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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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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.
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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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It's human nature to extrapolate the recent past into the future, but it's terrible that managements go along with this.
Charlie Munger
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If it happens every year like clockwork, what's so extraordinary about it?
Charlie Munger
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Hard work, honesty, if you keep at it, will get you almost anything.
Charlie Munger
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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.
Charlie Munger
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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.
Charlie Munger
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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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Knowing what you don't know is more useful than being brilliant.
Charlie Munger
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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.
Charlie Munger
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Understanding how to be a good investor makes you a better business manager and vice versa.
Charlie Munger
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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.
Charlie Munger
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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.
Charlie Munger
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We bought a doomed textile mill [Berkshire Hathaway] and a California S&L [Savings & Loan Wesco] just before a calamity. Both were bought at a discount to liquidation value.
Charlie Munger
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People calculate too much and think too little.
Charlie Munger
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Trying to prioritize among things we're unlikely to do is pretty fruitless.
Charlie Munger
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Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.
Charlie Munger
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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.
Charlie Munger
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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.
Charlie Munger
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Just keep your head down and do your best.
Charlie Munger