#236 | ‘Poor Charlie’s Almanack’: Life Advice Actually Worth Listening To—7 Charlie Munger Quotes and More!
Quick SUMMARY:
Douglas Vigliotti shares the witty, enlightening book, "Poor Charlie's Almanack" by Charles T. Munger, who some consider the modern-day equivalent of Benjamin Franklin. Vigliotti highlights Munger's role as Vice Chairman of Berkshire Hathaway, his close relationship with Warren Buffett, and many of Munger's philosophies, such as inversion thinking, worldly wisdom, and the Lollapalooza effect. He shares seven notable quotes from Munger, emphasizing key ideas to help you be a more expansive thinker and a better decision-maker.
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TOPICS COVERED IN the EPISODE:
Introduction to the Episode (00:09) - Douglas Vigliotti welcomes listeners and introduces "Poor Charlie's Almanac" by Charles T. Munger.
Overview of Charles T. Munger (01:18) - Discussion of Munger's life, achievements, and his role at Berkshire Hathaway.
Buffett's Foreword and Munger's Rebuttal (02:35) - Exploration of the mutual respect between Buffett and Munger through their writings.
Content of the Book (04:54) - Description of the book's structure, featuring Munger's speeches and insights.
Core Philosophies of Munger (05:55) - Introduction to Munger's pragmatism and rational thinking as central themes.
Worldly Wisdom and the Lollapalooza Effect (07:07) - Munger's concepts of broad knowledge and the impact of multiple indicators on decision-making.
Investment Evaluation Principles (08:28) - Munger's advice on assessing risk and cultivating a mindset for lifelong learning.
Simplicity and Clarity in Thought (09:39) - Munger's emphasis on the importance of simple, actionable insights over complex ideas.
Quote 1: Inversion Thinking (09:39) - Munger's advice on avoiding pitfalls by understanding what not to do.
Quote 2: Complexity of Solutions (11:08) - The danger of overconfidence in solutions without considering potential harm.
Quote 3: Patience and Decisiveness (12:32) - The balance between waiting for the right moment and taking decisive action.
Quote 4: Delivering Value (13:39) - Encouragement to create products or services that one would personally value.
Quote 5: Ideology and Critical Thinking (14:00) - Munger's warning against the pitfalls of rigid ideological thinking.
Quote 6: Compound Interest (14:59) - The significance of patience in compounding knowledge and investments.
Quote 7: Appeal to Interests (16:07) - Munger's insight on persuasion and the importance of understanding incentives.
Conclusion and Call to Action (17:02) - Vigliotti encourages listener engagement and promotes his own book.
READ THE TRANSCRIPT:
Welcome back to “Books for Men”, a podcast to inspire more men to read and bring together men who do. So. This week I have a book that I think is really going to help you. I know I learned a lot from it when I read the book, and it came out in 2023, it was actually a republishing, and it's around 380 pages or so, and it's called “Poor Charlie's Almanack” by Charles T. Munger. I will get more into the book. What it's about the author, of course, some of my larger takeaways and most importantly, my top seven quotes. So there are so many anecdotes and so many pieces of wisdom and wit in this book, but I selected seven that I want to share with you, along with some of the other big takeaways. But before I do that, I want to just remind you that I have a new book out and it is called “Aristotle for Novelists: 14 Timeless Principles on the Art of Story”. If you're looking to tell a story in any shape or fashion, so whether it be on the page, screen or in life, then I think you will get a lot out of that book. And if you have any interest in checking out more about it, all you have to do is visit the website Aristotle for Novelists.com.
01:26 - All right. So let me turn back to the book at hand. “Poor Charlie's Almanack” by Charles T Munger. So who is the author? I'll spare you all of the zillion things that Charlie Munger has done in his career, and just cite that he was a businessman and investor, an attorney, a philanthropist. He passed away in 2023. So the same year that this book got republished at the young age of 99. So he almost made it to 100. It's pretty remarkable in its own right. But anyway, he was most noted for being the vice chairman of Berkshire Hathaway, which of course, is the legendary investment firm led by the Oracle of Omaha, Warren Buffett. Buffett, naturally being the more well-known, talked about partner. But as many longstanding partnerships would suggest, both have said without each other they would not have achieved the same success in this sort of plays right into the book, because Buffett writes a foreword that is very complimentary to his friend, and in a very uncanny fashion.
02:35 - There is a rebuttal to that forward, written by one Charlie Munger. And I actually pulled excerpts from both of those for you to have a better understanding of their relationship. And so Buffett writes in the foreword, “Look first for someone both smarter and wiser than you are After locating him or her. Ask him not to flaunt his superiority so that you may enjoy acclaim for the many accomplishments that sprang from his thoughts and advice. Seek a partner who will never second guess you, nor sulk when you make expensive mistakes. Look also for a generous soul who will put up his own money and work for peanuts. Finally, join with someone who will constantly add to the fund as you travel a long road together. All of the above is splendid advice. (I've never scored less than an A in self-created exams.) In fact, it's so splendid that I set out in 1959 to follow it slavishly. And there was only one partner who fit the bill of my particulars in every way—Charlie.” And then in the rebuttal of this foreword, Charlie Munger writes, “I think there's some mythology in the idea that I've been this great.
03:54 - Enlighten her of Warren. He hasn't needed much enlightenment. I frankly think I get more credit than I deserve. It is true that Warren had a touch of brain block from working under Ben Graham and making a ton of money. It's hard to switch from something that works so well, but if Charlie Munger had never lived, the Buffett record would still be pretty much what it was.” All in all, I think this gives you a good look into their relationship and the camaraderie that each of them had for each other, and respect each of them had for each other, and also just the type of individual that Charlie Munger was. Despite his massive financial success, he remained very humble and practical and pragmatic. And I think that that comes through in a lot of the advice that you're going to hear him give in this book. So what is this book? In short, as you might have gathered, it's essentially an organization of 11 Charlie Munger speeches that were given at different points in his life for various reasons.
04:54 - So things like commencement speeches or conference talks, and it's all just in an effort to showcase the wit and wisdom, as the subtitle suggests, of the author. So the book was originally, as I alluded to, published in 2005 and edited at the time by Peter Kaufman, who is a longtime friend of Charlie Munger. And then it was republished in 2023, breathing new life into the work and memorializing the death in a way. So he died in November, and this book came out in December. Just as a matter of note, stripe does a beautiful job with their books. I've read a few before. “Get Together” was one of them. I've also interviewed Tyler Cowen, and that book was published by Stripe Press, along with Martin Guthrie's book “The Revolt of the Public”. That was another interview that I conducted on my previous podcast, and that was also a stripe book. It's worth noting that if you do pick up this book, it is beautiful and it is a piece that is worth having on your bookshelf.
05:55 - Having said that, before, I jump into the seven quotes that I want to share with you, I did want to just make mention of this thing with Charlie Munger. That sort of overrides pretty much everything in the book, and I sort of alluded to this already with his pragmatism and practicality, but he's really rational and rigorous, and one might think that some of his advice is too simple to be the truth. But I think that the brilliance of most great thinkers and Charlie is definitely included in that isn't necessarily the complexity of thought, but it's more their ability to deduce their thinking into actionable anecdotes. Charlie would call these mental models that sort of cut through the chaos, and in this book, there is so much to cover. So I'm only giving you a sliver of what's actually in it. But one of the bigger things that he hits on is this idea of worldly wisdom. So basically having a very wide breadth of knowledge that does not relate to your specialty, that then you can translate into what you are special at.
07:07 - Or this other thing that he's really keen on is called the Lollapalooza effect, which is basically when there are a series of indicators that are coming from a very wide net that create this Lollapalooza effect in the minds of people, and they gravitate all to this thing. And many times you have to have that worldly wisdom to see how all of these things create this storm, so to speak, or why something becomes so popular or so prevalent in society. And then just more broadly, he believes that all investment evaluation should begin by measuring risk, especially reputational risk, or that just because people agree or disagree with you doesn't make you right or wrong. The only thing that truly matters is the correctness of your analysis and your initial judgment. Or you must develop into being a lifelong self-learner through voracious reading, cultivate curiosity, and strive to become a little wiser every day. That kind of goes under that worldly wisdom piece. And he's also very adamant about staying within a very well-defined circle of competence. And I'll get into that with one of the quotes that I share with you.
08:28 - And perhaps my favorite Charlie philosophy is one that I spoke about in the David Foster Wallace episode, and it is that it is better to remember the obvious than it is to grasp the esoteric. And also, remember that the highest and best use is always measured by the next best use. Or things like being able to recognize and adapt to the true nature of the world around you and not expect it to adapt to you. And most importantly, keep things simple and always remember what you set out to do. These are all just high-level things that he talks about, and I cherry-picked those from the actual book. Just to give you a little taste of what you might expect. And I did the same for the seven quotes that I'm about to share with you right now to close this episode. So the first one is: “All I want to know is where I'm going to die, so I'll never go there.” And what looks to be on its face a really witty, whimsical saying, really what he's referring to is something that he notes as inversion thinking.
09:39 - And it means starting with what you can't do or what not to do, and dealing with what's left. This idea of inversion thinking can be applied to so many different aspects of life and quote on quote, in a metaphorical sense, eliminate where you're going to die and pick a solution from the areas where you're not going to die, even if the decision didn't work out in your favor. And I find this to be an extremely useful tool in many situations in life. The second quote I want to share with you is: “What I'm against is being very confident in feeling that you know for sure that your particular action will do more good than harm. You're dealing with highly complex systems wherein everything is interacting with everything else.” And while I should just let this hang there, I think I want to point out that I see this so much in modern society where people are so confident that the solution that they are bringing to the table is the right solution. Not thinking about the potential harm that could come from that solution, and not even considering that the thing that they are appalled by, or that they don't think is the right way to go, can actually be the way that on net creates a better future or a better solution.
11:08 - And I think that this is a really challenging idea for a lot of people to grapple with because it means second-guessing the things that you are so sure about. And when you look back in hindsight at a lot of situations, what you will find is that there are things that are done with not great intentions or that seem deplorable in some ways, but ultimately have benefit at large. And so this is a really tough thing to grapple with as somebody who is walking through the world, but nonetheless, it will make you a more expansive thinker. Quote number three is a short, pithy one, and it is “ …extreme patience combined with extreme decisiveness.” And as a general piece of advice, I just love this. But I will say that it seems a lot easier to understand and apply than it actually is, because when you are extremely patient, what typically happens is that you lull yourself into inaction. And since we habituate as humans to what we do or don't do, it becomes much harder to act with extreme decisiveness when you have, as Charlie Munger might say, a lollapalooza effect happening that would indicate you must act because it is the right thing to do.
12:32 - And so when you have that type of conviction, you have to have extreme decisiveness, but you can't do that without first being extremely patient, because those events are few and far between in one's life. So applying this advice is actually much harder than it seems. Number four is: “You want to deliver to the world what you would buy if you were on the other end.” And I think that this is just a golden rule for everybody. How many things do you offer to the world that you yourself would buy, quote on quote? And I don't literally mean buying them necessarily, but interact with engage with, want to be around. You can look at this in a much more metaphorical sense, and it's worth looking at sometimes even myself included. When I look at some of the things I do, I'm like, I would never want to be around that person or I would never want to do those things. So it becomes, again, really challenging and something that on its face is simple, but it's much more difficult to grapple with than meets the eye.
13:39 - The fifth quote is if ideology can screw up the head of Chomsky, imagine what it does to people like you and me. And this is a nod to someone who is as brilliant as Noam Chomsky being an ideologue. And Charlie is very adamant that ideology pounds ideas in rather than convinces them out. And he believes that one should always look to disprove their ideas rather than continually pound them in. And this is the big problem with being ideological, even if you are as brilliant as someone as Noam Chomsky. Number six is a quote Charlie abides by, from another great thinker, Albert Einstein. “Compound interest is the eighth wonder of the world. Never interrupt it unnecessarily.” This goes to that extreme patience combined with extreme decisiveness. But it's also just an ode to the idea of compounding. And you can compound anything in your life, whether it's investments or actions and behaviors, building a craft or a business, a skill, everything compounds. And so if you're compounding the wrong things or if you're compounding the right things, that matters.
14:59 - Of course, you have to believe in the idea of compounding. But I would say if Einstein believes in it, people like Charlie Munger believe in it. Among many other great thinkers, it's worth it for you to consider as well. And lastly, this entire book is a nod to Benjamin Franklin's book, “Poor Richard's Almanack”, and most people conclude that Charlie is the modern-day version of that. And so he has this quote in the book that is a Benjamin Franklin quote. And it goes, “If you persuade, appeal to interest, not reason.” I think that this is something that is not worth overlooking, that most people are guided by their interests, not by the reasonable explanation for something. I've talked about this in my book, “The Gap”, and when I talked about the private interest problem, or as Charlie would talk about it here, and as most social psychologists would talk about this as incentive bias, so people are biased to their incentives. And so if you want to persuade them to do something, whether they are politicians, businessmen, your boss, your wife, your friend, you should appeal to their interests, not to their reason.
16:07 - All right. So that's all I've got. I'm sorry I went on a little bit longer than I intended to, but this episode is definitely packed with a lot of wisdom and wit, something that this book promises, and it does deliver, so I highly suggest you pick it up for more of that. If you enjoyed this episode, I want to remind you to please click the subscribe button on whatever podcast platform you're listening to this on, or just simply rate the podcast because either one will get it in front of more eyeballs and ears and in return, inspire more men to read. If you want to tell me what you thought about this podcast, which I'd love to hear from you, you could do so in two ways, on Instagram @DouglasVigliotti. It's the only social media that I have or via my website DouglasVigliotti.com. As I mentioned at the top of this episode, I have a new book out called “Aristotle for Novelists” and you can find out more information about that at Aristotle for Novelists.com. And lastly, I want to again, thank you so much for listening and remind you that if you want more information on this podcast, which includes signing up for the monthly newsletter, then all you have to do is head over to the website Books for Men.org.
