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Poor Charlie’s Almanack - Summary - Free download as Word Doc (.doc /.docx), PDF File (.pdf), Text File (.txt) or read online for free. This is a very brief summary of Poor Charlie’s Almanack. See full list on ebook4trader.com. The Wit and Wisdom of Charles T. Munger: Poor Charlie's Almanack, Seeking Wisdom, The Most Important Thing, and A Few Lessons for Invenstors and Managers.
Charlie Munger is Warren Buffett’s long-time partner at Berkshire Hathaway. Content to being the lesser known of the two, Munger is no less impressive. Bill Gates says that Charlie Munger “is truly the broadest thinker I have ever encountered,” and Buffett calls him the ideal partner who is “both smarter and wiser.”
Poor Charlie’s Almanack is a collection of Charlie Munger’s best advice given over 30 years, in the form of 11 speeches given as commencement addresses and roundtable talks. He covers a wide range of topics, including rationality and decision making, investing, and how to live a good life. You’ll learn why Charlie considers multidisciplinary learning vital to success, his checklist for investment criteria, and how to build a trillion dollar company from scratch.
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The best way to guard against biases is to learn what they are and how they affect cognition, then construct a checklist to go through each one and think about whether it’s affecting your current judgment.
Build a Latticework of Mental Models
Charlie Munger has learned a lot about the world, and he calls the main ideas from the major fields “mental models.” He stresses the importance of multidisciplinary learning and connecting the major ideas together in a latticework, where the ideas can interact with each other.
The inferior way to learn is to learn isolated facts that exist entirely in separate silos. You can recite the facts, but you don’t know the ideas underlying them, and you can’t apply those ideas to solve problems in real life. This is a failure of rote learning, which is common in many national education systems.
Munger argues that the superior way to learn is to learn lots of mental models, then assemble them into a connected latticework (or a network).
What are Mental Models?
You can think of “mental models” as important ideas in a field that have broad relevance outside the field itself.
For example, the idea of “critical mass” comes from physics. Within the field of physics, the idea of critical mass relates specifically to the mass needed to sustain a nuclear chain reaction—if you have less than the critical mass, a chain reaction won’t perpetuate itself. But this concept applies generally outside of physics—metaphorically, it can apply to the minimal mass needed to start any virtuous cycle, like the minimum number of users needed to get a social networking app off the ground.
Other examples of mental models include “margin of safety” from engineering, “compound interest” from math, and “feedback loops” from biology.
Learn Models from Different Fields
The best ideas in the world exist in each of the major fields. No single academic department has all the answers to all the problems. To become the most versatile problem solver, you need to collect mental models from every major field of study.
Modern academia tends to silo fields of study into isolated departments. Ideas stay narrowly defined, and experts within the field stay largely within their lane. Munger argues this is why a literature professor can be esteemed in her field but be considered unwise in other aspects of life.
When you have models from different fields working together, this can yield surprising results that other people don’t see.
A Latticework of Mental Models
As you collect more of these ideas, you will start relating them together. For example, you might see how stock market swings are a combination of psychological biases (loss aversion, social proof), feedback loops from biology, critical mass from physics, and random walks from math. These connected ideas form a latticework of mental models.
On Investing
In Poor Charlie’s Almanack, Munger doesn’t talk directly about Berkshire Hathaway’s decisions much, but he does share the general investment philosophies and practices that have made them successful over decades.
Be Patient But Decisive
Warren Buffett and Charlie Munger make successful investments because they’re able to wait patiently for great deals. Unlike many investors, they don’t mind staying inactive, even for years at a time, when they don’t see great opportunities. However, when they do see great opportunities, they bet big.
When Warren Buffett lectures at business schools, he’s known for saying that everyone would make better investments if they were given a punch card with twenty slots in it and were restricted to only twenty investments throughout their entire lifetime. Once they punched all twenty holes, they would be able to make zero additional investments. Under these conditions, investors would be much more discerning about which investments to pursue, and they’d bet big on the few investments they found.
Find High-Quality Businesses
Poor Charlie's Almanack Pdf
Beyond just looking for cheap deals, Munger looks for high-quality businesses. In sum, these are profitable businesses that have a sustainable competitive advantage and good growth prospects.
The quality of a company may even override cheapness—”a great business at a fair price is superior to a fair business at a great price.” A company that returns 18% on capital over twenty years can get amazing results, even if you pay a price that looks expensive at first.
Moats and Competitive Advantage
Munger and Buffett consider the primary factor of a great business to be an enduring competitive advantage—what they call a “moat.” Like a moat protecting a castle, the competitive advantage allows a business to resist being made obsolete by competitors or changing markets. Examples of moats include loyal branding (such as See’s Candies) or a massive distribution system that is hard to rival (such as Coca-Cola).
Berkshire Hathaway thus counsels its companies to widen their moats every year. This doesn’t necessarily mean earning more profits each year, but rather growing a company’s strategic position to weather the long term.
Management Matters
The father of value investing Ben Graham never accounted for management quality in his value investing principles, partially because he was writing to a mass audience who wouldn’t have the opportunity to talk to and assess management, and partially because he had an intrinsic distrust of management.
But Munger and Buffett believe management can make a big difference. For example, famed CEO Jack Welch made a big difference for General Electric, in ways that the manager of Westinghouse didn’t. Munger looks for management that is 1) unusually skilled and 2) trustworthy.
Valuing Companies
Of course, to earn great returns, it’s important not just to find great businesses, but also great businesses at great prices. Even a fantastic business can be a terrible investment if the price is too high.
Consider betting on a horse race. The best horse is often obvious, based on its track record, weight, health, and so on, and it’s clearly better than a sickly horse with a bad record. But the odds already reflect that—the best horse might have odds of 2 to 1, while the bad horse has odds of 50 to 1. Which is the better deal? It’s not immediately clear.
On Character and Living a Good Life
In all, Charlie Munger is said to be a man of solid character—hard-working, humble, and always learning. In his speeches, he talks often about the traits leading to a happy and productive life.
How to Live Happily
- Have low expectations.
- Have a sense of humor
- Surround yourself with the love of friends and family.
- Figure out the lifestyle that you want most. You might indeed work eighty hours a week for fifteen years to make partner at a law firm, just to get the right to do more of the same. But if you don’t, this might not be the right life for you.
- To get what you want, try to deserve what you want.
- Avoid self-pity. It’s counterproductive and doesn’t change your situation. If you don’t feel self-pity, you’ll have an advantage over many people, since it’s a common response. Munger had a friend who carried a stack of business cards, and when he heard a self-pitying comment, he’d give the person a card; the card read, “Your story has touched my heart. Never have I heard of anyone with as many misfortunes as you.”
- Be around people you admire. Don’t work under someone you don’t want to be like.
- Work hard. Munger likes the word “assiduity” because it informally means, “Sit down on your ass until you do it.”
- Anticipate trouble. You’ll better know how to avoid it.
Moral Character and Honesty
Munger cares a lot about reputation—the reputation of Berkshire Hathaway, of its owned companies, and of himself. He desires integrity from people he works with and managers of companies he wants to acquire. Companies that have a trusted brand name have a competitive advantage that can persist over time. Trust takes a long time to build, and an instant to vanish.
- “When you borrow a man’s car, you always return it with a full tank of gas.” People notice these little things.
- Track records are important, and if you develop one in an integral trait like honesty, you’ll have a big advantage in the world.
Constant Learning
Munger and Buffett are both famous for their curiosity and their voracious reading.
- “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at 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.”
- “You need to have a passionate interest in why things are happening. That cast of mind, kept over long periods, gradually improves your ability to focus on reality. If you don’t have that cast of mind, you’re destined for failure even if you have a high I.Q.”
- Spend each day trying to be a little smarter than when you woke up.
Work Hard
Success doesn’t come without hard work.
- Munger thinks that passion is more important than natural talent or brain power. Berkshire has many companies with people who are fanatics about their business.
- Munger and Buffett are both famous for reading a lot. But reading isn’t enough—you need to have the courage to choose the right ideas and do good things with them.
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‘Poor Charlie’s Almanack’ is a book with the collection of advice and talks of Charlie Munger. Charles Thomas Munger is a famous investor and businessman in America. You can download the ‘Poor Charlie’s Almanack’ eBook pdf from here for free.
Charlie Munger has given many tips about investing and leading life smoothly. His speeches are collected in one place by Peter D. Kaufman in this book. Once you read this book you will be able to solve your life problems easily.
Summary of Poor Charlie’s Almanack Book
Charlie Munger has discussed many things like decision making, investing, arguing, and many more in the book. According to him, one should think about the arguments of the opposite side and you shouldn’t have overconfidence about your own ideas. You can put yourself into a reverse situation to know the solution.
While investing you have to keep patience for grabbing a good deal and then make a bet. You mustn’t bet a lot. To become successful you have to set some principles and work according to those. Always try to accept the truth whether you like it or not. Try not to fool your own self and be true to yourself always.
People will always talk about the things you love to hear. Sometimes their talkings become unbearable but you have to train yourself to handle every situation calmly. Always learn from others’ mistakes and make a shield before doing the same mistake. Try to pick good ideas. Many mental models are also present in the book.
Also download The Total Money Makeover pdf.
Review of Poor Charlie’s Almanack
Charlie Munger is a successful businessman and many think this book is an autobiography of him. But this book is not the autobiography of Charlie Munger. Even it’s not an investing guideline. This book is a unique mixture of business and psychology. Charlie Munger shared his own principles of investing and leading life.
This book is the perfect overview of Charlie Munger’s views about life. He sometimes gave an example of his experience. He presented some mental models that will surely help you in real life for solving problems. For example, he said you must try to become a little wiser every day than the previous day. He taught many disciplines like this in the book.
In a word, it is a book that will teach you how to think and how to handle any situation. If you’re completely new to economics and want to become successful in life this book will give you the right direction. Again if you are dealing with some problems in life, this book can help you out. This book is recommended for everyone.
About the Author
The author of the book ‘Poor Charlie’s Almanack’ is Peter D. Kaufman who is both Chairman and CEO of Glenair, Inc. in Glendale, California. He is involved in many nonprofit organizations including both local and national ones.
This author used to work in a unit of Berkshire Hathaway. Charlie Munger is in a lifetime partnership with this company. In this way, Charlie Munger was a friend of Peter D. Kaufman. In 2005, he organized the talkings and disciplines shared by Charlie Munger in the book ‘Poor Charlie’s Almanack’.
Detail Information About Poor Charlie’s Almanack eBook
FAQ
Is it a book about investment?
This book includes some disciplines of investment but it is not solely a book of investment. Besides investment, principles of decision making, thinking about life, and many more are mentioned in the book. All the principles and disciplines are described by Charlie Munger.
Did Charlie Munger talk about Berkshire Hathaway in the book?
Poor Charlie's Almanack Pdf Free
There is not much talk about the company Berkshire Hathaway. Maximum advice is given from Charlie’s point of view of life.
Ratings
- Story: 4.8/5
- Engagement: 4.3/5
- Characters: 4.7/5
- Writing: 5/5
- Length of the story: 4.2/5
- Creativity: 4.4/5
Overall rating: 4.5/5
Poor Charlie's Almanack Ebook
The author made this book a life guideline with the collections of the talks of legendary Charlie Munger. And the title is given imitating Franklin’s ‘Poor Richard’s Almanack’ because Charlie is an admirer of Benjamin Franklin.
Poor Charlie's Almanack Pdf Free
This book teaches many lessons about life from which you will get benefits for sure. The lessons you can use both in your personal and work life. So download the ‘Poor Charlie’s Almanack’ eBook free from here.