This book is about “the wits and wisdom of Charles T.Munger” and I have been re-reading it many times.
Every time I get stuck with the financial market or don’t know how to proceed with my financial independence, I open the book again and read it. It contains so much wisdom that I have continued to find it to be extremely helpful.
It shows me/reminds me what I need to do:
- Be a Business analyst, not a stock analyst, a macroeconomics analyst, etc…
- Most of the richest people in the world start or build successful companies and get rich. So if I don’t want to start a company or can’t, the next best thing is to find good businesses that I may want to start myself and buy their shares at a fair price. The return may not be as huge as the return for the founder but at the same time, you don’t take as much risk as the founder or put in that much effort.
- Avoiding “Envy“. Charlie has mentioned this many times and well, it sounds pretty straight forwards at first. But I didn’t appreciate what he is saying until I started to experience envy myself more often. I could feel the pain in my bone, the soreness in my neck, and my back. They are the symptoms and the root cause is envy. Only at those times, I appreciate what he said.
- While it may be fun to listen to pundits predicting the macroeconomics future, it may be more rewarding as investors to learn about microeconomics or how each company makes money. And from that, through “Poor Charlie’s Almanack” I got to know the book “Principles of Microeconomics” by N.Gregory Mankiw. I highly recommend this book too.
- Invert, always invert. While I read this phrase many times, I haven’t appreciated it enough and I need to do more. For example, instead of answering the question “why should I buy this stock/this company?”, I should try to answer the question “why this stock or this company is not good to buy?” and find out all the reasons.
- Learn as many different mental models as you can, basically all the main ideas/models from different disciplines like history, psychology, mathematics, physics, engineering, etc…
Through this book, I get to know many other books that I should read (and have read many of them) like:
- The little book of behavioral investing by James Montier
- Fiasco: The Inside Story of a Wall Street Trader
- Deep Simplicity: Bringing Order to Chaos and Complexity. Boy, this book is difficult to read, even when I try to get the main ideas only!
- Guns, Germs and Steel: the fates of human societies
- The selfish gene
- Influence: the psychology of persuation
- Getting to Yes
And of course, last but not least, Charlie is funny! His humor came through the eleven talks featured in this book 🙂