I am working on a new “mental models” series for the blog. The writing is taking a bit longer than I thought, so in the interim here is something light. I have paired each movie quote with an appropriate Charlie Munger quote.
- “Buy low, sell high. Fear? That’s the other guy’s problem.” Louis Winthorpe III. Trading Places.
Charlie Munger: “Look for more value in terms of discounted future cash flow than you’re paying for. Move only when you have an advantage. It’s very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor.”
- “Don’t you see what’s happening? Potter isn’t selling. Potter’s buying! And why? Because we’re panicking and he’s not. That’s why. He’s picking up some bargains.” George Bailey. It’s a Wonderful Life.
Charlie Munger: “For a security to be mispriced, someone else must be a damn fool. It may be bad for the world, but not bad for Berkshire.”
- “OK, first rule of Wall Street – Nobody – and I don’t care if you’re Warren Buffett or Jimmy Buffett – nobody knows if a stock is going up, down or sideways, least of all stockbrokers. But we have to pretend we know.” Mark Hanna. The Wolf Of Wall Street.
Charlie Munger: “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. It happens over and over and over.”
- “For twenty dollars I can tell you a lot of things. For thirty dollars I can tell you more. And for fifty dollars I can tell you everything.” Madame Ruby. Pee-Wee’s Big Adventure.
Charlie Munger: “I know one guy, he’s extremely smart and a very capable investor. I asked him, ‘What returns do you tell your institutional clients you will earn for them?’ He said, ‘20%.’ I couldn’t believe it, because he knows that’s impossible. But he said, ‘Charlie, if I gave them a lower number, they wouldn’t give me any money to invest!’ The investment-management business is insane.”
- “There’s not a lot of money in revenge.” Inigo Montoya. The Princess Bride.
Charlie Munger: “There’s an old saying, ‘What good is envy? It’s the one sin you can’t have any fun at.’ It’s 100% destructive. Resentment is crazy. Revenge is crazy. Envy is crazy. If you get those things out of your life early, life works a lot better.”
- “A fool and his money are lucky enough to get together in the first place.” Gordon Gekko. Wall Street.
Charlie Munger: ““Well, some of our success we predicted and some of it was fortuitous. Like most human beings, we took a bow.”
- “Danny Moses: “How can the banks let this happen?” Jared Vennett: “It’s fueled by stupidity. Mark Baum: But that’s not stupidity. That’s fraud.” Jared Vennett: “Tell me the difference between stupid and illegal and I’ll have my wife’s brother arrested.” The Big Short.
Charlie Munger: “It is remarkable how much long-term advantage people like [Warren Buffett and myself] have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
- “And there is no such thing as a no-sale call. A sale is made on every call you make. Either you sell the client some stock, or he sells you on a reason he can’t. Either way, a sale is made. The only question is, Who’s gonna close? You or him?” Jim Young. Boiler Room.
Charlie Munger: “If you take sales presentations and brokers of commercial real estate and businesses — I’m 70 years old, I’ve never seen one I thought was even within hailing distance of objective truth. ‘Incentive-caused bias’ causes this terrible abuse. And many of the people who are doing it you would be glad to have married into your family compared to what you’re otherwise going to get.”
- “That’s all the market is, one giant casino.” Nick Leeson. Rogue Trader.
Charlie Munger: “The model I like to sort of simplify the notion of what goes on in a market for common stocks is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what’s bet. That’s what happens in the stock market.”
- Navin R. Johnson: “’I’ve already given away eight pencils, two hoola dolls, and an ashtray, and I’ve only taken in fifteen dollars.’ Frosty: “Navin, you have taken in fifteen dollars and given away fifty cents worth of crap, which gives us a net profit of fourteen dollars and fifty cents. Navin R. Johnson: “Ah… It’s a profit deal. That takes the pressure off.” The Jerk.
Charlie Munger: “We’re trying to buy businesses with sustainable competitive advantages at a low – or even a fair price. The reason the professors teach nonsense is that if they didn’t, what would they teach the rest of the semester? Teaching people formulas that don’t really work in real life is a disaster for the world.”
- Doyle Lonnegan: “Your boss is quite a card player, Mr. Kelly; how does he do it?” Johnny Hooker: “He cheats.” The Sting.
Charlie Munger: “People need to ask, ‘How do I play the hand that has been dealt me?’ The world is not going to give you extra return just because you want it. You have to be very shrewd and hard working to get a little extra. It’s so much easier to reduce your wants. There are a lot of smart people and a lot of them cheat, so it’s not easy to win.”
- “Each man’s life touches so many other lives. When he isn’t around he leaves an awful hole, doesn’t he?” Clarence the Angel. It’s a Wonderful Life.
Charlie Munger: “That I’ve profited from being shrewd with money is not by itself satisfying to me. To atone, I teach and try to set an example. I would hate it if the example of my life caused people to pursue the passive ownership of pieces of paper. I think lives so spent are disastrous lives. I think it’s a better career if you help build something. I wish I’d built more, but I was cursed at being so good at stock picking. ‘The man is the prisoner of his talents.’ You can laugh, but I’ll bet this room is full of people who are prisoners of their talents. It tends to be the human condition.”
- A Dozen Things you can Learn from the Anti-Models that are Bernard Madoff and his Victims
- A Dozen Things I’ve Learned from Richard Thaler about Investing
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