5 Key quotes by Charlie Munger on value investing and creating wealth

A renowned author, businessman and investor, Charlie Munger is the vice chairman of Berkshire Hathaway and popularly known to be Warren Buffett’s partner. With layers of experience in the world of investing and wealth creation, Charlie Munger has authored several books which have proven to be great learnings for aspiring investors and successful wealth creators. Read 5 Key quotes by Charlie Munger that can help you understand the nuance of value investing and help take a wise call.

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

A very profound quote by Charlie Munger, the real message in the quote is to be patient with our investments. Usually, investors respond to rapid market movements with active buying and selling; focusing more on the latter and compromising on sound investment strategies that can deliver good returns in the long run. Also, it is interesting to note that the term ‘waiting’ in the quote can be well explained with the ‘Power of Compounding’ where regularly investing can help you achieve your financial goals or ‘the big money’ as what is quoted

“Spend each day trying to be a little wise than you were when you wake up.”

This quote by Charlie Munger comes with a direct message of learning and enhancing our knowledge on value investing keep yourself. While it is right to be committed to our investments, it is equally vital to update your knowledge on the different mutual fund schemes, different avenues available for investing, whether or not your financial goals are aligned with the scheme you are thinking to invest in. The more we learn, the better we get our investment-making decisions

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.”

As quoted by Charlie Munger, it is popularly believed that while it is wise to keep a periodic track of your equity portfolio and keep yourself aware on the varying market movements, it’s unwise to frantically respond to how the market is faring, especially during a downslide. This kind of behaviour has a detrimental effect on the investors’ equity portfolio where the investor is in the pursuit to redeem his/her investments either in fear or greed

“Simplicity has a way of improving performance by enabling us to better understand what we are doing.”

Charlie Munger believes that there’s nothing more important than knowing the simple fact of ‘why’ and ‘how’ to invest. As an investor, you must be fully cognizant on what you’re aiming to achieve, i.e. financial goals, gauge your risk appetite &investment horizon, and assess your investible surplus along keeping other minor details in mind. These may sound too complicated, but are very simple to follow. Keeping these factors in mind makes wealth creation a lot simpler and beneficial

“All intelligent investing is value investing, acquiring more than you are paying for. You must value the business in order to value the stock.”

The quote clearly implies that in value investing despite the price we pay; it is the value that we get. Equity investing is all about determining the price-value gap and acting accordingly. Further, every stock is nothing but a piece of the underlying business of the company. Hence, to know the value of the stock, one needs to value the underlying business

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