Warren Buffett’s long-time partner Charles Munger died on Tuesday last week. While he was “the silent partner” in Berkshire Hathaway, with Buffett being the more public face and the more often quoted, many give him equal credit in determining the company’s success.
Manager of Temple Bar Ian Lance described him as “as sharp as a tack, even as he got older” and he recommended every investor to read Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, edited by Peter D. Kaufman.
The book is a collection of speeches and writings with “invaluable advice” for investors on a wide range of subjects, “frequently presented in an amusing fashion” and full of “incredible” common sense.
“After the news of Munger’s death came in, it felt appropriate to dig out one of my prized possessions – a signed copy of Poor Charlie’s Almanack, whose subtitle sums up the book and Munger himself perfectly,” said Lance.
“I have been inspired to read the entire thing again. When someone as intelligent and successful as Munger generously shares his wit and wisdom, it would be foolish not to take advantage of it.”
The collection opens with a foreword titled Buffett on Munger and inevitably a rebuttal Munger on Buffett.
“Munger was a polymath who prided himself on the fact that he read all the time and across a wide range of subjects,” said the manager. “Throughout the book his encyclopaedic knowledge allows him to cite references that range from Cicero to Nietzsche and from Galileo to Johnny Carson.”
In Munger’s words: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero. You’d be amazed at how much Warren reads – and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
The main takeaway that Lance drew from the book came from the section Ten Talks, which covers a wide spectrum of Munger’s interests from acquiring worldly wisdom to how his Multiple Mental Models can be applied to business. Each talk is followed by a postscript written in 2006, allowing Munger to reflect and comment on some of his earlier thoughts.
“Possibly my favourite is Chapter 10, The Psychology of Human Misjudgement. As an investor who believes that behavioural biases in investors lead to share prices trading significantly above and below the intrinsic value of businesses, it is fascinating to see Munger identify 25 of these which range from ‘Simple, Pain-Avoiding Psychological Denial’ to ‘Overoptimism Tendency’,” said Lance.
Another part that resonated with Lance as a value investor was the chapter Mungerisms: Charlie Unscripted.
“It is so full of brilliant advice that it was hard to single one out, but as a value investor in a world in which hardly anyone still employs this investment philosophy, I was drawn to an answer that Munger gave to the question of why more investors don’t copy Berkshire Hathaway.”
In the book Munger said: “It’s a good question. Our approach has worked for us. Look at the fun we, our managers and our shareholders are having. More people should copy us. It’s not difficult – but it looks difficult because it's unconventional.”