Billionaire Charlie Munger Said ‘Damn Right’ I Am Rich Owning 3 Stocks—Because ‘Hell, One Will Suffice’ If You’re Not A ‘Know-Nothing Investor’

Charlie Munger didn’t need 50 stocks, a team of analysts, or a color-coded pie chart to feel rich. He needed three picks—and maybe not even that many.

At the 2017 Daily Journal annual meeting, Munger laid it out with signature bluntness: “The Mungers have three stocks. We have a block of Berkshire, we have a block of Costco, we have a block of Li Lu’s Fund, and the rest is dribs and drabs.” Then he posed the question himself: “So am I comfortable? Am I securely rich? You’re damn right I am.”

While financial planners preach diversification, Munger called that playbook unnecessary for anyone who actually understands what they’re doing. “Diversification is a rule for those who don’t know anything,” he said, referencing Berkshire Hathaway Chair Warren Buffett‘s term for casual investors: “know-nothing.” 

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Munger pushed further: “If you’re not a know-nothing investor, if you’re actually capable of figuring out something that will work better, you’re just hurting yourself looking for 50 when three will suffice. Hell, one will suffice if you do it right.”

This wasn’t a one-off rant. At the 2003 Wesco Financial annual meeting, he compared stock investing to real estate. “Suppose you were a real estate investor with a one-third interest in the best apartment complex in town, the best mall, and the best industrial property,” Munger said. “Would you feel like a poor, undiversified investor? No!” 

But with stocks, he said, people suddenly get nervous—because they’ve been taught to. “Why anyone would pay a lot of money to learn what is so obvious is beyond me. I’m serious—people get paid to teach this!” 

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Buffett has long been clear about who he considers a know-nothing investor: someone who doesn’t understand the underlying economics of a business and should avoid trying to outsmart the market. In his 1993 Berkshire Hathaway shareholder letter, Buffett wrote, “By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”

Nearly three decades later, during the 2020 Berkshire annual meeting, he doubled down. “In my view, for most people, the best thing to do is to own the S&P 500 index fund,” he said. “People will try and sell you other things because there’s more money in it if they do.”

Munger’s stance wasn’t about ego—it was about edge. If you understand the business, you don’t need 47 backups. And if you don’t, that’s fine—just don’t pretend you do. 

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Munger died in 2023 at age 99, just weeks shy of his 100th birthday. Until the end, he stuck with what he knew: Costco, Berkshire, and Li Lu. No hedging, no panic, no fluff. Three picks. Zero apologies.

But mimicking Munger’s approach isn’t as simple as buying a few recognizable stocks and waiting for them to “snowball.” These were decades-long positions, built on deep conviction, personal insight, and a tolerance for volatility that most investors don’t have. Even Buffett has stressed that the average person should avoid picking individual stocks altogether.

That’s why Buffett recommends broad exposure, like the S&P 500. And for those unsure how to start—or whether they’re more Munger or “know-nothing”—a licensed financial adviser can help clarify your options, risk tolerance, and long-term goals. Because owning one great stock can be enough. But knowing whether it should be? That takes more than guts. It takes guidance.

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