READ THIS BOOK - Poor Charlie's Almanack

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Since early 2020 when COVID started, I’ve gone on quite an exploration. In 2020 alone, I read over 25 books, all of which were either sci-fi (like Dune, The Three Body Problem, Snow Crash) or non-fiction. For some reason - maybe because I was unemployed and taking care of a newborn - my mind needed to work out. I had no idea that I would go on such a bender of books, but my brain was just saying “read something, learn something.”

So I ordered a book I’ve wanted to read for quite some time: Poor Charlie’s Almanack, a compendium of speeches by one of the best minds and investors of the 20th century, Charlie Munger.

I’ve been interested in the stock market and investments since I was young. I started investing - and losing money and learning and repeating - when I was 18 years old. I wanted go at it alone and learn myself without the help of books and other investors. Then when I was 19, I interned at a small wealth management team, and I got to sit next to the Chief Investment Officer, a brilliant and humble mind who taught me not only how little I knew, but how little he knew and how much he always strived to learn.

My arrogance and rebelliousness as a twenty-year-old ignored his advice to understand how little I knew. I was going to conquer the world! Yeah. Right...

It wasn't until recently that I whole-heartedly acknowledged how little I know. Spend a moment and really think about this statement: you know close to nothing. Truly. Think about how much there is to know in the world. Think about the number of Wikipedia entries and the endless amounts of books. How many of these would you be able to competently explain to a 5 year old? .01%?

Don’t worry even the majority of the most brilliant people in the world basically know nothing in relative terms. Yeah, he/she is one of the greatest physics minds in the world, but they don’t know shit about anything else.

ANYWAYS, the point I’m making is it was very psychologically freeing to realize how little I knew (and even many things I thought I knew well, I realized I was full of shit). This made me more open to learn and understand other points of view. It’s a win!

Which brings me back to investing and Charlie Munger and Poor Charlie’s Alamanack. If there is one person to learn investing from, I’d bet it’s Charlie Munger. Why? Because of the way he thinks. Because of the way he approaches problems and solves them. Because of his long-term vision. Because many times investing is not even about a company’s finances/numbers, it’s about common sense.

There is no one else like Charlie Munger. He will not only teach you about investing, he will teach you to think. And that, my friends, is an area we can all improve.

Buy the book, rent it, whatever, but please read it! Below are all my notes and quotes from the book to give you a feel what really stood out to me. enjoy!

Notes & Quotes

Multiple Mental Models Approach to Business (estimated to be 100 of them - Click here for list)

  • His models supply the analytical structure that enables him to reduce the inherent chaos and confusion of a complex problem into a clarified set of fundamentals. 

    This stitches together the analytical tools, methods, and formulas from such traditional disciplines as history, psychology, mathematics, engineering, biology, physics, chemistry, statistics, economics, and so on.

  • “if you have just one or two [mental models] that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does.”

  • “Just as multiple factors shape almost every system, multiple models from a variety of disciplines, applied with fluency, are needed to understand that system.” 

    1. Mathematics / Statistics 

      1. Compound interest from mathematics

      2. “The Fermat/Pascal system is dramatically consonant with the way the world works.”

      3. “Decision tree theory”

    2. Engineering

      1. Redundancy / Backup system model

      2. Breakpoints

      3. Quality Control (like what Deming did in Japan)

    3. Finance / Accounting / Economics

      1. Advantages of Scale

    4. Physics / Chemistry / Biology

      1. Breakpoint / tipping-moment / autocatalysis models from physics and chemistry

      2. Modern Darwinian synthesis model from biology - work of late 1930s and 1940s of discoveries of geneticists and natural historians to determine how change of genes could account for evolution of biodiversity: The organism acts, and has evolved, to further the interests of its genes.

    5. Philosophy

    6. Psychology

      1. Cognitive misjudgment models from psychology (I.E. Charlie’s 25 models from Psychology of Human Misjudgment talk)

      2. First principles - Look at every business and try to determine what their main psychological aim is for their business.

        1. Munger talks about a case study in Coke and says “[Coke] is going into the business of creating and maintaining conditioned reflexes. The ‘Coca-Cola’ trade name and trade dress will act as the stimuli, and the purchase and ingestion of our beverage will be the desired response.

        2. “How does one create and maintain conditioned reflexes?...(1) by operant conditioning and (2) by classical conditioning, often called Pavlovian conditioning.”

          1. For operant conditioning - we need only (1) maximize rewards of our beverage’s ingestion and (2) minimize possibilities that desired reflexes created by us will be extinguished through operant conditioning by competing products.

          2. Persuasion

    7. Social Proof

    8. Milgram experiment - Used authority to manipulate high-grade people into doing things that were clearly and grossly wrong 

    9. Pavlovian association - if people tell you what you really dont want to hear - what’s unpleasant - there’s an almost automatic reaction of antipathy

    10. Consistency principle

    11. Operant conditioning 

    12. Incentive-caused bias - what is good for the professional is good for the client and the wider civilization

  • The basics foundation of Mental Models are (Starting Page 167):

    1. Mathematics 

    2. Accounting

    3. Psychology

    4. Science

    5. Engineering & Engineering Quality Control

      1. Says Engineering QC is based on math of Pascal & Fermat and also based on what Deming brought to Japan with QC  

  • The Lollapalooza Effect - Forces / factors / models / biases operating in the same direction reinforce and greatly amplify each other in effect

  • Mental Biases

  • Checklists

    1. An Investing - or really anything IMO - Principles Checklist (Pages 73 - 76) but really a checklist for everything:

      1. Risk

        1. Avoid dealing with people of questionable character

        2. Insist upon proper compensation for risk assumed

      2. Independence

        1. Objectivity and rationality require independence of thought

        2. Mimicking the herd invites regression to the mean

      3. Preparation

        1. Develop into a lifelong self-learner through voracious reading.

        2. Cultivate curiosity and strive to become a little wiser every day

        3. Develop fluency in mental models from the major academic disciplines

      4. Intellectual Humility

        1. Acknowledging what you don’t know is the dawning of wisdom

        2. Identify and reconcile disconfirming evidence

        3. Resist false precision, false certainty

        4. Never fool yourself, knowing you’re the easiest to fool

      5. Analytic rigor

        1. Use of scientific method and checklists minimized errors and omissions

        2. Better to remember the obvious than grasp the esoteric

        3. Invert, always invert

      6. Allocation

        1. Remember highest and best use is always measured by opportunity cost.

      7. Patience

        1. Never interrupt compound interest

        2. Never take action for its own sake; avoid frictional costs

        3. Be alert for the arrival of luck

        4. Enjoy the process along with the proceeds, because the process is where you live

      8. Decisiveness

        1. Greedy when others are fearful and vice versa

        2. Opportunity doesn’t come often so seize it when it does

        3. Opportunity meets the prepared mind

      9. Change

        1. Continually challenge and willingly amend your “best loved ideas”

        2. Adapt to nature don’t expect nature to adapt to you

      10. Focus

        1. Reputation and integrity are most valuable assets

  • Munger Aphorisms (“Mungerisms”)

    1. Take a simple idea and take it seriously. 

    2. Don’t do cocaine. Don’t race trains. And avoid AIDS situations. - 2004

    3. I’m right and you’re smart, and sooner or later you’ll see I’m right

    4. You don’t want to be like the motion picture executive who had many people at his funeral, but they were just there to make sure he was dead.

    5. If you tell people why, they’ll understand it better, they’ll consider it more important and they’ll be more likely to comply. 

    6. The iron rule of life is that only 20% of the people can be in the top fifth.

    7. I asked the guy who sold purple and green fishing lures if the fish take these lures? He responded, ‘Mister, I don’t sell to fish.’

    8. Live with change and adapt to it.

    9. Heavy ideology is one of the most extreme distorters of human cognition.

    10. If you want to ruin civilization, just go to the legislature and pass laws that create systems wherein people can easily cheat.

    11. When people get bad news, they hate the messenger. 

    12. In my whole life, I have known no wise people (over a broad subject matter) who didn’t read all the time. None.

  • Quotes

    • Benjamin Franklin:

      1. Three may keep a secret, if two of them are dead.

      2. It’s difficult for an empty sack to stand upright.

      3. When you’re finished changing, you’re finished.

    • Cicero:

      1. The best Armour of Old Age is a well spent life preceding it; a Life employed in the pursuit of useful knowledge, in honourable actions and the practice of Virtue; in which he who labours to improve himself from his Youth, will in Age reap the happiest fruits of them; not only because these never leave a man, not even in the extremest Old Age; but because a conscience bearing witness that our life was well-spent, together with the remembrance of past good actions, yields an unspeakable comfort to the soul.

    • Einstein:

      1. Compound interest is the eighth wonder of the world. 

      2. Said his successful theories came from “curiosity, concentration, perseverance, and self-criticism.”

    • Others

      1. Faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof.” - John Kenneth Galbraith

      2. “What a man wishes, that also he will believe.” - Demosthenes

      3. “The man who doesn’t read good books has no advantage over the man who can’t read them.”

  • Other Notes

    1. Cicero - Thought to be Rome’s greatest writer, orator, lawyer, and statesmen.  Murdered by Marc Anthony in 43 B.C. for opposing autocracy.

      1. Cicero’s underlying philosophical view was one of deep and realistic cynicism about human nature, including a distaste for pure mob and demagogues

      2. This cynicism was counterbalanced by his belief it was the duty of citizenry, particularly its most eminent members, to serve the State and its values wisely and vigorously, even if that required a great sacrifice on the part of the servers. 

      3. He invented the Latin word “moralis” root of our word moral.

      4. To him, pride in a job well done is vastly constructive as it motivates good conduct in early life because, in remembrance, you make yourself happier when old.

      5. Cicero believed in self-improvement so long as breath lasts.

      6. The only life worth living is dedicated in substantial part to good outcomes one cannot possibly survive to see. 

    2. On Diversification

      1. In Munger’s view, a portfolio of three companies is plenty of diversification.

    3. Darwin

      1. He always gave priority attention to evidence tending to disconfirm whatever theory he had 

  • Themes

    • Multidisciplinary Thinking

    • Self-Improvement

    • History Repeats

    • Human Nature

  • Main Historic Characters Referenced

    1. Benjamin Franklin

    2. Isaac Newton

    3. Charles Darwin

    4. Pavlov

    5. Planck 

    6. Adam Smith

  • Peter Kaufman (Editor of Poor Charlie’s Almanack) - Speech on Multidisciplinary Approach to Thinking

    1. Why multidisciplinary thinking (“MDT”) is important

      1. Austrian philosopher Ludwig Wittgenstein said, “To understand is to know what to do.”

      2. St. Lous Cardinals great, Lou Brock, “Show me a man who is afraid of appearing foolish and I’ll show you a man who can be beat every time.”

    2. The Three Buckets - A statistician’s best friend is what? A large, relevant sample size. And why? Because a principle derived from a large relevant sample size can’t be wrong can it?

      1. Bucket 1 is 13.7 billion years. Is that a large sample? It’s the largest one in the whole universe. There is no larger sample. Because what is it? It’s the inorganic universe. Physics. Geology. Anything that’s not living goes in my bucket number 1. 13.7 billion years.

      2. Bucket number 2 is 3.5 billion years. It’s biology on the planet Earth. Is that a big sample size? Is it relevant? We’re biological creatures. Let me ask you this, inorganic, bucket number one, is it relevant? We live in it. So bucket number one we live in, 13.7 billion years. Bucket number two is what we’re part of, biology. 3.5 billion years. 

      3. Bucket 3 - 20,000 years of recorded human history. That’s the most relevant of all. That’s our story. That’s who we are.

    3. Models he discusses

      1. Mirrored reciprocation - based on Newton’s Third Law of Motion (for every action, there will always be an equal and opposite reaction) - Every interaction you have with another human being is merely mirrored reciprocation. Therefore, be a good person! 

        1. We test this concept by looking at the three buckets, and it confirms that Newton’s Third Law of Motion has been in effect for 13.7 billion years so same for 3.5 billion years, then he uses the example of grabbing a cat by its tail. It;s not going to like this and try to claw you senseless. Equal and opposite reaction.  

      2. Compound Interest

        1. Einstein said, “The most powerful force in the universe is compound interest.” Einstein also said it’s the greatest mathematical discovery of all time. He said it’s the eighth wonder of the world. 

        2. Kaufman defines as: dogged incremental progress over a very long time frame.

          1. You have to be constant, not intermittent.

      3. Win-Win is SO MUCH better than Win-Lose

        1. What happens you insert win-win in any game theory scenario, what do you get? Optimal every time.

        2. What must you necessarily do if you’re interested in achieving win-win frameworks with your important counterparties in life? You must understand the basic axiom of clinical psychologyThe basic axiom of clinical psychology reads, ‘If you could see the world the way I see it, you’d understand why I behave the way I do.’ 

          1. And I say if you buy the axiom, which you should, you must buy the two corollaries as well because they’re logical extensions. They’re undeniable.  

          2. Corollary number one, if that axiom is true and you want to understand the way someone’s behaving, you must see the world as they see it. 

          3. Corollary number two, if you want to change a human being’s behavior and you accept that axiom, you must necessarily, to get them to change, change how they see the world.

        3. Win-Win is the secret to leadership. The secret to leadership is to see through the eyes of all six important counterparty groups and make sure that everything you do is structured in such a way to be win-win with them. The six are: 

          1. Customers

          2. Suppliers

          3. Employees

          4. Owners

          5. Regulators

          6. Communities you operate in

          7. If you can truly see through the eyes of all six of these counterparty groups and understand their needs, their aspirations, their insecurities, their time horizons. How many blind spots do you have now? Zero. How many mistakes are you going to make? You’re going to make zero. People don’t think this is possible. It’s really easy. To understand is to know what to do. 

    4. Einstein’s Five Ascending Levels of Cognitive Prowess (from best to worse):

      1. Simple - Why is simple better than genius? Because you can understand it!

      2. Genius

      3. Brilliant

      4. Intelligent

      5. Smart

READ THIS BOOK - Men We Reaped: A Memoir by Jesmyn Ward

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NOTE: I wrote this review on November 22, 2014, and never published it. Given how powerful the book is, I wanted to at least put this out there.

In a span of four years, five young Black men in Jesmyn Ward's life, including her brother, died. She tells the story of each death, each person, his quirks, beauties, and foibles in heartbreaking detail. The constant, suffocating grief that Ward deals with throughout her life is visceral. Her words hold nothing back.

There are many things that I took for granted as a child without understanding the consequences, both mental and physical, that would have been part and parcel of my youth had I not been provided with so many of those necessities. Reading Ward's account of life in Mississippi as a Black family and community was striking, poignant, brave, and eye-opening.

There are so many worlds that I am so close to yet so removed from that I can't comprehend the gravity, perils, and consequences that are more inherently borne into lives based solely on circumstances, and many times, the color of their skin. This book helps to provide some insight into one of those worlds.

I wanted to share a few of the most powerful passages from Ward's memoir. Many are bleak but provide insight into Ward's psyche and the psyche of those around her coping with so much.

Nonetheless, I think the last passage shows how Ward, after experiencing so much loss, found something to hold onto.  

(These passages provide brief glimpses of the power of the entire book, so please read the entire book to understand where Ward is coming from when saying these things.)

1.  "The land that the community park is built on, I recently learned, is designated to be used as burial sites so the graveyard can expand as we die; one day our graves will swallow up our playground. Where we live becomes where we sleep. Could anything we do make that accretion of graves a little slower? Our waking moments a little longer? The grief we bear, along with all the other burdens of our lives, all our other losses, sinks us, until we find ourselves in a red, sandy grave. In the end, our lives are our deaths. Instinctually C.J. knew this. I have no words."  

2.  "What I did not understand then was that the same pressures were weighing on us all. My entire community suffered from a lack of trust: we didn't trust society to provide the basics of a good education, safety, access to good jobs, fairness in the justice system. And even as we distrusted the society around us, the culture that cornered us and told us were perpetually less, we distrusted each other. We did not trust our fathers to raise us, to provide for us. Because we trusted nothing, we endeavored to protect ourselves, boys becoming misogynistic and violent, girls turning duplicitous, all of us hopeless. Some of us turned sour from the pressure, let it erode our sense of self until we hated what we saw, without and within. And to blunt it all, some of us turned to drugs."

3.   "After my grandfather left my grandmother for another woman, she raised the seven children they'd had together on her own.  She took what my grandfather left with her, and she built it into something more, and she survived.

"This is a common refrain in my community, and more specifically in my family. I have always thought of my family as something of a matriarchy, since the women of my mother's side have held my nuclear family and my immediate family and my extended family together through so much. But our story is not special. Nor had it always been this way. It used to be that the Catholic Church was a strong presence in my community and divorce unheard of; men did not leave their women and shared children. But in my grandmother's generation, this changed. In the sixties, men and women began to divorce, and women who'd grown up with the expectation that they'd have partners to help them raise their children found themselves with none. They worked like men then, and raised their children the best they could, while their former husbands had relationships with other women and married them and then left them also, perhaps searching for a sense of freedom or a sense of power that being a Black man in the South denied them. If they were not called "sir" in public, at least they could be respected and feared and wanted by the women and children who love them. They were devalued everywhere except in the home, and this is the place where they turned the paradigm on its head and devalued those in their thrall. The result of this, of course, was that the women who were so devalued had to be inhumanly strong and foster a sense of family alone. This is what my grandmother did."

4.   "When I was 12 years old, I looked in the mirror and I saw what I perceived to be my faults and my mother's faults. These coalesced into a dark mark that I would carry through my life, a loathing of what I saw, which came from others' hatred of me, and all this fostered a hatred of myself. I thought being unwanted and abandoned and persecuted was the legacy of the poor southern Black woman. But as an adult, I see my mother's legacy anew. I see how all the burdens she bore, the burdens of her history and identity and of our country's history and identity, enabled her to manifest her greatest gifts. My mother had the courage to look at four hungry children and find a way to fill them. My mother had the strength to work her body to it's breaking point to provide for herself and her children. My mother had the resilience to cobble together a family from the broken bits of another. And my mother's example teaches me other things: this is how a transplanted people survived a holocaust and slavery. This is how Black people in the South organized to vote under the shadow of terrorism and the noose. This is how human beings sleep and wake and fight and survive. In the end, this is how a mother teaches her daughter to have courage, to have strength, to be resilient, to open her eyes to what is, and to make something of it. As the eldest daughter of an eldest daughter, and having just borne a daughter, I hope to teach my child these lessons, to pass on my mother's gifts.

"Without my mother's legacy, I would never have been able to look at this history of loss, this future where I will surely lose more, and write the narrative that remembers, write the narrative that says: Hello. We are here. Listen.”

I can't recommend this book enough and added the Amazon link below. 

READ THIS BOOK - Americanah by Chimamanda Ngozi Adichie

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Americanah is a story about wealth and privilege, war and peace, love and the shields that deflect its arrows, whites and blacks, African-Americans and Non-American Blacks, poverty and riches, the United States and the world, and finally, Ifemelu and Obinze. It's a story of many competing themes that never seem to trip over each other; instead, they weave together seamlessly.

Ifemelu is a Nigerian girl who emigrates to the United States after high school to attend college. She begins to blog about her experiences in America, and the blog posts alone are worth the price of admission for this novel. Obinze, Ifemelu's boyfriend and love from high school, has his own travails as he grows into a man. The novel follows both of them with an amazing depiction and vantage point of the lives and countries they see and live.

Author Chimamanda Ngozi Adichie, who is also a Nigerian, captures these characters in all of their humanity. All of them are flawed, and the ones that mask their flaws behind their pride prove to be the most insecure and miserable. The many characters that briefly pass through Ifmelu and Obinze's life are also incredibly well drawn. For example, one description of a corrupt politician, "Ferdinand, a stocky acquaintance of Chief’s who had run for governor in the last elections, had lost, and, as all losing politicians did, had gone to court to challenge the results. Ferdinand had a steely, amoral face; if one examined his hands, the blood of his enemies might be found crusted under his fingernails."

Most impressive was Adhichie's ability to succinctly describe the ease that wealth and privilege enable while the burdens of poverty and "choicelessness" (as she puts it) disable so much. I wanted to provide some of my favorite passages in regards to this in the hopes that a few of you would read this book! (I included a link at the bottom if you have a Kindle and/or want to buy from Amazon).

1.  "There was a certain luxury to charity that she could not identify with and did not have.  To take 'charity' for granted, to revel in this charity towards people whom one did not know - perhaps it came from having had yesterday and having today and expecting to have tomorrow. She envied them this…Ifemelu wanted, suddenly and desperately, to be from the country of people who gave and not those who received.  To be one of those who had and could therefore bask in the grace of having given, to be among those who could afford copious pity and empathy."

2.  "She liked, most of all, that in this place of affluent ease, she could pretend to be someone else, someone specially admitted into a hallowed American club, someone adorned with certainty."

3.  "The stories of his wealth made her assume he had changed more than he possibly could have.  People often told him how humble he was, but they did not mean real humility, it was merely that he did not flaunt his membership in the wealthy club, did not exercise the rights it brought – to be rude, to be inconsiderate, to be greeted rather than to greet - and because so many others like him exercised those rights, his choices were interpreted as humility.  He did not boast, either, or speak about things he owned, which made people assume he owned much more than he did.  Even his closest friend, Okwudiba, told him how humble he was, and it irked him slightly, because he wished Okwudiba would see that to call him humble was to make rudeness normal.  Besides, humility had always seemed to him specious thing, invented for the comfort of others; you were praised for humility by people because you did not make them feel any more lacking than they already did.  It was honesty that he valued; he had always wished himself to be truly honest, and always feared that he was not."

4.  "His friends were like him, sunny and wealthy people who existed on the glimmering surface of things… He was always thinking of what else to do and she told him that it was rare for her, because she had grown up not doing, but being."

5.  "Ifemelu would also come to learn that, for Kimberly, the poor were blameless. Poverty was a gleaming thing; she could not conceive of poor people being vicious or nasty because their poverty had canonized them, and the greatest saints were the foreign poor."

6.  "Alexa, and the other guests, and perhaps even Georgina, all understood the fleeing from war, from the kind of poverty that crushed human souls, but they would not understand the need to escape from the oppressive lethargy of choicelessness.  They would not understand why people like him, who were raised well fed and watered but mired in dissatisfaction, conditioned from birth to look towards somewhere else, eternally convinced that real lives happened in that somewhere else, were now resolved to do dangerous things, illegal things, so as to leave, none of them starving, or raped, or from burned villages, but merely hungry for choice and certainty."

Americanah
$10.00
By Chimamanda Ngozi Adichie
Buy on Amazon