Charlie Munger passed away in November aged 99 years old. The legendary investor is mostly know 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. As i was going through my Google drive I came across some of the notes that I had written down from the book. I just wrote everything from everywhere so it was all jumbled up and long. I decided to make a blog from those notes. 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 awhile. 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/product 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. 

to tell a story or make a presentation; don’t only rely on hard facts & figures, also use humorous anecdotes, poignant tales . for complex matters, break them down with tales, stories.

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. 

How to get a good spouse: best way is to deserve a good spouse because a good spouse by definition is not nuts. 

concentrate more on putting capital to work, investing small rather than attracting new clients and earning more.  

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 in 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:

This is why. 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 be nostalgic or chase being young so much (at expensive costs). 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 

have diversity of interests and curiosity- don’t be boxed into one way of living/doing things

financial success: being prepared on a few occasions in a lifetime, to act promptly in scale, in doing some simple & 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 Filtering: ‘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’. there is no strategy that can beat filtering. meaning you can’t know everything about all things-companies, life partners, investments etc., but you can have a criteria or checklist that is very specific, if they are too compelling to pass-by go full in.

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, not always confirming what you already know. Look for evidence to discomfort what you already know. A turtle may outrun the hair aided by extreme objectivity. To add to this Nassim Taleb says that great investors do not buy the best stocks, they start by eliminating the/avoiding/not buying worst stocks. first thing is to completely eliminate what can result to ruin– success is more about avoiding bad decisions than making the right ones. Have the right fundamentals- you will fair well, not the best but you will be above average, bad fundamentals= guarantee failure.

Pavlovian conditioning: Munger of allure of coca-cola: the brain of a man yearns for a type of beverage held by a pretty woman he can’t have. More of leisure marketing-alcohol, tourism etc. is done with this in mind: eg a man with an expensive drink with pretty women in hand, or on vacation.

-another powerful marketing tactic is social proof: imitative consumption triggered by the mere sight of consumption. In the messaging, remember to show the perceived rewards of consumption-eg coke quenching thirst feeling, receiving money on phone while relaxing, laughing, tasty, feeling classy, center of attention, etc. focus on entrenching present & future consumption, 

-also product engineering: what do you not want your customer to experience: here again INVERT/THINK IN REVERSE: eg if its a drink you don’t want your customers to have an-after taste. If an app- you don’t want it hang mid-process, you also don’t want too many steps, ambiguity on what to do. Secondly, aim at controlling any subsidiary you work with. These are what we now call MOAT.

Einstein- “everything should be made as simple as possible but no more simpler.

simple ideas, big life

Better roughly right than precisely wrong.

Ethical practices aren’t good because they pay; they pay because they are good.

 safest way to try to get what you want is to try to deserve what you want. You want to deliver to the world what you would buy if you were on the other end.

there’s no love that’s so right as admiration-based love, and such love should include the instructive dead

the acquisition of wisdom is a moral duty. It’s not something you do just to advance in life. Just as civilization can progress only when it invents the method of invention, you can progress only when you learn the method of learning.

‘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. for most of life, you don’t have to do a thing other than be amused. Avoid opportunities that are mediocre and tire you so that you miss out of the big opportunities. Don’t swing too often, but when one good ball comes, swing and try to hit the hardest. -investing and life choices. Avoid catastrophic missteps that could completely damage you/your portfolio/ your chances such that when the right thing comes along, you are not in a position to take advantage. Success involves the first ability to stay alive. Free your time to focus more on life changing aspects-investments/life partners/family/what you love.

‘invest in a few and wait. stay within your circle of competence, wait, observe and be able to identify big ideas and go big. commit more time in learning and thinking before executing’ you might seem inactive but when you go for the juggler, it is big’. however, learn to use and apply perspectives from other fields and mix them creatively to form a new and unique thing’.

‘Playing the hand: most people gain pleasure from playing and being accepted into a group. the good player gains pleasure from his ability to cope with the realities of the game’ -John Finn. in investing, just like in baseball, to put runs on the scoreboard, one must watch the playing field, not the scoreboard

Properly done, if teaching isn’t the highest calling of man, it is near it

Munger’s Checklist

Simple problem solving checklist

1. Decide the no-brainer questions first 
2. Apply numerical fluency 
3. invert-think of the problem in reverse
4. Apply multidisciplinary wisdom- never rely fully on others 
5. watch out for the combination of factors-lollapalooza effect. (if this happens, it will compound with this and so forth).

 Beware Of BEING OBSESSED WITH PROCEDURES: careful Procedures themselves often lead to overconfidence in their outcome. Self-assessment makes us think we are good than we might actually be. Sometimes you might follow all the procedures and still be wrong- care more about the outcomes, not just the process. but also ‘its not just about the proceeds, but also the process, enjoy the process. the process is where you live. everyday actions etc.

Guard against the effects of boredom and hubris: ‘Patience, patience, patience, never take an action for its own sake, humans are wired to always take action.

basic knowledge is enough if you use it well, most people calculate a lot and think less. Aim to break down to their simplest form-eg how to sell, build something, understanding customer etc. don’t complicate things.

know who you are selling to– to avoid impressing the wrong people who will not buy in any case. Have the target customer persona in mind, when writing, write as a customer would read- catchy but gets the message through. What makes sense to a manager is different from what makes sense to a shareholder. In many human affairs, what determines behavior is incentives. for the decision maker, ‘get the incentives right– keep refining until that is right.

Sitting on good business long term is better since it makes less susceptible to bad tax laws, also prevents you from chore of making many small decisions week in week out- best way is to invest in 2 -3 great business and sit on it for a decade or more.

on coping with challenges 

have low expectations 

have a sense of humour

surround yourself with family and genuine friends – you need their love and support as you also give it to them.

-END