Cost Quote by Charlie Munger
“We're guessing at our future opportunity cost. Warrenis guessing that he'll have the opportunity to put capital out at high rates of return, so he's not willing to put it out at less than 10% now. But if we knew interest rates would stay at 1%, we'd change. Our hurdles reflect our estimate of future opportunity costs.”
About This Quote
Source Speech: 1995 Annual Shareholder Meeting, Berkshire Hathaway
We base decisions on expected future returns; if rates fall, we would act differently.
In simple terms: Decisions depend on expected future returns.
Key Takeaway
Adjust strategies as expectations change.
Themes
finance
decision‑making
opportunity cost
risk tolerance
Mood
cautious
analytical
Type
advisory
financial
When to use this quote
- investment planning
- budgeting
- capital allocation
- interest rate forecasting
Key Concepts
expected return
opportunity cost
rate sensitivity
Questions to Reflect On
- How do you account for uncertainty in forecasts?
- What safeguards protect against wrong assumptions?
A Different Perspective
Assumes accurate forecasts; mis‑estimates can mislead.
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