Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger
Edited by Peter D. Kaufman. Published by Stripe Press in 2023.
When it comes to improving our diets, we’re bombarded with advice from all angles. From experts like doctors and dieticians to politicians and influencers, everyone has an opinion. In the midst of this information overload, the wisdom of our elders can often be the most valuable guide.
Similarly, in the realm of investments, there is no shortage of recommendations on how to achieve better returns. The late Charlie Munger, renowned vice chair of Berkshire Hathaway, shares his recipe for investment success in a way that harkens back to the common-sense approach of yesteryears.
In Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger, Munger dispenses his folksy wisdom on values and valuation, acquired over nearly a century. His anecdotes are peppered with memorable phrases that linger in the mind, such as likening a situation to “a one-legged man in an a**-kicking contest.”
Munger, who passed away on 28 November 2023, was a vocal critic of the false precision often found in financial circles. He dismissed notions like the efficient market hypothesis, questioning how he and Warren Buffett achieved their exceptional investment success if the market always priced in new information efficiently. It’s clear that their approach, including leveraging their positions and utilizing unique investment tools, sets them apart from the average investor.
Poor Charlie’s Almanack, originally released in 2005, has been reissued with a new foreword by John Collison, founder of Stripe, Inc. Three introductory chapters provide insight into Munger’s life and philosophies, while the main content consists of 11 talks he gave between 1986 and 2005. The arrangement of these talks showcases the evolution of his wisdom and wit over time, offering readers a comprehensive view of his investment philosophy.
Each talk is followed by Munger’s reflections and highlights from audience Q&A sessions, providing further depth to his ideas. His emphasis on wisdom over formulas and his multi-model approach to investing challenge the conventional narrative of financial success.
Munger’s use of analogies, such as comparing investing to the card game bridge, adds a unique flavor to his insights. He emphasizes the importance of using all available models and understanding their interaction, much like skilled bridge players communicate and leverage their hands in the game.
Poor Charlie’s Almanack is a treasure trove of timeless wisdom, with Munger drawing lessons from an eclectic mix of thinkers and leaders. While some of his examples may seem outdated, his core message of wisdom over shortcuts remains relevant.
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Disclaimer: The views expressed in this blog are the opinions of the author(s) and should not be considered as investment advice. They do not necessarily represent the views of CFA Institute or the author’s employer.
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