Appraisal Quote by Charlie Munger
“The hedge fund known as "Long Term Capital Management" collapsed last fall through overconfidence in its highly leveraged methods, despite I.Q.'s of its principals that must have averaged 160. Smart people aren't exempt from professional disasters from overconfidence. Often, they just run aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods.”
About This Quote
Source Speech: Annual Shareholder Meeting, Long Term Capital Management, 1998
Even highly intelligent, well‑educated people can fail when overconfidence drives them to take excessive risk.
In simple terms: Overconfidence can cause smart people to fail.
Key Takeaway
Beware overconfidence and test assumptions.
Themes
finance
psychology
risk management
leadership
Mood
cautious
reflective
Type
advisory
educational
When to use this quote
- investment strategy
- risk assessment
- team hiring
- performance review
- educational workshops
Key Concepts
overconfidence
leverage
decision bias
Questions to Reflect On
- What checks can curb overconfidence?
- How can teams improve risk awareness?
A Different Perspective
Leverage can amplify losses as well as gains.
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