental models.
Charlie Munger
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When you borrow a man's car, always return it with a tank of gas.
Charlie Munger
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Someone will always be getting richer faster than you. This is not a tragedy.
Charlie Munger
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Failure to handle psychological denial is a common way for people to go broke: you have made an enormous commitment to something. You have poured effort and money in. And the more you put in, the more that the whole consistency principle makes you think, Now it has to work. If I put in just a little more, then it will work.
Charlie Munger
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Once you start doing something bad, then it's easy to take the next step - and in the end, you're a moral sewer.
Charlie Munger
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I regard it as very unfair, but capitalism without failure is like religion without hell.
Charlie Munger
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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.
Charlie Munger
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Litigation is notoriously time-consuming, inefficient, costly and unpredictable.
Charlie Munger
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Just keep your head down and do your best.
Charlie Munger
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To the man with only a hammer, every problem looks like a nail.
Charlie Munger
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Never, ever, think about something else when you should be thinking about the power of incentives.
Charlie Munger