Poor Charlie's Almanack: The wit & wisdom of Charles T Munger


You may have to ask somebody to get it from US. It’s available on amazon. I have pasted the link above. It’s weighs more than 2 Kgs…and costs more than $50. I also couldn’t get in India and bought during my travel 2 years back.



You can buy it online from Book-Zone (a leading store for books on finance in Mumbai, Fort Area). It is owned by Sterling Book House and is quite reliable.




I too faced the same problem of reading a good book but failed to recall stuff from it few months down the line…I now employ a simple method…I make a short powerpoint on the key takeaways from the book…it can be customized according to your tastes and you would not need to go through the book again few months down the line

Flipside is that there are few books where u learn something new every time u read it due to the learning curve and experience obtained as an investor. Another one is that if you were using this method, you have to make sure that the one reading you do is comprehensive enough to absorb all that the author is trying to convey…

Still folks can give it a try and see if it works for you…

Hi Nelson,

Creating PowerPoint for salient points from the book seems like an excellent idea to me, especially if done in a collaborative manner. If you wish to share your ppt and OK with evolving them in a collaborative manner, I am a game for it.

I usually note down salient points of book in my notebook when reading it. I am thinking of moving to your way, as it will help me get the summary quickly.



Hi Subash,

Thank you for the feedback. I have started this only recently. So unfortunately I have readymade PPT only for 1 book: “You can be a stock market genius” by Joel Greenblatt. Do let me know if you would like to develop a collaborative ppt for other books. We can choose a book of our choice and set a deadline for it. After that interested parties like you, me and others can exchange their powerpoint files. Do let me know your thoughts.

Hi Nelson,

As I already said, I am game for it. By collaboration, I mean folks who want to add any point to the book, can do so. That actually will be a good thing, as one person might not be able to observe it from all possible perspective. I am not in favor of deadline; we all are part time investor, and should have the freedom to do thing in our own pace.

Thanks to valuepickr, and seniors I have learned so many thing related to investing, which I couldn’t have learned by doing investing for 5-6 years myself. So this will be my way to payback to investment community. My 1st effort for the same (python script for automated excel sheet) failed because it took way too much time, and the code got buggy big time. This one at least won’t take way too much time, and won’t have bug to debug it.

I will be starting with “The mis-behavior of the market” (done with 2-3 slides) and then will cover the little book series, especially the ones that I like.



I read “Poor Charlie’s Almanack” the first time around 2 years back, but didn’t retain much of it in my head. I was reading Charlie’s speech atUSC Business School, 1994yesterday athttp://ycombinator.com/munger.htmland thought it will be a good idea to list few of the mental models in point wise format. So, that in the next few days i can go through each of these points in detail by doing some reading and try and gain more knowledge on the models and more importantly trying to keep those models in my head on a more permanent basis.

In the second part of the letter he talks about investing as a subset of wordly wisdom and is a good read in full.

So, here you go. It’s copy-paste.

80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person.

1). Basic arithmetic.

2). permutations and combinations - And the great useful model, after compound interest, is the elementary math of permutations and combinations.

3). Simple Algebra and Decision Tree theory

4). If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a onelegged man in an asskicking contest. You’re giving a huge advantage to everybody else.

5). Accounting - you have to know enough about it to understand its limitations

6). psychology - And then when you get into psychology, of course, it gets very much more complicated. But it’s an ungodly important subject if you’re going to have any worldly wisdom. And you can demonstrate that point quite simply: There’s not a person in this room viewing the work of a very ordinary professional magician who doesn’t see a lot of things happening that aren’t happening and not see a lot of things happening that are happening.And the reason why is that the perceptual apparatus of man has shortcuts in it. The brain cannot have unlimited circuitry. So someone who knows how to take advantage of those shortcuts and cause the brain to miscalculate in certain ways can cause you to see things that aren’t there.So when circumstances combine in certain waysaor more commonly, your fellow man starts acting like the magician and manipulates you on purpose by causing your cognitive dysfunctionayou’re a patsy. It’s so elementary though that, when it was all over, I felt like a fool.

7). the five W’sa you had to tell who was going to do what, where, when and why

8). So there’s an iron rule that just as you want to start getting worldly wisdom by asking why, why, why, in communicating with other people about everything, you want to include why, why, why. Even if it’s obvious, it’s wise to stick in the why.

9). Statistics - I don’t think it’s necessary for most people to be terribly facile in statistics. But you have to understand that bellshaped curve at least roughly as well as I do.

10). The engineering idea of a backup system is a very powerful idea.

11). The engineering idea of breakpointsathat’s a very powerful model, too.

12). The notion of a critical massathat comes out of physicsais a very powerful model.

13). all of this cost-benefit analysisahell, that’s all elementary high school algebra, too. It’s just been dolled up a little bit with fancy lingo.

14). biology/physiology - because, after all, all of us are programmed by our genetic makeup to be much the same.

15). The elementary part of psychologyathe psychology of misjudgment, as I call itais a terribly important thing to learn. There are about 20 little principles. And they interact, so it gets slightly complicated. But the guts of it is unbelievably important.Terribly smart people make totally bonkers mistakes by failing to pay heed to it. In fact, I’ve done it several times during the last two or three years in a very important way. You never get totally over making silly mistakes.

16). Two-track analysis -Personally, I’ve gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these thingsawhich by and large are useful, but which often misfunction. One approach is rationalityathe way you’d work out a bridge problem: by evaluating the real interests, the real probabilities and so forth. And the other is to evaluate the psychological factors that cause subconscious conclusionsamany of which are wrong.

17). microeconomics - But the truth is that it(economy) is a lot like an ecosystem. And you get many of the same results. Just as in an ecosystem, people who narrowly specialize can get terribly good at occupying some little niche. Just as animals flourish in niches, similarly, people who specialize in the business worldaand get very good because they specializeafrequently find good economics that they wouldn’t get any other way.And once we get into microeconomics, we get into the concept of advantages of scale. Now we’re getting closer to investment analysisabecause in terms of which businesses succeed and which businesses fail, advantages of scale are ungodly important.

18). Advantages & disadvantages of scale - This is huge one. Lot to learn and understand on this.

“The great defect of scale, of course, which makes the game interestingaso that the big people don’t always winais that as you get big, you get the bureaucracy. And with the bureaucracy comes the territorialityawhich is again grounded in human nature.”

19). Pavlovian association - CBS provides an interesting example of another rule of psychologyanamely, Pavlovian association. If people tell you what you really don’t want to hear what’s unpleasantathere’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.

You get a lot of dysfunction in a big fat, powerful place where no one will bring unwelcome reality to the boss.

20). Over the years, we’ve tried to figure out why the competition in some markets gets sort of rational from the investor’s point of view so that the shareholders do well, and in other markets, there’s destructive competition that destroys shareholder wealth.

Example - Cereals Vs Airline industry

21). Understanding few things in micro-economics and they work currently- Like Patents, trademarks, exclusive franchise.

The great lesson in microeconomics is to discriminate between when technology is going to help you and when it’s going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does. Example of technology usage in commodity business like textile Vs printing

“This capital outlay will save you so much money that it will pay for itself in three years.”

So you keep buying things that will pay for themselves in three years. And after 20 years of doing it, somehow you’ve earned a return of only about 4% per annum. That’s the textile business.

22). competitive destruction - You know, you have the finest buggy whip factory and all of a sudden in comes this little horseless carriage. And before too many years go by, your buggy whip business is dead. You either get into a different business or you’re deadayou’re destroyed. It happens again and again and again.

23). “Early Bird” - A model derived from the competitive destruction - And when these new businesses come in, there are huge advantages for the early birds. And when you’re an early bird, there’s a model that I call "surfing"awhen a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows…But people get long runs when they’re right on the edge of the waveawhether it’s Microsoft or Intel or all kinds of people, including National Cash Register in the early days.

24). Surfing - Patterson & NCR Story - I have in my files an early National Cash Register Company report in which Patterson described his methods and objectives. And a well-educated orangutan could see that buying into partnership with Patterson in those early days, given his notions about the cash register business, was a total 100% cinch. And, of course, that’s exactly what an investor should be looking for. In a long life, you can expect to profit heavily from at least a few of those opportunities if you develop the wisdom and will to seize them. At any rate, “surfing” is a very powerful model. However, Berkshire Hathaway , by and large, does not invest in these people that are “surfing” on complicated technology. After all, we’re cranky and idiosyncraticaas you may have noticed.

24). circle of competence - Every person is going to have a circle of competence. And it’s going to be very hard to advance that circle. If I had to make my living as a musician… I can’t even think of a level low enough to describe where I would be sorted out to if music were the measuring standard of the civilization.

And people who could never win a chess tournament or stand in center court in a respectable tennis tournament can rise quite high in life by slowly developing a circle of competenceawhich results partly from what they were born with and partly from what they slowly develop through work.

So some edges can be acquired. And the game of life to some extent for most of us is trying to be something like a good plumbing contractor in Bemidji. Very few of us are chosen to win the world’s chess tournaments.

Moving from Carrots to Dessets - i.e., on the art of Stock picking

25). Stock Market - The model I likeato sort of simplify the notion of what goes on in a market for common stocksais the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what’s bet. That’s what happens in the stock market.

Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc., etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on. But if you look at the odds, the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it’s not clear which is statistically the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it’s very hard to beat the system.

And then the track is taking 17% off the top. So not only do you have to outwit all the other betters, but you’ve got to outwit them by such a big margin that on average, you can afford to take 17% of your gross bets off the top and give it to the house before the rest of your money can be put to work.

26). Bet less Often - It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at itawho look and sift the world for a mispriced beathat they can occasionally find one.

And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple.

And yet, in investment management, practically nobody operates that way. We operate that wayaI’m talking about Buffett and Munger. And we’re not alone in the world. But a huge majority of people have some other crazy construct in their heads. And instead of waiting for a near cinch and loading up, they apparently ascribe to the theory that if they work a little harder or hire more business school students, they’ll come to know everything about everything all the time.

To me, that’s totally insane. The way to win is to work, work, work, work and hope to have a few insights.

And you’re probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It’s just that simple.

27). And, as usual in human affairs, what determines the behavior are incentives for the decision maker. So getting the incentives right is a very, very important lesson.

The Fed-Ex example.

28). Goes back to point no. 25 - In the stock market, some railroad that’s beset by better competitors and tough unions may be available at one-third of its book value. In contrast, IBM in its heyday might be selling at 6 times book value. So it’s just like the pari-mutuel system. Any damn fool could plainly see that IBM had better business prospects than the railroad. But once you put the price into the formula, it wasn’t so clear anymore what was going to work best for a buyer choosing between the stocks. So it’s a lot like a pari-mutuel system. And, therefore, it gets very hard to beat.

Hope this is helpful to other’s as well.


Hi Subash,

I do not have the book so I will not be able to contribute to the PPT but I look forward to reading your PPT of the book. I will definitely contribute to series as I have a few books from that series with me.

Kind regards,


For those who are interested in mental models , you can enrol in the following course


The number one ideais to view a stock as an ownership of the business [and] to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash flow than you’re paying for. Move only when you have an advantage. It’s very basic.


Charlie Munger, Vice-Chairman, Berkshire Hathaway, 2001**

Another book published by charlie munger, its a digital book of Blue Chip Stamps annual letters, written by Charlie Munger, from 1978-1982

https://www.gitbook.io/book/maxolson/blue-chip-stamps Link: https://www.gitbook.io/book/maxolson/blue-chip-stamps

The best part is its free may be indicating that there is no price for it :slight_smile:

1 Like

Mungerism has always been simple but not easy. I thought I will share a little trick that helped me soak in all those pieces of wit and wisdom and get them into my head. There are a few youtube videos of Charlie Mungers speech available for free. The most prominent of these are Psychology of Human Misjudgement and 2008 Speech at Caltech. I am not going to provide a link as these are usually top hit when you google for charlie munger videos. What I did is take a bunch of these youtube links and converted them into MP3s (there are many online websites that do this for free) and put them in a little USB drive that sticks to my car audio system permanently. What I have is hours of Charlie Munger which I listen almost daily during my commute. Every time I listen to these there is a certain amount of incremental learning I get and best part is freedom from those FM radio stations which air a little bit of music between a lot of advertisements.


Recently finished and this is my review. Posting it here just to revive this thread. :slight_smile:

I have never enjoyed a book this much, so much so that I think it must be a crime to derive so much pleasure from just reading a book. When I feel something as bizarre, I would usually put it down to weird quirks of the human mind but now I know the exact human misjudgements at play that leads one to feel things like that. I had come across the psychology of human misjudgement talk years ago and had made a note to read this book someday and am glad to have managed it finally.

Other than the powerful 100 pages on human misjudgement, there is the equally powerful talk on ‘practical thought about practical thought?’ where Munger draws on multi-disciplinary knowledge from physiology, psychology, economics and physics to dissect how an empire like coca-cola can be built from scratch and become worth over a trillion dollars in the future.

The rest of the book is a bit biographical, talking about how Berkshire Hathaway came about, the values behind the partnership with Buffett, greek philosophy and literature, roman empire and its downfall, an unending admiration of Ben Franklin and disgust towards Academia especially pertaining to the soft-sciences and Wall St. and accounting shenanigans, advocacy of index investing for charitable funds and the like and an unrelenting flood of zingers and anecdotes filled with wit and wisdom. This book is just outstanding and I foresee myself reading this over and over again in the future.


I try to read it once every 1/2 years. The only challenge is its so heavy that it is difficult to hold and read :frowning: I just wish they had a kindle version.


A genuine colossus of an intellect and business acumen. One of the greatest. You will be missed :frowning:
Rest in peace :pray:, Charlie

Beyond investing and business, Charlie taught us about resilience, dignity/reputation, and a life well-lived. His one-liners and quotes have been a great source of wisdom. Remembering a few on this sad day

“If all you succeed in doing in life is getting rich by buying little pieces of paper, it’s a failed life. Life is more than being shrewd in wealth accumulation.”

Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day- if you live long enough like most people, you will get out of life what you deserve.

All I want to know if where I’m going to die, so I’ll never go there.


One can also listen to “The Psychology of Human misjudgment” on YouTube. Invaluable education for all investors.

1 Like