It’s hard to find someone who hasn’t heard of Warren Buffet, even outside of the finance world. The legendary investor and billionaire started Berkshire Hathaway and through meticulous analysis and patience, has managed to beat the S&P 500 for decades. Not nearly as famous however, was Buffet’s right-hand man, Charlie Munger, who passed away on November 28, 2023 at age 99. 

Munger was Vice Chairman of Berkshire Hathaway and a legend in his own right. A large part of the success of Berkshire Hathaway can be attributed to Munger, who was known for his intellect, wit, and his commitment to value investing, which is essentially looking for strong companies trading at a discount to their true value. These value stocks would then be held long-term, with no exit plan needed.   

Munger had many great quotes that encompassed this philosophy. I have always appreciated how he expressed wisdom through common sense thoughts. Here are some examples:

“The first rule of compounding: Never interrupt it unnecessarily.”

Munger emphasizes the power of compound interest, highlighting the importance of letting investments grow over time without unnecessary interference. This quote underscores the value of patience and long-term thinking in investing.

“It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait.”

In a world focused on instant gratification and short-term thinking, Munger reminds investors of the virtues of patience. Successful investing often requires the discipline to stay the course, even when faced with uncertainty or market fluctuations. Many times the best course of action is no action at all. Stick to your plan!

“The big money is not in the buying or selling, but in the waiting.”

Munger’s focus on patience is evident in this quote, emphasizing that the real profits are made by holding onto quality investments for extended periods. It’s a reminder to investors to resist the temptation to constantly trade and instead focus on the long-term value of their holdings.

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Munger advocates for a mindset focused on avoiding costly mistakes rather than seeking brilliance. This quote highlights the importance of humility, rationality, and avoiding unnecessary risks in decision-making. For the vast majority, market returns are more than enough to reach your goals. Again, stick to your plan.

These are simple yet powerful thoughts. Overthinking can lead to rash decisions and taking unnecessary risks. Take a lesson from one of the best to ever do it and simplify your investing philosophy.

Munger will be missed at Berkshire Hathaway and beyond, but his wisdom will continue to shape how we think about investing and success for years to come.

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