Charlie Munger’s Greatest Hits, Volume 3: “Wise Pilot”

Updated on

A full twelve tracks for Charlie Munger‘s third Greatest Hits album: “Wise Pilot”

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q2 2020 hedge fund letters, conferences and more

Buckle in and wise up!

1) No wise pilot, no matter how great his talent and experience, fails to use a checklist.

Ever leave the house knowing you forgot something and can’t remember what?

If you used a pilot’s checklist, that wouldn’t happen.

Movie plot:

Family of seven leaving for Christmas holiday forgets an eight-year-old son…

And hilarious hell breaks loose!

“Home Alone” (1990)

With a wise pilot's checklist no child would ever be left behind.

But then we wouldn’t have this great movie.

If you haven’t seen it, it’s LMAO funny.

View the trailer at


Bring the kids.

All of them.

2) When you borrow a man’s car, always return it with a full tank of gas.

Billy Wilder said, “No kindness goes unpunished.”

Kindness can seem like weakness.

We bite the hand that feeds.

But primates have computers in their heads.

That assay kindness and cruelty.

And repay both in kind.

Exchange kindness in marriage and it lasts.

Exchange cruelty and end up in Court.

If someone shows you a kindness, repay it.

Build Charlie’s web of trust.

A great place to live…and work.

It’s how the world works.

Until it doesn’t.

3) If you’re going to do it, get it done. Nobody cares about excuses.

Get things done and you’re known as “can-do.”

Proffer slick excuses and you’re known as “slick.”

As a physician-in-training I ferried an excuse from a polished administrator to a can-do surgeon and got an earful:

“Dr. Who?

‘Round here we just call him ‘Slick’!

You can tell Slick for me:

‘Just get it done!’”

4) Generally speaking, there is more felicity to be gained... from reducing expectations than in any other way.

Invert Charlie’s wisdom and find you already know it:

“If something is too good to be true, it’s probably not.”

Two exceptions:

1) The United States of America

2) Compound Interest

Put another way:

Reality never disappoints us.

We disappoint ourselves.

5) Being rational is a moral imperative. You should never be stupider than you need to be.

High IQ does not mean rationality.

You can have a high IQ and still be, as Charlie plainly states:


The full Charlie:

“Very high-IQ people can be completely useless. And many of them are.”

IQ and judgment are not correlated.

IQ and character are not correlated.

Sociopaths can have high IQs.

So they’re hard to spot.

But not for Charlie Munger.

As Charlie overheard at a deceitful presentation: “He’s onto us!”

6) You want to be very careful with intense ideology. It presents a big danger for the only mind you’re ever going to get.

I grew up in the 1960s.

Some of my brightest friends were sucked into intense ideologies:

Communism and communes.

Cults and gurus.

Hippie culture.

Drug culture.

“Pigeons waiting to be hooked on new religions.”---

“Sweet Charity” (1969)

Many came to a bad end:

Wasted lives, early deaths, poverty and misery.

Angry and disappointed with a world that passed them by.

As Charlie teaches, never buy an argument without being able to present the opposing side.

7) A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc.

Charlie inverts again!

Know what you want to avoid.

Not just what you want.

A virus “knows” what it wants.

A friend was about to spend a newly minted first fortune on a failing business he hoped to resurrect.

Make a proud fortune and lose it seeking a bigger fortune.

Duly warned, he passed on the deal.

The failing business promptly folded, as it was bound to do.

Sighs of relief.

Like the One Note Samba:

“You will find yourself with no show.

Better play the note you know.”

8) It takes character to sit with all that cash and to do nothing. I didn’t get where I am by going after mediocre opportunities.

Bring cash to a broker and promptly go shopping.

For stock ordinaire, closed-end funds, annuities, insurance.

Fees and commissions galore!

The world is full of “mediocre opportunities.”

As Charlie says, “The money is in the waiting.”

Value investing.

Buying a dollar for 50 cents.

Cash does not burn a hole in your pocket.

You do.

9) There should be more willingness to take the blows of life as they fall…not whining all the time and trying to fix it by whining.

Little as we may like it, life is a struggle.

A good fighter takes the punches.

Who doesn’t cheer “Rocky” (1976)?

We love tough guys for good reason.

This nation was not built by people who were “triggered.”

You don’t get to be CEO by calling HR.

10) In the history of the See’s Candy Company they [embezzlers] always say, “I’ve never done it before, and I’m never going to do it again.” And we cashier them. It would be evil not to, because terrible behavior spreads.

When we catch likeable people doing bad things we tend to give them a pass.

But what’s the chance you caught them the first time?

It gets easier to do bad things the more you do them.

And you’re more likely to be caught the more you do them.

Charlie believes in prompt action against bad behavior regardless who did it.

And rest assured they did it before.

11) If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.

Amass a modicum of wealth and you can “react with equanimity to a market decline of 50%.”

As Chris Rock said, if you have ten million and lose half in divorce, you still have five million.

But if you make thirty thousand a year and lose half,

A very different emotion arises.

12) Oh, it’s just so useful dealing with people you can trust and getting all the others the hell out of your life. It ought to be taught as a catechism… Wise people want to avoid other people who are total rat poison. And there are a lot of them.

Charlie’s fundamental algorithm is Repeat What Works!

The corollary is Stop What Doesn’t!

Apply it to love and friendship and lose frenemies.

And apply it to work and end bad associations.

Apply it to ideas and lose wishful thinking.

Do that housecleaning and distill your life.

What remains is Charlie’s web of trust.

In which we all should seek to live and work.

As Charlie always says, “It’s all so simple.”