1-Sentence-Summary: Poor Charlie’s Almanack explores the life of the famous investor Charlie Munger, the right hand of Warren Buffett, and teaches its readers how his inspirational take on life helped him achieve a fortune and still have time and money to dedicate towards philanthropic causes.
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Favorite quote from the author:
Charlie T. Munger is one of the most influential and successful investors of all time. And yet not many people have heard of him. His down-to-earth lifestyle and preference for spending days in, rather than flashing his wealth online kept him under the radar. However, for those who want to become financially whole and start looking for the best pieces of advice out there, his name should be of importance to you.
More than an inspirational leader, Munger is also an honest businessman. He pays his taxes regularly and encourages everyone to do so. After all, it’s good for business, and for his country. He is guided by a strong work ethic and a series of principles that projected him quite high on the social and financial scale of life. Now, he’s passing down his knowledge through books like Poor Charlie’s Almanack by Peter E. Kaufman, and many seminars and workshops.
Here are my three favorite lessons from the book:
- A successful career is paved with many challenges and blessings in disguise.
- Berkshire Hathaway was built on a strong respect for investors worldwide.
- To err is human, but to learn from your mistakes is admirable.
Now, let’s explore these lessons in-depth and see what they have to offer!
Lesson 1: Munger’s successful career had many drawbacks throughout its course
Charlie Munger wasn’t always the successful investor he is today. In fact, he doesn’t even hold a bachelor’s degree. During his teenage years, he always had a passion for studying and reading as much as he could. As such, he spent most of his days in libraries and lived through the books he was reading. After his studies at the University of Michigan were interrupted, he managed to learn a series of informal skills that proved to be quite useful during his lifetime.
Among the subjects, he’s studied were medicine and science, then mathematics and physics. WWII sent him to study different fields, become a pilot, and serve the army. Eventually, he finished Harvard Law with Magna Cum Laude.
His cross-disciplinary skills proved to be of utmost importance when it came to his career in finance, as he was able to use multiple fields of knowledge to get ahead of the game. No matter how many challenges crossed his path, he managed to learn something from each and every one of them.
The lesson here is to keep on learning and pushing through despite life’s hardships. No matter what you read about, make it a habit to absorb more and more information as you go through life. You never know when it’ll prove to be useful for you. Moreover, improve your work ethic. Munger insists on finishing things the first time, instead of going back to repeat the process. A strong determination to do things right and learn every day will get you far in life, just as it happened with him.
Lesson 2: The key to Munger and Buffett’s successful business was morality, honesty, and respect
Early in his professional life, Munger started a law firm that went on with its operations successfully, yet something didn’t sit right with him. It wasn’t long after when he had to take a trip to Omaha to close on some real estate he inherited, where he met Buffett. Their shared interest in the business world and investing was enough to spark a long-lasting business relationship between them.
As a result, Munger joined Buffett in managing Berkshire Hathaway, one of the most successful investing enterprises of today. Their immense success was built on a strong work ethic, and more importantly, a series of moral principles. Unlike most Wall Street investors, who con people for a living, Berkshire made it a mission to do away with insider trading and doctoring the books to make certain securities look more promising.
For a company with 175,000 employees, the cases of litigations and scandals are very few. The company sees tax evasion and cutting corners as something unaligned with its principles. And the two managers take it quite personally when middlemen do so. Of course, scandals occurred, especially when Munger stated that you have to do business with people who share your ethics, but then the company engaged in lucrative partnerships with Solomon Brothers, a corrupt bank.
Still, such scandals are considered sealed today, as Munger and Buffett proved their worth. As such, it’s of great importance to first build a strong work ethic, do things the right way on a first try, engage only in moral businesses and work with companies who value integrity. This formula guarantees success without you giving up on your peace of mind.
Lesson 3: Munger appreciates people who own up to their mistakes because it’s only natural to make errors in life
Throughout his life, Munger made some terrible mistakes when it comes to business. He failed to buy more stock in valuable companies, he thought Walmart was a costly stock before it skyrocketed, and he once failed to acknowledge that See’s Candy is a great investment prospect.
Luckily, other agents made him change his mind about that one. Still, he acknowledges that to err is human and that owning up to your mistakes is the most important thing after all. One time a middleman made a terrible mistake that ended up costing the company hundreds of thousands of dollars. In this instance, the man confessed immediately and was willing to suffer all the consequences. Fortunately, this was the exact reason why Munger forgave him and allowed him to keep his job.
Another important trait to develop is the ability to change your mind. We can’t possibly be right all the time, and sometimes huge opportunities can pass us by if we don’t accept second opinions or new perspectives. If Charlie Munger could rethink his position in See’s Candy, you too can take a second look at your most important decisions in life. Keep in mind that there’s always room for improvement and other people’s contributions can help you.
The Poor Charlie’s Almanack Review
Poor Charlie’s Almanack delves into the fascinating life of Charlie Munger, one of the best investors of all times, who’s built Berkshire Hathaway with Warren Buffett from the beginning. The book explores the principles that served him throughout his life and helped him achieve tremendous success, to help its readers adopt the right mindset in life. Reading this book will make you understand the importance of cross-disciplinary training, accepting your mistakes, building a strong work ethic, and many more principles that can help you build a successful future.
Who would I recommend the Poor Charlie’s Almanack summary to?
The 25-year-old person who’s passionate about investing and wants to learn about the lives of successful people in the field, the 30-year-old who loves biographies and real-life inspirational stories of top performers, or the 35-year-old who feels lost in their career and wants to motivate themselves.
Last Updated on October 5, 2022