Book review: Poor Charlie’s Almanach – Peter D. Kaufmann

This was one of my few “souvenirs” from my pilgrimage to Omaha some weeks ago.

The book can be basically divided in 2 parts:

1) The first 150 pages or so is some “Almanach style” collection of quotes, interviews, observation and general concepts of the “Munger style”
2) The remaining part then are transcripts/manuscripts of talks, Charlie Munger had given over the years

The speeches themselves are of course most interesting, as this is Charlie’s original work.

Those are the 11 talks / speeches

1) Harvard school Commencement Speech (1986)
Major concepts: Reliability, inverting problems

2) Talk at USC (1994)
“Worldly wisdom”, combining knowledge from many different areas, multiple mental models
Economics of scale / dumb bureaucracy, specialisation
Airlines vs. cereals, when does technology help or kill a business ?
Incentives

3) Stanford Law School 1996
make systems cheating proof, large companies shouldn’t produce football helmets

4) Practical Thought about Practical Thought (1996)
Mental model, Coca Cola case,

5) Harvard Law School reunion (1998)
Academic multidisciplinary

6) Investment Practices of Leading Charitable Foundations (1998)
Bernie Cornfeld, deficiencies of professional money management

7) Breakfast meeting of the Philanthrophic Roundtable (2000)
“febezzlemant”

8) The great Financial Scandal of 2003 (2000)
Option accounting at Tech companies

9) Academic Economics, USC (2003)
Raising prices often raises sales opposite to classical economic theory

10) USC Law School Commencement address (2007)
constant learning, acquisition of wisdom.LEarning machine”

11) The Psychology of Human Misjudgement
25 psychological “mental models”

At the end of the book, there is also a recommended reading list. The one from Charlie Munger himself can be found for instance here.

Summary:

I think it is a “MUST READ” for any serious disciple of the “Value Investing” School. It is basically the only book where you can find a lot of knowledge about the “number 2” guy at Berkshire Hathaway. For many people, the success of Berkshire is the success of Buffet. I am pretty sure, Buffet would have done well without Charlie, but I would not underestimate the contribution of Munger to the “Later stage” success of Berkshire.

The book is not an easy read and I will have to read it again. Although the author tried to compile it in a coherent way it is clearly not a “Bruce Greenwald” style step-by-step book or a “how to get rich quickly” publication.

One warning: It is a real heavy (1 kilo) big book. I “schlepped” this one back from Omaha and no, I will not take orders if I go to Omaha again next year.

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