Charlie Munger Comments on Mistakes

The late investing titan discusses mistakes

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Dec 22, 2023
  • Munger quotes on mistakes
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“The more hard lessons you can learn vicariously rather than through your own hard experience, the better.”

“Although I am very interested in the subject of human misjudgment — and lord knows I've created a good bit of it — I don't think I've created my full statistical share”

“Since mistakes of omission don't appear in the financial statements, most people don't pay attention to them. We rub our noses in mistakes of omission – as we just did.

“The most extreme mistakes in Berkshire's history have been mistakes of omission. We saw it, but didn't act on it. They're huge mistakes — we've lost billions. And we keep doing it. We're getting better at it. We never get over it.” There are two types of mistakes: 1) doing nothing; what Warren calls “sucking my thumb” and 2) buying with an eyedropper things we should be buying a lot of.”

After nearly making a terrible mistake not buying See's, we've made this mistake many times. We are apparently slow learners.

These opportunity costs don't show up on financial statements, but have cost us many billions.

Chris Davis (Trades, Portfolio) [of the Davis funds] has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn't do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn't remind you. Why not celebrate stupidities in both categories?”

There's no way that you can live an adequate life without [making ] many mistakes.

“Our biggest mistakes, were things we didn't do, companies we didn't buy.”

Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) on How to Avoid Mistakes in Life and Business:


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