Here is genymoney.ca’s Poor Charlie’s Almanack book review. This was the final book of the five books that I set out to read in 2019 as part of my personal finance resolutions. It’s a huge book and is very heavy. It is over 500 pages long. Poor Charlie’s Almanack was inspired by Benjamin Franklin’s Poor Richard’s Almanack, written in the 1700’s. Poor Charlie’s Almanack is not a cheap book by any means, I guess it’s for die hard Charlie Munger fans.
Who is Charlie Munger?
A lot of people might not know who Charlie Munger is. More people know who Warren Buffett is but not many know who Charlie is. Charlie Munger is often touted as Warren Buffett’s right hand man. He is a billionaire himself (though not nearly as wealthy as Warren is) and is Vice Chairman of Berkshire Hathaway. He is a lawyer by training and didn’t get involved with investing until later. He met Warren Buffett by a chance meeting (mutual friend) and they both grew up in Omaha and both worked at the Buffett grocery store. The rest is history and they became fantastic business partners. Charlie Munger is known for inspiring Warren to lean away from investing in cheap cigarette butt value companies towards bigger more established companies.
I’m a big fan of Charlie Munger, he’s had a lot of terrible things happen to him in life (lost his eye, lost his young son to leukemia, divorced etc.) but you don’t see him complaining. We briefly saw him at Gorat’s eating dinner with Warren Buffett when we went to Omaha for the Berkshire Hathaway Annual General Meeting, and we saw his face on the teleprompter and heard him speak at the Daily Journal Annual General Meeting in Los Angeles.
genymoney.ca is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.
Poor Charlie’s Almanack is not really a personal finance or investing book but more a book on philosophy and psychology. It is a book that lets you take a peek into the mind of Charlie Munger. He blends psychology with economics, and makes you realize just how important psychology is to business. His superior intellect is definitely very apparent- the way he thinks is very detailed yet pragmatic. He is similar to Benjamin Franklin in that he’s like a ‘jack of all trades’ but of psychology and philosophy. Charlie Munger is an expert generalist.
What I Liked About Poor Charlie’s Almanack
There were many things that I liked about Poor Charlie’s Almanack. I really liked the illustrations and graphics that went along with the book, with a little excerpt explaining each concept or mention of a person in a little more detail. I also liked a lot of the speeches and Charlie’s thoughts and reflections on the speeches that he gave.
Charlie Munger is also funny and witty with his speeches and thoughts. He’s blunt, straight forward and tells it like it is. There’s no frilly thoughts or wasted words. He talks about human being’s natural faulty thinking and how important it is to have different mental models when evaluating things. And that is very important to have systematic checklists to avoid and prevent this automatic faulty thinking. For example, before pilots take off they have a checklist to go through to ensure safety of the passengers.
One of my favourite talks is Talk Ten, or the “Psychology of Human Misjudgment.” In this talk, Charlie Munger goes over the 25 psychological tendencies that humans have, and why it is important to be aware of these tendencies in order to make decisions effectively or remove bias.
Another thing that I liked about the book is that he talks about a lot about characteristics of effective leaders and effective management. He talks about what it means to be successful in life. Traits such as showing up, discipline, integrity, reliability, and honesty are important. He talks about how easy it can be to cheat when you’re in a position of power and a leader of a company, and how important it is to be an honest individual (it makes me think of Elizabeth Holmes and her ability to fool so many people with her fraudulent company, Theranos).
The other quote that I really liked from Poor Charlie’s Almanack is the quote from Mark Twain:
“To a man with a hammer, everything looks like a nail.”
When you only have one type of mental model (one type of tool, e.g. the hammer) to evaluate things in order to make a decision, everything will look like a nail to you. If you focus on self-improvement and never lose the curiosity to learn something new, you will likely go through life’s decision making very well.
What I Didn’t Like About Poor Charlie’s Almanack
There weren’t many things that I didn’t like about Poor Charlie’s Almanack. Some of the speeches were not as interesting compared to the others. Although I knew it was not an investing book going into it, it would be nice to have a few tidbits on investing, like some tips on how to evaluate intrinsic value of a company.
The other downside to Poor Charlie’s Almanack was that some of the asides and pictures were a little distracting and didn’t add to the words from Charlie Munger very much.
This is definitely a good book if you’re a fan of Charlie Munger. I haven’t read the other book that gives credence to Charlie Munger’s thinking style- Seeking Wisdom. I hear that it is similar to Poor Charlie’s Almanack but is an easier read. One major takeaway of Poor Charlie’s Almanack is that I have is to be open to the idea of different mental models when evaluating something and walk around having assumptions. Without assumptions and an open mind, you will be more humble and therefore modest enough to use a checklist when going through decision making systematically to avoid mistakes and inherent cognitive bias.
Hope you liked my Poor Charlie’s Almanack book review! It’s an expensive book but if you’re in a book store and see it on the shelves it’s worth stopping and taking a perusal of it.
As Charlie Munger says, “I have nothing left to add.”
Although this is not a dividend investing book per se, a lot of the fundamental wisdom is distilled into easy pearls within this book that are of great importance when evaluating a company to invest in.
Have you read Poor Charlie’s Almanack?
What do you think of the book?
Would you spend 3 figures on a collector’s book?
GYM is a 40 something millennial writing about personal finance since 2009 and interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for a free dividend yield spreadsheet and the free Young Money Bootcamp PDF.