Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition

552 Pages·2005·176.05 MB·English

by  Charles T. Munger

(,opvnght O 2005. l(XXr lrr PCA Publicrrrion. L.1,.(1.
.\bridgcd edition 2005. sccond printing Z(X)(r
flxpandccl scconrl crlitiort 2006. secortd printing 2007
Erpandccl tlrirtl cLlirion l0()8
Expandccl thirrl ctlition. second prirtrirrg 3()0E
Expanclcd thirrl c,tlition. third printing 2(X)()
Iirpanclccl thirrl cdition, tburth printing 2010
E,rpanclcd tlrirtl cdition, filth printing 201 I
Erpantictl rhird crlition. sirth printirrg 201 1
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For
Charles Munger
who, in his own words, would tell you:
'Acquire utorldly uisd.om and adjust your behauior
If
accordingljr. your new behauior giues loa a linle
temporar! anpopularity utith your peer grotlp...
tben to bell utith tbern."
at.,':a
rttal by Ciartes T foIunger
Aging.........
Age: Mu*ger's Reflections on ......27
Charlie......
The Children on .....39
il;;"'#'; Making
Learning, and Decision .......s2
",*,
w Berfrsfiirv Hatharoay and Wesco Financial annual meetings)
Speech......
Harvla Comnencement .'..............150
,f
:*_' j fchool
\;*'i:' ::'-'-:=--;' -
1\-" -.
Revisited
on Elementary WorldlyWisdom, """""""""2?0
l1**.,,,,,",,.,,,,$,,Rf*on
t;ffim*_
.4SdFdi ',,
4. Practical Thought About Practical Thoughtl.. ....278 11. The Psychology of Human Misjudgment........40
5. Harvard Law School Fiftieth Reunion Address..... ................302 Appendixes
6. Investment Practices of Leading Charitable Foundations...32Z I. Recommended Reading Material.... ............ 499
7. Philanthropy Roundtable ....................340 II. Articles, Editorials, and Opinion Pieces .....502
8. The Great Financial Scandal of 2003 ...................356 Index ................522
Economics...............
9. Academic ............374
10. USC Gould School of Law Commencemenr Address...... ......420
==Acknowledgments
his book is a survey of Charles T, Munger: his
approach to learning, decision maki^9, investing,
his speeches, his "zingers," and more. -['he i''rpctus firr the
book came from rhe many people who, over the yezrrs, har''e said thcv u'ished one existccl-
and have done so with ever-increasing vigor at Berkshire and \\esco sharcholder mccrings. rrt
dinner parties, on message boards, and rnanv other placcs. Hearing this clitn'ror, vour cclitor.
Peter Kaufman, suggested to \\hrren Btrffett that a book be done and ll'ns ct'tcotrragecl to takc
it upon himself to make it happen. What you are about to re:rcl is the restrlt.
Illustrator and caricaturc artist Ed Wexler has made caricatr,rrc clrarvings of each contributor
to the projecr and has also produced several dozcn other illustrations throughotrt thc
book. We hopeyouenjoyallofhislr,orkasmuchaswedo. Sprccial recognitionisalsodue
Whitney'l'ilson, rvho compilecl the N'Iungerisms section; Nlichacl Broggie, the attthor of oLrr
biographical portrait of Charlic; and Carol Loomis, r,i'ho edited ccrtirin sections of thc book
(and on multiple occasions savcd the editor fron-r himself.)
The production team included, fiom left to right (back row), Tiavis (iallup, Carl liootc,
Scott Rule, Dlr'ight Tbn-rpkins, N,lichael Broggie, Stcvc Nlull, (miclcllc rou') Pirmela Koch,
Eric Harrman-Birge, Paul Hartman, (lharles Belser, licl Wexler, (fror-rt rou') \\rl-ritnev'l'ilson,
Nlarcus Kaufman, Pt:ter Kaufman, (larol Loomis, I)cbbie Ilosanek, ancl f)oerthe Obcrt.
&: Finally, if you enjov readingPoorCltarlit'.s Alnrana* half as rnuch as vve enjovccl putting it
together, we will considcr our efforts a distinct success. In cverv respect, bLtt particularlv
in orrr interactions with Charlie, his family, and the N{ungers'u'icle circle of fricrrds and
associares, we have been favored with cahr-r skies and smooth sailing in the proclttction of this
book. We hope our efforts have proven u,orthv of our subjcct, a good and adr-r'rireblc rnan.
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Charles Helman Lea once said, "It will generally be admitted that the true test of all books is the influence they have
upon the lives and conduct of their readers." W'e hope our book passes this test, exerting a lasting influence on you.
i Buffett on Mun$er
y Warren E. Buffett
33 to 1758, Ben Franklin dispensed
and timeless advice throu gh Poor Richardl
Among the virtues extolled were thrift, duty, hard work,
pnfuries went by during which Ben's thoughts on these
as the last word. Then Charlie Munger stepped forth.
l.+ t.,
,.
[f*ciple of Ben's, Charlie was soon breaking new ground. What
id; eharlie demanded. If Ben suggested saving pennies,
I $rahse. If Ben said be prompt, Charlie said be early. Life under
to iook positively cushy compared with the rigor demanded by
r
:.'
'
.
ar -'
tharlie consistently practiced what he preached (and, oh, how
ip lis will, created tw9. small philanthronilfun.f s tfat yele
t5e magic of compound interest. Early on, Charlie decided
that this was a subject far too important to be taught through some posthumous
project. Instead, he opted to become a living lesson in compounding, eschewing
frivolous (defined as "any") expenditures that might sap the power of his example.
Consequently, the members of Charlie's family learned the joys of extended bus
trips while their wealthy friends, imprisoned in private jets, missed these enriching
experiences.
In certain areas, however, Charlie has not sought to improve on Ben's thinking.
For example, Ben's "Advice on the Choice of a Mistress" essay has left Charlie in the
"I have nothing to add" mode that is his trademark at Berkshire annual meetings.
There w*s onb one As for myself, I'd like to offer some "Advice on the Choice of a
Partner." Pay attention.
partner who fit my
Look first for someone both smarter and wiser than you are.
bill of particulars After locating him (or her), ask him not to flaunt his superiority so
that you may enjoy acclaim for the many accomplishments that
in euery wa!-Charlia sprang from his thoughts and advice. Seek a partner who will never
second-guess you nor sulk when you make expensive mistakes.
Look also for a generous soul who will put up his own money and
work for peanuts. Finally, join with someone who will constantly
add to the fun as you travel a long road together.
All of the above is splendid advice. (['ve never scored less than
an A in self-graded exams.) In fact, it's so splendid that I set out in
1959 to follow it slavishly. And there was only one partner who fit
my bill of particulars in every way-Charlie.
In Ben's famous essay, he says that only an older mistress makes
sense, and he goes on to give eight very good reasons as to why this
is so. His clincher: "...and, lastly, they are so grateful."
Charlie and I have now been partners for forty-five years. I'm
not sure whether he had seven other reasons for selecting me. But I
definitely meet Ben's eighth criterion. I couldn't be more grateful.
"A partner who is not subservient, who
is himself extremely logical, is one of
the best mechanisms you can have."
-Buffett