Poor Charlies Almanack : wit and wisdom of charlie munger
This book is all about charlie mungers approach to life , learning , objectivity and investing as a by product of leading a goal and process oriented life. This is the second time i have read this book and it a rare source for learning basic approach/philosophy to navigate life, approach decision making and at the same time how to progress with time.
Since most of us are aware of charlies background and his partnership with warren buffet, i would mainly focus on the main contents of the book. this might be a little long review but i wanted to write it anyways.
this book mainly focuses on the following principles :-
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Multidisciplinary approach to learning : one should learn all the major lessons of major disciplines. He lays emphasis on hard sciences where in one should be conversant with high school algebra, elementary probability and basic lessons of engineering,chemistry and biology. lessons from psychology are limited in number and easy to understand but the same are not given their due importance. he lays special emphasis on the psychology of human misjudgement and lists out the major one. One needs to have a latticework of mental models. Thinking fast and slow is another treasure if one wants to read about decision making and behavioral finance , it is written by daniel khaneman along with amos tversky
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According to him one can accentuate his learning curve by reading a lot of history, reading biographies of great personalities like B franklin, cicero, feynman and the likes.
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For approaching complex problems in life or in investing he insists that one should try the law of inversion: basically what are major mistakes that one should avoid and hence mere avoiding such pitfalls will lead us onto the correct path. " invert always invert".
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He is a big fan of process driven approach to life and frequently quotes the benefit of having a detailed checklist for different fields. He cities the examples of pilots who with the help of checklist are able to handle a complex machine with ease. The book has a basic checklist for investing. when it comes to investing he wants one to mainly focus on the business quality, the management quality and finally the ability to quantify risk.
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Charlie introduces us to the idea of think in term of pay-off odds…Pari-Mutuel system of betting of which he is a great fan. His idea is not to bet on the obvious but to look out for mispriced bets which tend to payoff more and losses if any are limited. This according to me is a very strong concept and if imbibed can drastically improve long term performance. He advises to swing really hard when such a mispriced bet is offered and one should wait patiently for such oppurtunities. One should then also let the power of compounding do its wonder over a long period of time.
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He is against few of the practises of corporate america like use stock options and the way they are accounted. the institutional imperative of top management and also of investment banking in general.
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He has coined the term LOLLAPALOOZA effects where the result is bigger than the sum of the parts. This particularly helps in investing and one should always look out for such effects taking place either for good or bad. He also talks about pavlonian effect and conditioning reflex which one can associate with big brands.
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Few observations which i could relate to in respect to the market is that charlie is a big fan of micro-economics and wants us to avoid macro-economies. according to him one will be better off studying decisions made by people and business regarding allocation of resources rather than analysing far too complex macro situation. He is also very vocal about the ill effects on the brain of having a very strong ideology. This might be political or ideological in nature. so we all must guard against it.
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He wants one to acquire knowledge which is sound and gives example of max planck for the same. He wants one to master their domain and not be the one who mostly learn to prattle their talks which according to him is “superficial knowledge”.
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The last chapter of the book mostly covers heuristics/biases, power of incentive and incentive induced behavior for long term gains. For this topic i would recommend one to read " thinking fast and slow" as mentioned above…
To sum up, the book is like a big banyan tree with multiple branches ,each branch invokes curiosity and is full of wits and wisdom of charlie. It gives a brief outline as to how one can start from scratch and with effort on regular basis can become better with each passing day. This book is an ode to a guy who devoted his life to continuous learning along with ethical living. I compare it with an ode as its fun and rhythmic to read. Charlies one liner and dry sarcasm will keep you entertained and will convey deep meaning at the same time. This can be reread once in few years to realign our prespective with goals in mind.
With this i have nothing more to add 
regards
divyansh