In his own words
Munger on Avoiding stupidity
41 sourced quotes. All themes
“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.”
“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. There must be some wisdom in the folk saying: 'It's the strong swimmers who drown.'”
Extended form as printed in the Almanack; the first sentence is the widely quoted core.
“There are only three ways a smart person can go broke: liquor, ladies, and leverage.”
Buffett has repeatedly credited this line to Munger; no single primary recording pins the exact occasion.
“It's very difficult to invest money well, and I think it's all but impossible to do it time after time after time in venture capital. Some of the deals get so hot, and you have to decide so quickly, that you're all just sort of gambling.”
“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. People are trying to be smart — all I am trying to do is not to be idiotic, but it's harder than most people think.”
“We try more to profit from always remembering the obvious than from grasping the esoteric.”
From Munger's Wesco chairman's letter; it immediately precedes the famous 'consistently not stupid' line.
“Mimicking the herd invites regression to the mean (merely average performance).”
“If I had to name one factor that dominates human bad decisions, it would be what I call denial. If the truth is unpleasant enough, their mind plays tricks on them and they think it isn't really happening.”
Lightly cleaned of a spoken filler; from his 2023 answer on which biases do the most damage.
“A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc.”
From Whitney Tilson's contemporaneous notes (part paraphrase), so the phrasing is approximate.
“Personally, I've gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things — which by and large are useful, but which often misfunction.”
“Why would you risk what you have and need in order to get what you don't have and don't need? Really stupid.”
On margin and leverage — he prefaced it 'when you're already rich, it's insane.'
“Avoid crazy at all costs. Crazy is way more common than you think. It's easy to slip into crazy. Just avoid it, avoid it, avoid it.”
“I avoided the standard ways of failing. … My game in life was always to avoid all standard ways of failing. You teach me the wrong way to play poker and I will avoid it.”
One ellipsis replaces a connective; no other words changed.
“Do not live your life in such a fashion that a bad day can kill you.”
“Around here I would say that if our predictions have been a little better than other people's, it's because we tried to make fewer of them.”
“We've got people who know nothing about stocks being advised by stockbrokers who know even less.”
“One nice thing about doing something dumb, if you're smart, is that you won't do it again.”
“Addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken.”
His own variant of the 'chains of habit, too light to be felt until too strong to be broken' proverb (after Samuel Johnson).
“If you just have one or two [models] that you're using, the nature of human psychology is such that you'll torture reality so that it fits your models, or at least you'll think it does.”
'[models]' is inserted for clarity; his verbatim phrasing is 'one or two that you're using.'
“I thought of my favorite business analogy—the mouse who says, 'Let me out of the trap, I've decided I don't want the cheese.' There are a million business traps. You can get sloppy, you can get alcoholic, you can get megalomania, you can not understand your own limitations. There are a million ways to gum it up.”
His 'mouse and the trap' analogy for the many ways to ruin a business.
“You call a man the Chief Risk Officer, but often he is functioning as a guy that makes you feel good while you do dumb things.”
On the big banks' risk management after the 2008 crisis.
“If you have some easily removable ignorance and keep it, it's dishonorable. I don't think it's just a mistake or a lack of diligence. I think it's dishonorable to stay stupider than you have to be, and so that's my ethos.”
He called Berkshire 'a temple of rationality.'
“Modern life creates successful bureaucracy, and successful bureaucracy breeds failure and stupidity. How can it be otherwise? That's the big tension of modern life.”
He called it 'the great tragedy of modern life.'
“Think of how refreshing a board of directors meeting would be if they sat down, 'And now we'll spend three hours examining all our stupid blunders and how much we've blown.'”
“My attitude when something is big and dangerous is to stay a long way away from it. Other people want to come as close as possible without going in. That's too tricky for me. If there's a big whirlpool in the river, I stay a long way away from it.”
Two passages on the same point joined; wording verbatim, contiguity approximate.
“Other people are trying to be smart; all I'm trying to be is non-idiotic.”
“It's really crazy if you're very comfortable and secure to leverage. The incremental value of getting a little extra return is not that great.”
“When people use the word 'common sense,' what they mean is uncommon sense. Because the standard human condition is ignorance and stupidity.”
“In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting.”
From Tilson's 2003 notes (near-verbatim, not an official transcript).
“People are always saying to Berkshire, 'Why don't you write a lot more volume in relation to capital? Everyone else is doing it.' … But then somebody else comes in and asks, 'Why did everybody get killed last year but you?' Maybe the questions are related. To finish first you have to first finish.”
He applies the old racing maxim 'to finish first you have to first finish.'
“Smart, hard-working people aren't exempted from professional disasters from overconfidence. Often, they just go aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods.”
“We've had enough good sense, when something was working very well, to keep doing it. I'd say we're demonstrating what might be called the fundamental algorithm of life — repeat what works.”
He credited 'repeat what works' to Lee Kuan Yew.
“We recognized early on that very smart people do very dumb things, and we wanted to know why and who, so we could avoid them.”
Year/occasion not pinned to a transcript.
“You don't have to have perfect wisdom to get very rich. All you've got to do is have slightly more than other people, on average, over a long time.”
“What I needed to get ahead was to compete against idiots, and luckily there's a large supply.”
On finding your circle of competence; excerpted mid-sentence.
“Anytime somebody offers you a tax shelter from here on in life, my advice would be don't buy it. In fact, any time anybody offers you anything with a big commission and a 200-page prospectus, don't buy it.”
He calls this 'Munger's Rule.'
“In terms of business mistakes that I've seen over a long lifetime, I would say that trying to minimize taxes too much is one of the great standard causes of really dumb mistakes. Warren and I personally don't drill oil wells. We pay our taxes.”
“I don't think I use much physics in solving my investment problems, but it occasionally helps me. Occasionally, some damned fool will suggest something that violates the laws of physics, and I always turn off my mind the minute I realize the poor bastard doesn't know any physics.”
“One should stay far away from any conduct at all likely to drift into chemical dependency. Even a small chance of suffering so great a damage should be avoided.”
“The reality is too painful to bear, so one distorts the facts until they become bearable.”
On psychological denial.
“Misjudgment is like sunshine, it will always be part of the world.”
From Boodell's notes (recollections, corroborated).