. 2023. Edited by Peter D. Kaufman. Strip press.
There isn’t any shortage of recommendation on how you can improve our weight loss program. There is an “expert” for each taste: from doctors and nutritionists to congressmen (who defined pizza as a vegetable in 2011) and social media influencers. Food firms are adding their very own voice. The abundance of competing guidance is overwhelming, but common sense and the wisdom of our elders can guide us to the most effective decisions.
There can also be no shortage of guidelines to enhance our investment returns. The late Charlie Munger – long-time vice chairman of Berkshire Hathaway – offers his own recipe for investment success, and it’s rather a lot just like the common sense nutrition that defined meal times just a few many years ago. In his work, Munger presents folk wisdom about values and evaluations which have amassed over almost a century. His examples are punctuated with memorable phrases, corresponding to the usefulness of a “one-legged man in an ass-kicking contest” and a person who only has a hammer and to whom every problem looks like a nail.
While Munger, who died on November 28, 2023, knew the ingredients for fulfillment, he quickly rejected the physics envy and false precision of economic experts, in addition to the efficient market hypothesis, which requires the immediate incorporation of latest information into the market prices of securities . After all, how can we explain the incredible and enduring investment success of his and his Berkshire partner Warren Buffett when the market is perfectly efficient or success requires ever-increasing computing power? (However, attentive readers will recognize this Berkshire uses leverage and has investment tools not available to most investors; It should buy firms directly and its solid balance sheet enables tailored and profitable transactions with struggling firms – for instance Solomon brothers and Goldman Sachs).
, first published in 2005, is a brand new edition with a brand new foreword by John Collison, founding father of Stripe, Inc. (and Stripe Press). Following the unique three forewords by Buffett, Munger, and Almanac writer Peter D. Kaufman, the book comprises three introductory chapters – a “portrait” of Munger’s life, memories and anecdotes of his children, and a summary of his “way of living, Learning and Decision Making” – followed by 11 lectures given between 1986 and 2005. Munger’s final lecture has been substantially revised and expanded from three lectures given between 1992 and 1995 and serves as a bookend to the third introductory chapter. Each of the bookend chapters could function a comprehensive exposition on their very own, however the book is strengthened by the repetition of Munger’s teachings and wit. The chronological order of the lectures also gives readers insight into the event of his wisdom (the humor is there from the start). The Almanac is less a textbook than a series of heartfelt fireside chats, and just like the stories of our elders, the repetition may raise a groan, however it also ensures that the teachings endure.
Most talks are followed by a temporary reflection from Munger and a few highlights from audience query and answer (Q&A) sessions. For example, one participant asks how one can copy Berkshire’s successful model. Munger’s answer highlights the worth of wisdom fairly than formulas or shortcuts. First, Munger and Buffett’s system is just not a secret formula, but fairly a network of mental models that challenges assumptions and assesses downside risks from different perspectives. Second, they concentrate on areas where they’ve a competitive advantage, or not less than aren’t at an obstacle (hence Berkshire’s traditional reluctance to speculate in technology stocks – firms they are saying they do not understand well).
In considered one of many analogies from his big selection of interests, Munger draws on the deck of cards to display the importance of using all available models and the importance of model interaction. Successful players communicate the strengths and weaknesses of their hands through strategic bids after which exploit that information through finesse and skillful card play. Investors who’ve attended considered one of Berkshire Hathaway’s conference and annual meeting weekends may already know that Munger’s passion for Bridge is tied to the breadth of Berkshire’s investment holdings. Convention attendees could have kicked the tires of a Dairy Queen ice cream truck, a NetJets plane, or a Burlington Northern and Santa Fe Railway automotive (while wearing Justin Brands boots) after which witnessed Munger and Buffett walk past one page to assist. Range duplicate bridge match. In the world round the corner, Munger and Buffett’s market knowledge would have been vividly on display through the annual meeting’s question-and-answer session. Weaves the temporal wisdom of successive annual meetings – where questions often concentrate on current market events – right into a comprehensive and equally energetic series of life lessons and investment advice, making a philosophical companion to the live experience of a Berkshire annual meeting.
The multi-model approach involves managing downside risks, for which Munger cites algebraist Carl Jacobi (“invert, always invert”) and provides practical examples within the methodology utilized by Charles Darwin in its development. Additional lessons come from an eclectic list of tutors: Demosthenes, Jack Welch, George Bernard Shaw, BF Skinner and naturally Ben Franklin. Munger also liked the term “Lollapalooza,” by which he meant the synergistic interaction of multiple biases, effects, or models. It is unclear whether he knew musician Perry Farrell, who popularized the term more recently.
There are only just a few criticisms of the book. Munger’s style can seem dated; He relies totally on male examples and uses phrases corresponding to “the male art of betting.” But considering he lived to be 99, the reader might overlook this drawback and concentrate on his wisdom. Still, a few of Munger’s examples age higher than others. As expected, Demosthenes and Franklin age well. (It’s unclear whether Munger knew any of them.) Jack Welch, the previous CEO of General Electric, has been cited greater than once as an exemplary leader, but recent books about Welch’s leadership are crucial. Since this book is a brand new edition, Munger has no opportunity to give it some thought further.
A final but subtle criticism is that Munger often denounces the academy for a siled approach to post-secondary education, noting that it could be far more practical if universities encouraged the event of an interdisciplinary approach – a network of mental models, like his calls. Although critical of his own training, he stays a consummate example of his preferred latticework approach. It is tough to imagine that his time on the University of Michigan, Caltech, and Harvard University did nothing to further his own development in establishing the assorted mental models that he applied with such apparent success.
This book is crucial reading that can profit each investment professionals and individual investors. True devotees, including those that have attended Berkshire Hathaway’s annual meetings, may find the third edition of this book – published in 2006 as a bigger coffee table book with a phenomenal picture layout and mementos from Munger’s life and profession – value testing on the used bookstore. For the remainder of us, the re-release of Munger’s generous wit and wisdom is a celebration of nearly a century of success and deserves to be at the highest of our reading lists.
