How could economics not be behavioral? If it isn't behavioral, what the hell is it?
Charlie MungerRead
You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing.
Interpretation
What this quote means
Investing involves recognizing opportunities where the value is underestimated, and it requires knowledge to identify these opportunities.
The quote by Charlie Munger encapsulates the essence of value investing, which focuses on finding investments that are priced below their intrinsic value. It highlights that successful investing is not merely luck; rather, it is a calculated gamble that demands a deep understanding of the market and the companies involved to distinguish genuine opportunities from misleading ones.
Themes
InvestingValueGambleKnowledgeOpportunity
In practice
Example use cases
In a discussion about stock market strategies, one could use this quote to emphasize the importance of thorough research.
More from Charlie Munger
All quotes βThe world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame.
Charlie MungerRead
I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart.
Charlie MungerRead
Economics is in many respects the queen of the soft sciences. It's expected to be better than the rest. It's my view that economics is better at the multi-disciplinary stuff than the rest of the soft science. And it's also my view that it's still lousy.
Charlie MungerRead
Look at this generation, with all of its electronic devices and multitasking. I will confidently predict less success than Warren, who just focused on reading.
Charlie MungerRead
Economics profession, they've been - they've been confident in various formulas, but economics is not physics. The same formula that works in one decade doesn't work in the next. Economics is a difficult subject.
Charlie MungerRead
Similar quotes
Just because you buy a stock and it goes up does not mean you are right. Just because you buy a stock and it goes down does not mean you are wrong.
Peter LynchRead
As time goes on, I get more and more convinced that the right method of investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.
John Maynard KeynesRead
Read Ben Graham and Phil Fisher read annual reports, but don't do equations with Greek letters in them.
Warren BuffettRead
Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to 'earning power' and assume that prosperity is equivalent to safety.
Benjamin GrahamRead
Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn't count. If you are right about a business whose value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables.
Warren BuffettRead
To be an investor you must be a believer in a better tomorrow.
Benjamin GrahamRead