Broke Quote by Charlie Munger
“Failure to handle psychological denial is a common way for people to go broke: you have made an enormous commitment to something. You have poured effort and money in. And the more you put in, the more that the whole consistency principle makes you think, "Now it has to work. If I put in just a little more, then it will work."”
About This Quote
Source Speech: Berkshire Hathaway Annual Meeting, 2018
People deny reality and keep investing in failing projects because of sunk‑cost bias, leading to financial ruin.
In simple terms: Denial and sunk costs trap investors.
Key Takeaway
Recognize sunk costs and cut losses early.
Themes
finance
behavioral economics
psychology
Mood
cautious
analytical
Type
financial
psychological
When to use this quote
- investment decisions
- business planning
- personal finance
Key Concepts
sunk‑cost fallacy
denial
Questions to Reflect On
- How do you identify when a project is beyond repair?
- What strategies prevent sunk‑cost escalation?
A Different Perspective
The principle may not apply when emotional attachment outweighs rational analysis.
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