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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.

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
Bigs
Balloons
Give
Accounting
Giving
Margins
World
Engineering
People
Damn
False
Aided
Safety
Balloon
Financial
Margin

More quotes by Charlie Munger

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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.
Charlie Munger
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The big money is not in the buying and selling ... but in the waiting.
Charlie Munger
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In the 1930s, there was a stretch where you could borrow more against the real estate than you could sell it for. I think that's what's going on in today's private-equity world.
Charlie Munger
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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.
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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Cicero's words also increased my personal satisfaction by supporting my long-standing rejection of a conventional point of view.
Charlie Munger
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Wall Street has too much wealth and political power.
Charlie Munger
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The more hard lessons you can learn vicariously rather than through your own hard experience, the better.
Charlie Munger
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Just avoid things like racing trains to the crossing, doing cocaine, etc. Develop good mental habits.
Charlie Munger
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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?!
Charlie Munger
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Stock-picking is like gambling: those who win well, seldom bet, but when they do, they bet heavily.
Charlie Munger
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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.
Charlie Munger
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If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.
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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When it gets into these spikes, with shortages and uproar and so forth, people go bananas, but that's capitalism.
Charlie Munger
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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.
Charlie Munger
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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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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.
Charlie Munger
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Since those don’t hit financial reports, the opportunities you had but didn’t accept, most people don’t bother thinking about them very much. At least that is a mistake we don’t make. We rub our own noses in our mistakes in blowing opportunities, as we just did.
Charlie Munger
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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.
Charlie Munger