When repeating old words is right
“Repetition seems appropriate to us where facts remain both true and analytically important over many years and where certain ideas are part of our fixed business catechism.”
Investing
Charlie Munger's 1981 letter to Blue Chip Stamps shareholders, one of the letters in Blue Chip Stamps and Wesco Letters, 1977–2009.
A poor record at foretelling the future
“Our record as foretellers of the future is often poor, even with respect to businesses we have owned for many years, and we so greatly underestimated See's future that we were lucky to acquire it at all.”
Bad ideas are born good
“The sorry state of the savings and loan industry is one more example of the operation of Garrett Hardin's principle for soft sciences (like business, politics, economics and law) that bad ideas are born good.”
Reversing course when danger flags fly
“If, as seems likely, Hardin's principle is part of an inevitable human legacy, tragedy can be averted, partially, only by reversing course when the danger flags start flying as the cherished ideas of the past are faithfully followed.”
The mind rejects inconvenient danger signals
“Unfortunately, another perverse phenomenon interferes [in reversing course] — the tendency of the mind to reject the message from a danger signal which is inconsistent with a cherished idea.”
Damage at birth outlasts its correction
“Damage inflicted on an infant at birth impairs its subsequent life even after the people in charge of the operating room have decided that different delivery procedures would have been appropriate.”
Opportunity cost losses matter as much
“While convention doesn't require reporting of 'opportunity cost' losses to shareholders, we believe they are just as important as conventional reported losses and should be faced just as squarely.”
Long stalls lose to sprinting capital
“When other capital is sprinting, remaining in the starting blocks for a long time prevents one from ever catching the field.”
Passive stakes improve capital decisions
“We think the rationality of use-of-capital decisions is improved when the repertoire of a corporate manager includes purchases of business interests which do not augment the number of people to whom the manager can give orders.”