The Timeless Investing Wisdom of Charlie Munger,
Buffett’s No. 2
https://www.nytimes.com/2023/12/06/opinion/charlie-munger-warren-buffett.html
Peter Coy:
Lollapalooza effects “can make you rich, or they can kill you,” Munger wrote in his Benjamin Franklin-style “almanack.” As I understand it, his advice is to minimize the risk of bad lollapaloozas because they destroy so much value that even good lollapaloozas won’t be enough to dig you out of the hole you’re in. Math is unforgiving that way: If you go down 80 percent and then up 80 percent, you will still be down 64 percent. …
To get the good lollapaloozas and not the bad ones requires two things, from what I can glean from Munger’s book and Berkshire Hathaway’s famous annual shareholder letters. One is patience to wait for good opportunities, and the other is plentiful available cash when those opportunities finally present themselves.
https://www.nytimes.com/2023/12/06/opinion/charlie-munger-warren-buffett.html
Peter Coy:
Lollapalooza effects “can make you rich, or they can kill you,” Munger wrote in his Benjamin Franklin-style “almanack.” As I understand it, his advice is to minimize the risk of bad lollapaloozas because they destroy so much value that even good lollapaloozas won’t be enough to dig you out of the hole you’re in. Math is unforgiving that way: If you go down 80 percent and then up 80 percent, you will still be down 64 percent. …
To get the good lollapaloozas and not the bad ones requires two things, from what I can glean from Munger’s book and Berkshire Hathaway’s famous annual shareholder letters. One is patience to wait for good opportunities, and the other is plentiful available cash when those opportunities finally present themselves.