I have been wanting to read Poor Charlie’s Almanack for some time but could not find it. Recently, I managed to borrow this book. It contains the speeches and talks by the author himself. It wants to present the readers with Charlie’s general thought processes when considering an investment.
Charlie Munger is an American investor and former real estate attorney. He is the vice chairman of Berkshire Hathaway, so he is the partner of Warren Buffett.
Poor Charlie’s Almanack has 4 chapters, an introduction, and Charlie Munger’s Recommended Books.
Chapter 1 contains 4 subchapters. These are A Portrait of Charles T Munger By Michael Broggie, Praising Old Age, Remembering, The Children on Charlie, and And Bill Gates has to Say:.
Chapter 2 is The Munger Approach to Life, Learning, and Decision Making.
Chapter 3 is Mungerism: Charlie Unscripted Highlights from Recent Berkshire Hathaway and Wesco Financial Annual Meetings By Whitney Tilson.
Chapter 4 is Eleven Talks. These talks include 1) Harvard School Commencement Speech, 2) A Lesson on Elementary, Worldly Wisdom as It Relates to Investment Management and Business, 3) A Lesson on Elementary, Worldly Wisdom, Revisited Stanford Law School, 4) Practical Though About Practical Thought?, 5) The Need for More Multidisciplinary Skills from Professionals: Educational Implications, 6) Investment Practices of Leading Charitable Foundations, 7) Philanthropy Roundtable, 8) The Great Financial Scandal of 2003, 9) Academic Economics: Strengths and Faults after Considering Interdisciplinary Needs, 10) USC Gould School of Law Commencement Address, and 11) The Psychology of Human Misjudgment.
Poor Charlie’s Almanack presents us with the general thought processes of Charlie Munger, not only in investment but in life. He uses multiple mental models which consider the relatedness and the effects from the relatedness of things under consideration. This book talks about where he found his unique models, and how he mastered them, and their application in real-world analysis and decision making.
Regarding investment, I feel like there are not a lot being talked about. The following remarks are what I find important. A great business at a fair price is superior to a fair business at a great price. We should bet on the business momentum, and not the manager’s brilliance. We also have to understand the odds and have the discipline to bet only when the odds are in our favor.
On the other hand, there are a lot of life lessons. Let me share some with you. He advises us to think in terms of tradeoffs and recognize tradeoffs in what we are dealing with. Second, the only thing that matters is the correctness of our analysis and judgment, not whether people agree or disagree with us. Third, recognize and adapt to the true nature of the world; don’t expect it to adapt to us. Fourth, the safest way to try to get what we want is to try to deserve what we want. Fifth, take a simple, basic idea and take it very seriously.
His basic guiding principles are preparation, discipline, patience, and decisiveness. He does not believe in complete fairness and believe that a little unfairness in life is good for the world. He also likes to use checklist and believes that humans should not only possess wide-ranging elementary wisdom but also go through mental checklist routines in using it. He also says that tendency is not always destiny, and knowing the tendencies and their antidotes can often help prevent trouble that would otherwise occur.
In conclusion, Poor Charlie’s Almanack contains the life wisdom of Charlie Munger. If I were to summarize in a sentence what I have learned, it would be: strike out the untouchables first, wait for opportunity to arise and bounce on it.
The eleventh talk in chapter 4 is a must-read. If you do not have the time to read the whole book, just read this chapter to get the most out of this book.
- Life’s tragedy is that we get old too soon and wise too late.
- Above all, never fool yourself, and remember that you are the easiest person to fool.
- The mind of man at one and the same time is both the glory and the shame of the universe.
- Reality is always more ridiculous than what I’m going to tell you.
- Wealth consists not in having great possessions, but in having few wants.
Interested in Poor Charlie’s Almanack?
I could not find a bookstore selling this book. If you know of any store that is selling this book, do comment in the section below.
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