Charlie Munger

Quotes are word for word from the source.

• Accounting as Business Language

  “Obviously, you have to know accounting. It's the language of practical business life.”

  Our noteMastering accounting is essential because it serves as the foundational language of business.

• Limitations of Accounting

  “But you have to know enough about it to understand its limitations - because although accounting is the starting place, it's only a crude approximation.”

  Our noteInvestors must understand accounting deeply enough to recognize that financial statements are only rough approximations.

• Critique of Corporate Finance

  “... much of what is taught in modern corporate finance courses is twaddle.”

  Our noteMuch of academic corporate finance theory is impractical nonsense in real-world business.

• Building Seed Capital

  “The first $100,000 is a bitch, but you gotta do it.”

  Our noteAccumulating the initial seed capital is extraordinarily difficult, yet mandatory for building wealth.

• Early Capital Accumulation

  “The hard part of the process for most people is the first $100,000. If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”

  Our noteStarting from zero to reach the first major capital milestone is the hardest phase of wealth compounding.

• Latticework of Mental Models

  “You have to learn all the big ideas in the key disciplines in a way that they're in a mental latticework in your head and you automatically use them for the rest of your life.”

  Our noteCore concepts from major disciplines must be organized into a mental latticework for lifelong decision-making.

• Focus Investing

  “Our investment style has been given a name - focus investing - which implies ten holdings, not one hundred or four hundred.”

  Our noteFocus investing means concentrating capital into roughly ten deeply understood holdings rather than hundreds.

• Scarcity and Concentration

  “The idea that it is hard to find good investments, so concentrate in a few, seems to me to be an obvious idea.”

  Our noteBecause truly great investment opportunities are rare, concentrating capital in a few of them is only logical.

• Humility, Investing Difficulty

  “People who do it two or three times early, all go broke because they think it's easy. In fact, it's very hard and rare.”

  Our noteEarly successes can create a false sense of ease that ultimately leads to ruin because investing is inherently difficult.

• Avoid self delusion

  “And Buffett held self-delusion at bay as he underclaimed expertise while he knew better than most corporate executives what worked and what didn't in business”

  Our noteMunger describes Warren Buffett's intellectual humility and business acumen.