Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sides show a large profit from the same trade.
Charlie MungerNever, ever, think about something else when you should be thinking about the power of incentives.
Charlie MungerOur approach has worked for us. Look at the fun we, our managers, and our shareholders are having. More people should copy us. It's not difficult, but it looks difficult because it's unconventional - it isn't the way things are normally done. We have low overhead, don't have quarterly goals and budgets or a standard personnel system, and our investing is much more concentrated than average. It's simple and common sense.
Charlie MungerIt's human nature to extrapolate the recent past into the future, but it's terrible that managements go along with this.
Charlie Munger