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Business Charlie Munger (compiled by Peter D. Kaufman)

Poor Charlie’s Almanack

By Charlie Munger (compiled by Peter D. Kaufman) · 2005

A collection of Munger’s talks on investing, decision-making, psychology and the use of multidisciplinary mental models.

Form
Speech collection
Genre
Business writing Investment philosophy
Date
2005
Influenced by
Poor Richard’s Almanack by Benjamin Franklin
External Link
Read online for free
Tags
Mental modelsValue investingDecision-makingCognitive biasesBerkshire Hathaway

Poor Charlie’s Almanack brings together speeches, lectures and public commentary by Charlie Munger, the long-serving vice-chairman of Berkshire Hathaway. Edited by Peter D. Kaufman, the collection examines Munger’s approach to investing, business and practical judgement. Rather than treating financial analysis as a self-contained discipline, Munger argues that better decisions come from drawing on useful ideas across economics, mathematics, psychology, history and the sciences.

A central theme is the use of “mental models”: conceptual tools that help people understand complex problems from several perspectives. Munger also considers common errors in human reasoning, including psychological biases that can distort judgement when they operate together. His discussions connect these ideas with investment selection, management and everyday decision-making.

The book also addresses learning, ethics and personal conduct. Its title refers to Benjamin Franklin’s Poor Richard’s Almanack, reflecting Munger’s interest in practical knowledge, self-education and principles that can be applied across different areas of life.

Quotes

“In my whole life, I have known no wise people (over a broad subject matter) who didn’t read all the time—none, zero. You’d be amazed how much Warren reads—and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“So you have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“If anything, I now believe even more strongly that reliability is essential for progress in life and while quantum mechanics is unlearnable for a vast majority, reliability can be learned to great advantage by almost anyone.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Addiction can happen to any of us through a subtle process where the bonds of degradation are too light to be felt until when they are too strong to be broken.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“The great defect of scale, of course, which makes the game interesting, so that the big people don’t always win—is that as you get big, you get the bureaucracy.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“You don’t need to take the last dollar.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Choose clients as you would friends.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Take a simple idea and take it seriously.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“I find it quite useful to think of a free market economy—partly free market economy—as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who specialize in some narrow niche can do very well.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“In business we often find that the winning system goes almost ridiculously far in maximizing and/or minimizing one or a few variables—like the discount warehourses of Costco.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“If you have competence, you pretty much know its boundaries already. To ask the question [of whether you are past the boundary] is to answer it.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Our game is recognize a big idea when it comes along, when one doesn’t come along very often. Opportunity comes to the prepared mind.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“The life of Darwin demonstrates how a turtle may outrun a hare, aided by extreme objectivity, which helps the objective person end up like the only player without a blindfold in a game of Pin the Tail on the Donkey.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“I’m afraid that’s the way it [reality] is. If there are twenty factors and they interact some, you’ll have to learn to handle it—because that’s the way the world is. But you won’t find it that hard if you go at it Darwin-like, step by step with curious persistence. You’ll be amazed at how good you can get.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“If you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply. Even if they don’t understand your reason, they’ll be more likely to comply.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“At Harvard Business School, the great quantitative thing that bonds the first-year class together is what they call decision tree theory. All they do is take high school algebra and apply it to real-life problems. And the students love it. They’re amazed to find that high school algebra works in life.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“If you don’t get elementary probability into your repertoire, you go through a long life like a one-legged man in an ass-kicking contest.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“The way to win is to work, work, work, work and hope to have a few insights. And you’re probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It’s just that simple.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“If you want to change behaviors, you have to change motivations.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Trying to minimize taxes too much is one of the great standard causes of really dumb mistakes.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“You’re much more likely to do well if you start out to do something feasible instead of something that isn’t feasible. Isn’t that perfectly obvious?”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Biological creatures ordinarily prefer effort minimization in routine activities and don’t like removals of long-enjoyed benefits.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day, and at the end of the day—if you live long enough—like most people, you will get out of life what you deserve.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

“Mankind invented a system to cope with the fact that we are so intrinsically lousy at manipulating numbers. It’s called the graph.”

Charlie Munger · Poor Charlie’s Almanack, 2005 · Primary source

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Charlie Munger

32 quotes · 3 works · 63 themes · 160 tags
Quotes
“If anything, I now believe even more strongly that reliability is essential for progress in life and while quantum mechanics is unlearnable for a vast majority, reliability can be learned to great advantage by almost anyone.”“I think a life properly lived is just learn, learn, learn all the time.”“Addiction can happen to any of us through a subtle process where the bonds of degradation are too light to be felt until when they are too strong to be broken.”
Works
2017 Berkshire Hathaway Annual Meeting 2017Daily Journal Corporation Annual Meeting 2020
Themes
Preparation for rare opportunitiesContinuous learningReading as a habit
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