Charlie Munger: It’s Getting Harder To Achieve Outsized Returns

During the 2015 Daily Journal Annual Meeting, Charles Munger discussed why it’s getting harder to achieve outsized returns. Here’s an excerpt from the meeting:

Munger: Achieving success through investments has been pretty easy in my lifetime. If you were rational and disciplined, and you had a tailwind of a 10 percent per annum on average from carefully selected stocks going for you, pre tax, that was a big tailwind.

If you saved your money, and you lived within your means, were shrewd and so forth, that was enough to take care of you. A little discipline in saving, and the passage of time will do it.

Now, if the world is going to get 10 percent out of indexes in the future, and I don’t think it will, in real terms, getting more has proven to be quite difficult.

Some of you who come along later are finding that if you stay in the big stocks, it’s damn near impossible for most people. When things are damn near impossible, maybe you could stop trying.

That was not my system, but I do not recommend my system to everybody. I do, as a way of life, but I don’t think all you have to do is read Charlie Munger and you’ll get rich. If it were that easy, this place would be a football stadium.

[laughter]

You can listen to the entire discussion here: