Return to Video Archive

Charlie Munger & the Fishing Lure

Chris Davis shares Berkshire Hathaway investing legend Charlie Munger's humorous wisdom on the futility of forecasts and predictions.

Share Transcript Return to Video Archive

Disclaimers Performance Prospectuses and Forms

More videos from Davis Funds

Return to Video Archive

Charlie Munger & the Fishing Lure

One of my favorite pieces of wisdom was conveyed to me by Charlie Munger in the form of a story. When I had asked him why there is so much craziness, why so often people react to forecasts that have no predictive value? Why there's so much irrationality in their behavior?

And he said, well, once he was in Minnesota and he was buying a fishing lure. And he looked at it and he said, My god, it's pink and green and do fish really take this lure? And the old-timer behind the counter said, Well Mister, I don't sell to fish. And it's such a powerful story because often people are giving a forecast because they've been asked, not because they know.

What matters is that the people are interested in what they say, just the way they line up to read the horoscope or to visit astrologers, it's not because there's predictive value in those things, it's because people want to believe. And the astrologer or the people writing the horoscope are satisfying that market in the same way the man selling the lure was selling to people, not to fish.

This material is authorized for use by existing shareholders. A current Davis Funds prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.

Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include "forward-looking statements" which may or may not be accurate over the long term. Forward-looking statements can be identified by words like "believe," "expect," "anticipate," or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.

Davis Advisors investment professionals make candid statements and observations regarding economic conditions and current and historical market conditions. However, there is no guarantee that these statements, opinions or forecasts will prove to be correct. All investments involve some degree of risk, and there can be no assurance that Davis Advisors' investment strategies will be successful. The value of equity investments will vary so that, when sold, an investment could be worth more or less than its original cost.

Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors' products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors' payment(s) to a financial intermediary as a basis for recommending Davis Advisors.

Charlie Munger is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.

Shares of the Davis Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800-279-0279,