"All right, J.D., I'll give you all I've got." This was all he said, but I went home that night relieved of anxiety. As it turned out, we received the check of the Liverpool, London & Globe Insurance Company for the…
"All right, J.D., I'll give you all I've got." This was all he said, but I went home that night relieved of anxiety. As it turned out, we received the check of the Liverpool, London & Globe Insurance Company for the…
Adam Smith:The Wealth of Nations, Book II, Chapter III, Paragraph 838
Adam Smith《The Wealth of Nations》· Book II, Chapter III · Investing
This expense, it may be said, indeed, not being in foreign goods, and not occasioning any exportation of gold and silver, the same quantity of money would remain in the country as before. But if the quantity of food and clothing which were thus consumed by unproductive, had been distributed among productive hands, they would have reproduced, together with a profit, the full value of their consumption. The same quantity of money would, in this case, equally have remained in the country, and there would, besides, have been a reproduction of an equal value of consumable goods. There would have been two values instead of one.
"All right, J.D., I'll give you all I've got." This was all he said, but I went home that night relieved of anxiety. As it turned out, we received the check of the Liverpool, London & Globe Insurance Company for the…
My first promotion was my being chosen, in 1736, clerk of the General Assembly. The choice was made that year without opposition; but the year following, when I was again propos'd (the choice, like that of the members,…
21:00 Figures · Investing · Modern investor letters
Charlie Munger:Accounting Is Only an Approximation
Charlie Munger《A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business》· Accounting and its limitations · Investing · Cognition · Decision
But you have to know enough about it to understand its limitations—because although accounting is the starting place, it's only a crude approximation.
Accounting is the starting point of analysis, but only a crude approximation.
Context
Munger did not dismiss accounting; he warned that it is the starting point of analysis, not reality itself. Estimates such as depreciation schedules and write-downs can pull reported numbers away from economic truth. Understanding those limits matters more than memorizing more ratios.
Today's question
When did you last trust financial statements completely—and which estimates were buried in those numbers?
"All right, J.D., I'll give you all I've got." This was all he said, but I went home that night relieved of anxiety. As it turned out, we received the check of the Liverpool, London & Globe Insurance Company for the…