Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger

by Charles T. Munger

manipulates you on purpose by causing you cognitive dysfunction—you’re

The elementary part of psychology—the psychology of misjudgment, as I call it—is a terribly important thing to learn.

people tell you what you really don’t want to hear, what’s unpleasant, there’s an almost automatic reaction of antipathy. You have to train yourself out of it. It isn’t foredestined that you have to be this way. But you will tend to be this way if you don’t think about it.

If you play games where other people have the aptitudes and you don’t, you’re going to lose.

You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.

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.”

Investment managers are in the position of that fishing tackle salesman.

This will happen because the Darwinian approach, with its habitual objectivity taken on as a sort of hair shirt, is a mighty approach indeed. No less a figure than Einstein said that one of the four causes of his achievement was self-criticism, ranking right up there alongside curiosity, concentration, and perseverance.

Warner & Swasey ad that was a favorite of mine: “The company that needs a new machine tool and hasn’t bought it is already paying for it.”

Extreme success is likely to be caused by some combination of the following factors:

Extreme maximization or minimization of one or two variables. Example, Costco or our furniture and appliance store.

Adding success factors so that a bigger combination drives success, often in nonlinear fashion, as one is reminded by the concept of breakpoint and...

Catching and riding some sort of big wave. Example, Oracle. By the way, I cited Oracle before I knew that the Oracle CFO [Jeff Henley] was a big part of the proceedings here today.

Generally, I recommend and use in problem-solving cut-to-the-quick algorithms, and I find you have to use them both forward and backward.

best road to success in life and learning would be a multidisciplinary one.

If you want to end up wise, heavy ideology is very likely to prevent that outcome.

“A small leak will sink a great ship.”