| name | value |
| authors | Charlie Munger |
| isbn | 978-1-953953-24-7 |
| pages | 394 |
| rating | ★ ★ ★ ★ ★ |
| date started | 2024-05-23 |
| date finished | 2024-06-25 |
| locations | Sarajevo & Stuttgart |
Around 2018 I got this book from the library in San Francisco. It is a very popular and famous book in that part of the world. You actually need to wait some weeks in order to get this book from the library.
This was 6 years ago, but I didn't read it at the time. Physical design of the book was weird. It was huge with some cartoons.
This time I got book and finally was able to read it on my kindle.
Book is great. The bad part - editing is not good. For some reason editor inserted himself into the book and wrote bunch of non important words that distract from the thoughts of Munger.
It should have been a book of just talks from Charlie. Nothing else. Especially I didn't enjoy reading editor's commentary before each talk selling it to me and promising to make me a better person.
Those talks are great. They are written in an old school American way I like. It reminder me of Neil Postman style - educated, respected with many references to the knowledge from the past.
I think you learn economics better if you make Adam Smith your friend. That sounds funny, making friends among the “eminent dead,” but if you go through life making friends with the eminent dead who had the right ideas, I think it will work better for you in life and work better in education. It’s way better than just giving the basic concepts.
Love this idea. Similar to what Neil Postman wanted to convey in most of his books.
Charlie detests placer mining, the process of sifting through piles of sand for specks of gold. Instead, he applies his “big ideas from the big disciplines” to find the large, unrecognized nuggets of gold that sometimes lie in plain sight on the ground.
I like this. Curiosity towards different disciplines always makes sense to me.
How many insights do you need? Well, I’d argue that you don’t need many in a lifetime. If you look at Berkshire Hathaway and all of its accumulated billions, the top 10 insights account for most of it.
This one reminds me of simple idea I have. People have 2-3 "profound" ideas/insights per life (those ideas that are independently discovered by few people) and around 10 important but regular insights (those are the ones that are independently discovered by many other people).
When Warren lectures at business schools, he says, “I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 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.” He says, “Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”
This is a great point about making only few good bets in your life. And measuring them carefully. Very interesting because nowadays we talk a lot about "numbers game", diversification and making tons of small bets.
I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My god, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”
Love this story. It's idiotic ofc but shows how many things we buy because they are shiny.
Life and its various passages can be hard, brutally hard. The three things I have found helpful in coping with its challenges are: 1. Have low expectations. 2. Have a sense of humor. 3. 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 12 handicap.
I definitely believe in low expectations and humor and the idea of constant change.
Psychology, to me, as currently organized, is like electromagnetism after [Michael] Faraday but before Maxwell—a lot has been discovered, but no one mind has put it all together in proper form. And it should be done because it wouldn’t be that hard to do—and it’s enormously important. Just open a psychology text, turn to the index, and look up envy. Well, envy made it into one or two or three of the Ten Commandments. Moses knew all about envy. The old Jews, when they were herding sheep, knew all about envy. It’s just that psychology professors don’t know about envy. Books that thick are teaching a psychology course without envy? And with no simple psychological denial? And no incentive-caused bias?
Excellent point on what is missing from the modern psychology.
It can’t be emphasized too much that issues of morality are deeply entwined with worldly wisdom considerations involving psychology. For example, take the issue of stealing. A very significant fraction of the people in the world will steal if a) it’s very easy to do and b) there’s practically no chance of being caught. And once they start stealing, the consistency principle—which is a big part of human psychology—will soon combine with operant conditioning to make stealing habitual. So if you run a business where it’s easy to steal because of your methods, you’re working a great moral injury on the people who work for you. Again, that’s obvious. It’s very, very important to create human systems that are hard to cheat. Otherwise, you’re ruining your civilization, because these big incentives will create incentive-caused bias and people will rationalize that bad behavior is okay. Then, if somebody else does it, now you’ve got at least two psychological principles: incentive-caused bias plus social proof. Not only that but you get Serpico effects: If enough people are profiting in a general social climate of doing wrong, then they’ll turn on you and become dangerous enemies if you try and blow the whistle. It’s very dangerous to ignore these principles and let slop creep in. Powerful psychological forces are at work for evil.
Love this mix between explaining stealing from the business, morality and psychology.