I recently read the book 'Poor Charlie's Almanack - The Wit and Wisdom of Charles T. Munger (famously known as Charlie Munger).
Warren Buffet would not have achieved success without Charlie Munger with him. This book is about the life of Charlie Munger, his approach to learning, investing, his speeches, and much more.
The real joy of studying Warren and Charlie is not that one can learn a great deal about how to compound money at a high rate for an extended period- though this certainly is a nice side benefit! Rather, by absorbing their teachings, one will gain a far deeper understanding of the human condition, the state of the world, how to think rationally, and most importantly, how to better lead a life of integrity, happiness, and kindness (here's a hint: these characteristics are intertwined).
This post is gonna be a little long (8 minutes read), so hang on.
My learnings from this book:
- Charlie Munger in his own words would tell you:
- Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you little temporary unpopularity with your peer group...then to hell with them.
- Warren Buffet on the Choice of Partner:
- Look first for someone both smarter and wiser than you are. After locating him (or her), ask him not to flaunt his superiority so that you may enjoy acclaim for the many accomplishments that sprang from his thoughts and advice. Seek a partner who will never second-guess you nor sulk when you make expensive mistakes. Look also for a generous soul who will put up his own money and work for peanuts. Finally, join with someone who will constantly add to the fun as you travel a long road together.
- Charlie on being a partner:
- A partner, ideally, is capable of working alone. You can be a dominant partner, subordinate partner, or an always collaborative equal partner. People couldn't believe that I suddenly made myself a subordinate partner to Warren, but there are always people who will be better at something that you are. You have to learn to be a follower before you become a leader. People should learn to play all roles.
- Charlie Munger on being rich:
- I wanted to get rich so I could be independent, like Lord John Maynard Keynes. Independence is the end that wealth serves for Charlie, not the other way around.
- Charlie's parents encouraged reading and gave each of their children several books at Christmas. He says,
- 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 how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out.
- Charlie on attracting clients:
- It's the work on your desk...It's the work on your desk. Do well with what you already have and more will come in.
- Charlie, a Harward Law graduate had his own law firm initially. He reminds the firm's attorney:
- You don't need to take the last dollar and choose clients as you would friends.
- The best Armour of Old Age is a well-spent life preceding it.
- A Willingness to Change Mind:
- Charlie has developed an unusual additional attribute- a willingness, even an eagerness, to identify and acknowledge his own mistakes and learn from them. As he once said, "If Berkshire has made modest progress, a good deal of it is because Warren and I are very good at destroying our own best-loved ideas. Any year that you don't destroy one of your best-loved ideas is probably a wasted year."
- Fundamental guiding principals:
- Charlie counts preparation, patience, discipline, and objectivity among his most fundamental guiding principles. He will not deviate from these principles, regardless of group dynamics, emotional itches, or popular wisdom that "this time around it's different."
- Jesse Livermore on making money said, "The big money is not in the buying and selling...but in the waiting."
- At the 2004 Annual General Meeting of Berkshire Hathaway, a young shareholder asked how to succeed in life. Charlie chimed, "Don't do cocaine. Don't race trains. And Avoid AIDS situations."
- On Independent Thinking:
- Warren Buffett- Apply logic to help avoid fooling yourself. Charlie will not accept anything I say just because I say it, although most of the world will.
- Richard Feynman- Never fool yourself, and remember that you are the easiest person to fool.
- Charlie Munger on Focus: Keep things simple and remember what you set out to do
- Remember that reputation and integrity are your most valuable assets- and can be lost in a heartbeat
- Guard against the effects of hubris and boredom
- Don't overlook the obvious by drowning in minutiae
- Be careful to exclude unneeded information or slop: "A small leak can sink a great ship"
- Face your big troubles: don't sweep them under the rug
- Charlie on track records:
- I think track records are very important. If you start early trying to have a perfect one in some simple things like honesty, you're well on your way to success in this world.
- Charlie on paths in life:
- I wish I knew where I was going to die, then I'd never go there.
- Poem: Avoiding life's Pitfall by La Kipling:
- Learning from John Wooden:
- Learning from Benjamin Franklin:
- Charlie on Honesty:
- If you tell the truth, you don't have to remember your lies.
- Charles Darvin on Adaptation:
- It's not the strongest of the species that survives, nor the most intelligent, but the most responsive to change.
- What should a young person look for in a career?
- Charlie Munger answers- I have three basic rules.
- Don't sell anything you wouldn't buy yourself.
- Don't' work for anyone you don't respect and admire.
- Work only with people you enjoy.
- What overall life advice do you have for young people?
- Charlie Munger answers-
- 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. At the end of the day- if you live long enough- most people get what they deserve.
- Life and its various passages can be hard, brutally hard. The three things I have found helpful in coping with its challenges are:
- Have low expectations.
- Have a sense of humor.
- Surround yourself with the love of friends and family.
- Investment Advice by Charlie:
- The Importance of Temperament, Patience, and Curiosity
- (One of the key elements to successful investing is having the right) temperament- most people are too fretful; they worry too much. Success means being very patient, but aggressive when it's time. And the more hard lessons you can learn vicariously rather than through your own hard experience, the better.
- You need a lot of curiosity for a long, long time.
- 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 higher IQ.
- Investing focus:
- Our investing style has been given a name- focus investing- which implies ten holdings, not one hundred or four hundred.
- Our game is to recognize a big idea when it comes along, one doesn't come along very often. Opportunity comes to the prepared mind.
- We read a lot. I don't know anyone who's wise who doesn't read a lot. But that's not enough. You have to have a temperament to grab ideas and do sensible things. Most people don't grab the right ideas or don't know what to do them.
- Avoid debt:
- Once you get into debt, it's hell to get out. Don't let credit card debt carry over. You can't get ahead paying eighteen percent.
- On Margin of Safety:
- Munger's Three Great Lessons of Investing:
- Warren Buffet quotes:
- In investing, just as in baseball, to put runs on the scoreboard, one must watch the playing field, not the scoreboard. All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock.
- Benjamin Franklin quoted:
- Compound interest- the stone that will turn all your lead into gold...Remember that money is of a prolific generating nature. Money can beget money, and its offspring can beget more.
- Charlie on An Investing Principles Checklist:
- No wise pilot, no matter how great his talent and experience, fails to use his checklist.
 |
You may contact me in case you need to ask or tell me something.
I am waiting to hear from you.
Thank you very much for your time!
With respect,
Aaditya Chhajed
CA, CFA(US) All Levels Cleared, MCom
Aaditya Chhajed
CA, CFA(US) All Levels Cleared, MCom
E: chhajedaaditya@gmail.com
M: +91-9404055222.
M: +91-9404055222.
Instagram: @chhajedaaditya
Aaditya is the founder of Aaditya Chhajed Financial Advisory Services, a Financial Planning and Wealth Management Firm in Pune.
He loves helping family, friends, and, clients make better financial decisions. He believes learning is perpetual.
He loves reading books, traveling around the world.
He is a commerce postgraduate and Chartered Accountant. He has also cleared all levels of CFA(US) in the first attempt.
Investors should seek the advice of their financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. Future estimates mentioned herein are personal opinions and views of the author. This post is not a recommendation to buy or hold or sell securities. Investments are subject to market risks. Please read all investment-related documents carefully.
Comments