Charles Munger: Great Investing Means Being Aversive To The Standard Stupidities

Johnny HopkinsCharles Munger, Warren BuffettLeave a Comment

During the 2016 Berkshire Hathaway Meeting, Charles Munger explained why great investing means being aversive to standard stupidities. Here’s an excerpt from the meeting:

WARREN BUFFETT: But it’s not a very complicated economic equation at Berkshire. People didn’t — for a long time, they didn’t appreciate the value of float. We kept explaining it to them, and I think they probably do now.

The big thing, the goal, what Charlie and I think about, we want to add, every year, something to the normalized — you know, the normalized earning power per share of the company. And we think we can do it because we should be able to do it. We have retained earnings to work with every year to get that job done.

Sometimes it doesn’t look like we’ve accomplished much, and we haven’t accomplished much. And other years, we — something big happens, and we don’t know ahead of time which year is going to be which. Charlie?

CHARLIE MUNGER: Well, there are very few companies that have ever been similarly advantaged.

In the whole history of Berkshire Hathaway, we’ve lived in a torrent of money, and we were constantly deploying it, and disbursed assets, and we were wising up as we went along. That’s a pretty good system.


CHARLIE MUNGER: We’re not going to change it.

WARREN BUFFETT: No. And it’s allowed for a lot of mistakes. I mean, that’s the interesting thing.

American business has been good enough that you don’t have to be — you don’t have to really be smart to get a decent result. And if you can bring a little bit of intellect, you know, then you should get a pretty good result.

CHARLIE MUNGER: What you’ve got to do is be aversive to the standard stupidities. You just keep those out. You don’t have to be smart.


CHARLIE MUNGER: Thank God, right.

You can watch the entire discussion here:

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