At the 2008 Berkshire Hathaway
This is why people love him.
Munger is probably the most quotable investor of all time. Sometimes what he says is hilarious. Sometimes it's serious. But it always gets you thinking.
Here are 30 other awesome things he's has said over the years.
On derivatives: "The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame."
On gold: "I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk."
On health-care spending: "In an aging affluent civilization where GDP rises at 2 or 3 percent per year per capita, I don't think it matters at all if we spent 20% of GDP on health care. I don't think it matters that much if 20% of the health care is no damn good. You know, like Botox for women for whom intervention is hopeless. I don't think it's our main problem at all."
On free-market financial systems: "People really thought that giving a predatory class of people the ability to do whatever they wanted was free-market enterprise. It wasn't. It was legalized armed robbery. And it was incredibly stupid."
On patience: "Almost all good businesses engage in 'pain today, gain tomorrow' activities."
Life advice: "Don't do cocaine. Don't race trains. And avoid all AIDS situations."
On how inflation will affect investing: "I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I've seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not."
On Wall Street pay: "A man does not deserve huge amounts of pay for creating tiny spreads on huge amounts of money. Any idiot can do it. And, as a matter of fact, many idiots do do it."
On outside advice: "I would rather throw a viper down my shirt than hire a compensation consultant."
On reality: "I think that one should recognize reality even when one doesn't like it; indeed, especially when one doesn't like it."
On financial collapse: "The world learned what happened after World War I, when we demanded that Germany repay. It was chaos and hyperinflation. The result, of course, was the rise of Hitler. And Hitler could have been more successful than he was; his kids or family members could still be in power today, had things gone just a little differently. You don't ever want to do anything to push an economy to collapse. Terrible things result.
Now think about this. During World War II, Japan tortured our soldiers to death. They marched them around. The Germans put people in ovens. Just awful. And what did we do after the war? We gave them money to rebuild. We said, 'Let bygones be bygones.' The result was a magnificent global economic system and a win for human rights."
On envy: "There is nothing more counterproductive than envy. Someone in the world will always be better than you. Of all the sins, envy is easily the worst, because you can't even have any fun with it. It's a total net loss."
On trusting others: "If you don't allow for self-serving bias in the conduct of others, you are, again, a fool."
On legacy: "To the extent that all I've done is pick stocks that have gone up and sat on my [behind] as my family got richer, I haven't left much contribution to society. I guess it's a lot like Wall Street. The difference is, I feel ashamed of it. I try to make up for it with philanthropy and meetings like this one today. This meeting is not out of kindness. This is atonement."
On an easy life: "Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won."
On investing in banks: "A friend of mine won't touch banks. His attitude is that sooner or later the bastards will go crazy. I think that's irrational. You have to be able to recognize the ones that stick out. Wells Fargo
On pundits: "People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts."
On regulation: "When Hitler was in his bunker before he shot himself, he said, 'This isn't my fault. The German people just don't appreciate me enough.' That's the attitude of a lot of bankers. They think their silliness is necessary. Banks will not rein themselves in voluntarily. You need adult supervision."
On simplicity: "In my life there are not that many questions I can't properly deal with using my $40 adding machine and dog-eared compound interest table."
On accounting: "To say accounting for derivatives in America is a sewer is an insult to sewage."
On competition: "Someone will always be getting richer faster than you. This is not a tragedy."
On bad mergers: "If you mix raisins and [excrement], they're still [excrement]."
On whom to blame for the financial crisis: "The academic elites failed us with their utterly asinine ideas of risk control. It was grounded on the idea that all risk took Gaussian distributions, which is just totally wrong. Very-high-IQ people can be completely useless. And many of them are.
Benjamin Graham used to say, 'It's not the bad investment ideas that fail; it's the good ideas that get pushed into excess.' And that's a lot of what happened here.
Some economic distortions come from the masses believing that other people are right. Others come from the need to make a living through behavior that may be less than socially desirable. I've always been skeptical of conventional wisdom. You have to be able to keep your head on when everyone else is losing theirs."
On intelligence: "In the corporate world, if you have analysts, due diligence, and no horse sense, you've just described hell."
On returns: "The net amount of money that's been made by the shareholders of airlines since Kitty Hawk is now a negative figure."
On math: "Mankind invented a system to cope with the fact that we are so intrinsically lousy at manipulating numbers. It's call the graph."
On finance as a career: "A big percentage of Cal-Tech grads are going into finance. I regard this as a regretfully bad outcome. They'll make a lot of money by clobbering customers who aren't as smart as them."
On being open: "If you get a lot of heavy ideology young -- and then you start expressing it -- you are really locking your brain into a very unfortunate pattern."
On humility: "I like people admitting they were complete stupid horses' [behinds]. I know I'll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn."
Munger's rule of investing: "When any guy offers you a chance to earn lots of money without risk, don't listen to the rest of his sentence. Follow this, and you'll save yourself a lot of misery."
Fool contributor Morgan Housel owns shares of Berkshire Hathaway. Follow him on Twitter, @TMFHousel. The Motley Fool owns shares of Berkshire Hathaway and Wells Fargo and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo and Berkshire Hathaway. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.