The hedge fund known as "Long Term Capital Management" collapsed last fall through overconfidence in its highly leveraged methods, despite I.Q.'s of its principals that must have averaged 160. Smart people aren't exempt from professional disasters from overconfidence. Often, they just run aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods.
Charlie MungerPersonally, Iโve gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically conclusions in various ways โ which, by and large, are useful โ but which often malfunction? One approach is rationalityโฆ And the other is to evaluate the psychological factors that cause subconscious conclusions โ many of which are wrong.
Charlie MungerAccounting incomes were reduced by discrepancy [ but] "the net amount paid by lawyers for lawyerly discrepancy is close to zippo. In this case, the goddess of justice was blind.
Charlie MungerDetermine value apart from price; progress apart from activity; wealth apart from size.
Charlie MungerWithout numerical fluency, in the part of life most of us inhibit, you are like a one-legged man in an ass-kicking contest.
Charlie Munger[In picking stocks] You really have to know a lot about business. You have to know a lot about competitive advantage. You have to know a lot about the maintainability of competitive advantage. You have to have a mind that quantifies things in terms of value. And you have to be able to compare those values with other values available in the stock market.
Charlie Munger