Poor Charlies Almanack

"l wanted to get rich so I could be independent, like Lord John

Maynard Keynes." Independence is the end that wealth serves
for Charlie, not the other way around.
A special note: Charlie's redundancy in expressions and examples
is purposeful: for the kind of deep "fluency" he advocates, he

knows that repetition is the heart of instruction.

In my whole life, I have known no wise people (over a broad subject matter area) who
didn't read all the time- none, zero. You'd be amazed at how much Warren teads-and
at how much I read. My children laugh at me. They think I'm a book with a couple oF legs
sticking out."

However, he never forgot the sound principles caught by his

grandfather: to concentrate on the task immediately in front of him and
to control spending.
Charlie on attracting clients: "It's the work on your desk.... It's the work on your desk. Do
well with what you already have and more will come in."

After this difficult experience, Charlie followed Warren in concluding

that he no longer wanted to manage funds directly for investors (Warren
had closed his own partnerships in 1969). Instead, they resolved to build

equity through stock ownership in a holding company.

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."

I think you learn economics better if you make Adam Smith your friend.
That sounds funny, making friends among 'rhe eminent dead,'but if
you go through life making friends with the eminenc 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."
Our experience tends to conform a long-held notion that being
prepared, on a few occasions in a lifetime, to act promptly in scale, in
doing some simple and logical thing, will often dramatically improve the
financial result of that lifetime.
A few major opportunities, clearly recognizable as such, will usually
come to one who continuosly searches and waits, with a curious mind
that loves diagnosis involving multiple variables.
And then all that is requiered is a willingness to bet heavily when the
odds are extremely favorable, using resources available as a result of
prudence and patience in the past.
-

Charles T. Munger

Just as animals fourish in niches, people who specialize in some narrow

niche can do verywell.

"You must know the big ideas in the big disciplines and use them routinely-all of them, not
just a f'ew. Most people are trained in one model-economics, for example-and try to solve
all problems in one way. You know the old saying: 'To the man with a hammer, the world
looks like a nail.' This is a dumb way of handling problems."

"So if your professors wont give you an appropriate multidisciplinary approach, if

each wants to overuse his own models and underuse the important models

in

other disciplines, you can correct that folly yourself."

"The bookthatrests on my library coffee table is not Peter Lynch's Beating tbe
Sneet or even my own, but several bools by historian Paul Johnson on the
makings of the nineteenth and twentieth centuries.

"There is no better teacher than history in determining the future.... There are
answers worth billions of dollars in a $30 historv book."

When faithfully adhered to, these traits result in one of the bestknown Munger characteristics: not buying or selling aer! often

Patience: The

Art of "'W'aiting'Without Tiring of'Waiting"

"Look at those hedge funds-you think they can wait? They don't know how to wait! In
my personal portfolio, I have sat for years at
a time

with $10 to $12 million in treasuries or municipals, just wa-iting, waiting....

'As Jesse Livermore said' 'The big money is not in the buying and selling...but in the

waiting."'

"It takes character to sit there with all that cash and do nothing. I didn't get to *{rere I am
by going after mediocre opportunities."

-Munger

"To us, investing is the equiralent of going out and betting against the paxi- mutuel
rystem.

lW'e

look for a horse with one chance in rwo of winning and which pays you three

to one, You're looking for a mispriced gamble. Thatt what investing is. And you have to
know enough to know whether the gamble is mispriced. That's value investing."