Corentin Derbré


Poor Charlie’s Almanack – Charlie Munger

ISBN: 1578645018
Date read: 2017-06-18
How strongly I recommend it: 10/10
(See my list of books, for more.)

Go to the Amazon page for details and reviews.

May sometimes be hard to read, but the ideas and the common sense of Charlie Munger is impressive. His checklist of models is a masterpiece. He underlines the importance of being multidisciplinary.

my notes

And the thought patterns that seem to be rewarded in one’s life are usually those which end up as part of one’s most incense convictions.

“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 warehouses of Costco.”

‘Find out what you’re best at and keep pounding away at it

In business as in life, Charlie gains enormous advantage by summarily eliminating the unpromising portions of “the chess board,” freeing his time and attention for the more productive regions. Charlie strives to reduce complex situations to their most basic, unemotional fundamentals.

I’m no genius. I’m smart in spots, and I stay around those spots.

Price is What You Pay, Value is What You Get

Develop fluency in mental models from the major academic disciplines

If you want to get smart, the question you have to keep asking is “why, why, why?”

Remember that highest and best use is always measured by the next best use (opportunity cost)

“Compound interest is the eighth wonder of the world” (Einstein); never interrupt it unnecessarily

Opportunity meeting the prepared mind: that’s the game

• How to get rich? 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.

• How to find a good spouse? What’s the best way to get a good spouse? The best single way is to deserve a good spouse because a good spouse is by definition not nuts.

• On 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.

Be reliable

Einstein: “Curiosity, concentration, perseverance, and self-criticism.” And by self-criticism, he meant the testing and destruction of his own well-loved ideas.

> If poem

When Warren lectures at business schools, he says, “I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches-representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all.”

pari-mutuel system

All right, we’ve now recognized that the market is efficient as a pari-mutuel system is efficient-with the favorite more likely than the long shot to do well in racing, but not necessarily give any betting advantage to those that bet on the favorite.

However, averaged out, betting on the quality of a business is better than betting on the quality of management. In other words, if you have to choose one, bet on the business momentum, not the brilliance of the manager.

If you sit on your ass for long, long stretches in great companies, you can get a huge edge from nothing but the way income taxes work.

How do you and Warren evaluate an acquisition candidate? “We’re light on financial yardsticks; we apply lots of subjective criteria: Can we trust management? Can it harm our reputation? What can go wrong? Do we understand the business? Does it require capital infusions to keep it going? What is the expected cash flow? We don’t expect linear growth; cyclicality is fine with us as long as the price is appropriate.”

What should a young person look for in a career? “I have three basic rules. Meeting all three is nearly impossible, but you should try anyway: . 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. I have been incredibly fortunate in my life: with Warren I had all three.

What overall life advice do you have for young people? “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. 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. Above all, live with change and adapt to it. If the world didn’t change, I’d still have a twelve handicap.”

If you get a lot of heavy ideology young – and then you start expressing it – you are really locking your brain into very unfortunate Pattern.

“The five essential entrepreneurial skills for success are concentration, discrimination, organization, innovation, and communication,” -Faraday

When you don’t know and you don’t have any special competence, don’t be afraid to say so.

He failed to recognize that what works best in most cases is to appeal to a man’s interest.

What works best for me in coping with all disappointment is what I call the Jewish method: humor.

“The man who doesn’t read good books has no advantage over the man who cant read them.” – Mark Twain

Einstein said that one of the four causes of his achievement was self-criticism, ranking right up there alongside curiosity, concentration, and perseverance.

“The company that needs a new machine tool, and hasn’t bought it, is already paying for it.”

Early Charlie Munger is a horrible career model for the young because not enough was delivered to civilization in return for what was wrested, from capitalism.

I’m not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I’ve reached that state.

“If you would persuade, appeal to interest and not to reason.” > incentivize people (Fedex)

“Whose bread I eat, his song I sing.”

For instance, a man who is so constructed that he loves admirable persons and ideas with a special intensity has a huge advantage in life.

“It is not greed that drives the world, but envy.”

Taking candy from the stock of his employer with the excuse that he intended to replace it later. The father said, “Son, it would be better for you to simply take all you want and call yourself a thief every cime you do it.”

All skills attenuate with disuse. The right antidote to such a loss is to make use of the functional equivalent of the aircraft simulator employed in pilot training. It is also essential for a thinking man to assemble his skills into a checklist that he routinely uses.

© 2018 Corentin Derbré.