Charlie Munger on Why Most Investors Fail | Final Interview with CNBC 2023 【C:C.M 330】

[Transcript]

CHARLIE MUNGER: If all of us had to make a living backing people in chess tournaments, where there's very little revenue to pay anybody anything, we'd all recognize we have to get into the top 7 players or something like that, or have no chance of winning, you know, chess tournaments.

BECKY QUICK: Yeah.

CHARLIE MUNGER: And everybody would be trying to play the wooden style to get the bet. But in investment picking, people think anybody can learn it who just goes to Harvard or Columbia or something. And of course, anybody can't learn it. It's like chess or mechanical ability or a lot of other abilities. It's somebody who does it a lot and has a natural attitude for it, who's the outlier, who gets the good big results. And that's what happens in the investment world. Just a few outliers make money.

Now, we've also created a whole lot of people who get the reputation of being geniuses, who run venture capital funds and so forth, and do pretty well for themselves because they get paid so outlandishly. But they don't really get — The bottom 80% of the people who invest in venture capital. When we had a row, they didn't even look at it.

BECKY QUICK: So they're just making —

CHARLIE MUNGER: People who stumbled into Sequoia in the right year were different. They got a long, long run when Sequoia didn't try and grow. And they got the advantage of milking Sequoia. But that was rare. Nowadays, everything is quite different. I do not think venture capital will win in the future the way Sequoia once did. And I don't think Sequoia will win in the future the way Sequoia once did. It's too hard. It's too damn hard.

BECKY QUICK: Meaning that it's, that they were —

CHARLIE MUNGER: There's too much failure, difficulty, accident in the world. It's really hard to have a stretch like Sequoia has had as an investment firm. Now everybody thinks if they sort of copy the method they'll get the result. And of course, It's like competing with John Wooden's example. You can compete with John Wooden's example while you in fact do something else, which is what they're doing. And of course, they're not going to get something else. They're going to get lousy results, not wooden results.
 

Source: https://youtu.be/H5Oom5Rjp_Y?si=ZEkkZkAN6WyOWcl9

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