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10 Nuggets of Investing Wisdom From the Late, Great Charlie Munger That Warren Buffett Especially Liked

The world lost an investing legend on Tuesday. Charlie Munger, Vice-Chairman of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and longtime business partner of Warren Buffett, passed away at the age of 99.

Munger was known for his witty -- and profound -- remarks. In the most recent letter to Berkshire Hathaway shareholders, Buffett highlighted some of his favorite Munger quotes. Here are 10 nuggets of investing wisdom from the late, great Charlie Munger that Buffett especially liked.

Warren Buffett.

Image source: The Motley Fool.

1. "The world is full of foolish gamblers, and they will not do as well as the patient investor."

Munger never minced words in pointing out what he thought were foolish gambles. For example, he once compared cryptocurrencies to "venereal disease." On the other hand, he was the epitome of a patient investor. And his approach made him a multibillionaire.

2. "If you don't see the world the way it is, it's like judging something through a distorted lens."

This quote from Munger underscores a problem that can affect some investors. It's easy to look only for what you want to see, rather than what's really there.

3. "If you don't care whether you are rational or not, you won't work on it. Then you will stay irrational and get lousy results."

Munger knew that emotions must be put aside when making decisions about investments. He thought that Benjamin Graham hit the nail on the head with his description of the fictional "Mr. Market" -- who often behaves irrationally by selling at a ridiculously low price and buying at a ridiculously high price.

4. "Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage."

Exercising patience was a frequent theme for Munger. He once aptly stated, "The big money is not in the buying and the selling but in the waiting."

5. "Don't bail away in a sinking boat if you can swim to one that is seaworthy."

Investors shouldn't equate patience with doing nothing, though. Munger fully recognized that there were times when the best course of action was to cut his losses by selling a stock and reinvesting the money in a better alternative.

6. "A great company keeps working after you are not; a mediocre one won't do that."

Buffett stated on several occasions that he and Munger were "business-pickers," rather than stock-pickers. Munger would almost certainly agree. He focused on investing in great businesses and avoiding not-so-great companies.

7. "Warren and I don't focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time."

It's not surprising that Buffett included this quote in his latest letter to Berkshire shareholders. When you ignore the short-term stock market gyrations and focus on buying and holding great stocks over the long term, your chances of success increase significantly.

8. "There is no such thing as a 100% sure thing when investing."

Keeping this warning from Munger in mind could spare investors a lot of pain. He went on to add that this is why "the use of leverage is dangerous."

9. "You don't, however, need to own a lot of things in order to get rich."

Munger realized that it's the relatively few big winners that make investors the most money over the long run. For example, he was a huge fan of Costco -- one of only three stocks in his personal portfolio. The other two, by the way, were Berkshire Hathaway and newspaper publisher Daily Journal Corporation.

10. "You have to keep learning if you want to become a great investor. When the world changes, you must change."

Consider the tremendous amount of change that occurred during Munger's lifetime. Yet he continued to stay abreast of new developments. As a case in point, he convinced Buffett years ago to invest a big chunk of Berkshire's money in Chinese electric-vehicle maker BYD. The world will change a lot over the next 99 years, too. The investors who keep learning and adapting will be the biggest winners.

Thinking and laughing

At the end of his list of Munger quotes in the Berkshire Hathaway shareholder letter, Buffett wrote: "I never have a phone call with Charlie without learning something. And, while he makes me think, he also makes me laugh."

I suspect many of us who never met Munger in person would agree with those sentiments. He always made us think and frequently made us laugh.

Rest in peace, Charlie. You will be missed.

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Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends BYD, Berkshire Hathaway, and Costco Wholesale. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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