Charlie Munger passed away in November aged 99 years old. The legendary investor is mostly known as investing partner of Warren Buffet. Buffet is richer and more known but it was Charlie's ideas, thoughts and speeches that captivated the investing world when they were presented in a book: Poor Charlie's Almanack: The wit and wisdom of Charles Munger. I came across the book around mid 2010s and it ended up becoming one of my favorite books on investing and generally how to think about life. It is a collection of speeches and ideas by Munger. When I first read it, i jotted down many ideas i gained from the book. This is not a typical blog post but just a compilation of ideas from the book: the greatest hits.
Frivolous – fun, care-free, not being entangled with trappings of modern consumerism - use the bus, eat simply, exercise simply, enjoy simple truths/fun, invest constantly.
Lollapalooza effect: a term coined by Munger to loosely mean combination of curiosity, perseverance, concentration, self-criticism, applied through prism of multidisciplinary mental models which might lead to significant unexpected outcomes. In my own way I'm reminded of another concept - FLANEURING – strolling, get lost intentionally, soaking in, free thinking, when in a new city, place, try wandering around freely, or when walking home, use a different route once in a while. In essence it might be aimless, that is the aim. you might find inspiration from unexpected places.
Success is not linear: inputs and outputs do not match. Aim for extreme maximization in something you are good at or extreme minimization. Concept of breakpoint or critical mass: aim for combinations that add and put on more pressure or give you better chances by accumulation. Flip thinking backwards and forwards to see missing pieces.
On getting clients: the best source of new clients is the work on your desk - do your best with what you have and get referrals. Choose clients as you'd do friends.
Be friends with the eminent dead - read biographies, ideas of those who came before you. Pride in a job well done is vastly constructive and important. As you pat yourself on the back, you improve your future conduct. Remembrance of past good actions is good for the soul. At old age, what will make you happy is knowing you did good work.
Retire at 50? Never. Let's start with what Marcus Cicero says - if you live right, the earlier parts of your life are the inferior not the other way round. Don't necessarily aim to retire at 40 after you've made your fortune - aim for a long, fulfilling life doing what you enjoy. Compound interest - do small things well and let them compound over time. When you're finished changing, you're done — Benjamin Franklin. Always be curious, learn, change.
Cicero again: the best a young man can wish for is to get old before he dies. Patience and gratitude are the greatest of all virtues.
Recipe for living a miserable life (Munger commencement speech 1986): 1. Ingesting chemicals in an effort to alter mood/perception. 2. Envy. 3. Resentment. 4. Be unreliable.
Financial success: Being prepared on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often drastically improve the financial results of that lifetime. Never miss an opportunity, but for you to do that you have to wait and prepare. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits with a curious mind that loves diagnosis involving multiple variables.
INVERT, ALWAYS INVERT - best way to learn something is backwards. Eliminate what does not work first - avoid catastrophic mistakes. Best way to learn is to try and look for theories that disprove what you already know. A turtle may outrun the hare aided by extreme objectivity. Great investors do not buy the best stocks, they start by eliminating and avoiding the worst stocks. First thing is to completely eliminate what can result in ruin – success is more about avoiding bad decisions than making the right ones.
The big money is not in buying and selling, but in buying and waiting. More peace of mind, less transactional costs and taxes, probability of windfall. 'It takes character to sit there with cash and do nothing. I did not get where I am by going after mediocre opportunities.' - Munger.
Ethical practices aren't good because they pay; they pay because they are good. The safest way to try to get what you want is to try to deserve what you want. The acquisition of wisdom is a moral duty. Simple ideas, big life. Better roughly right than precisely wrong.