Charlie Munger

Want to Learn Charlie Munger’s Way of Thinking?

According to Colby, men will confess to treason, murder, arson, false teeth, or a wig, but not to a lack of humour.

This, I believe also happens with creative thinking.

So people, in general, like to think that they are creative thinkers, don’t even consider otherwise and, you know what, they may be right!

Most of us can become creative thinkers. It’s just that we need a catalyst to bring forth our innate thinking powers.

Roger von Oech's Creative Whack Pack One such amazing catalyst I found out two years back, through a recommendation from Prof. Sanjay Bakshi, is Roger von Oech’s Creative Whack Pack.

This is a great tool to practice thinking like Charlie Munger does – combining various ideas from different spheres of life and joining them to create a process of thinking creatively – the latticework of mental models, as he calls it.

The pack consists of a deck of 64 cards divided in four suits. Each card gives a bite-sized story or situation and a strategy that may be adapted to the problem or concept the user is working on.

The idea is that drawing cards singly or in combination and considering the strategy can shift the user’s mind to previously unexplored, creative directions.

While this entire pack of cards has helped my thought process immensely over these past two years, here are four cards that have helped me as far as my investment thinking is concerned.

The text in quotes below is from the respective card.

Charlie Munger’s Six Secrets to Winning Big in Investing

Charlie Munger, business partner of Warren Buffett and vice chairman of Berkshire Hathaway, recently did an interview with Jason Zweig published by the Wall Street Journal. You can read Zweig’s notes from the interview here.

Here are the six simple but big-big ideas I’ve pulled out from WSJ’s interview of Charlie Munger – these are all you need to become a smarter investor, if you can ingrain these in your investment philosophy and practice them while making your decisions.

Over to Charlie!

How to Be Happy and Get Rich

I have been re-reading Poor Charlie’s Almanack over the past few days in preparation of my upcoming Mastermind course.

This is my fifth reading of this wonderful book, and it seems I am going through it for the very first time.

Unlike what many people think, this book is not a ready reckoner on how to become a successful investor. In fact, it’s much more than that.

It’s a book on how to live a happy, sensible and rich life and in the process become a better thinker and investor.

As you read through the book, some of Munger’s ideas will inspire you, and some will make you uncomfortable. But all will challenge you to think outside the box.

The third chapter of Poor Charlie’s Almanack captures “Mungerisms”, where Munger dispels hundreds of ideas on subjects ranging from life, investing, academia, financial engineering, accounting, money management business, and managements.

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #9)

This post is authored by Puneet Khurana, a Safal Niveshak tribesman.

Imagine the following scenario. You are sitting at your work desk sipping your coffee when your boss comes and offers you the following deal.

He offers you a fixed bonus of Rs 1 crore for the year. Besides this, he offers you a variable bonus. For the variable bonus, he asks you to either take another fixed Rs 50 lac or flip a coin. If it’s heads, you get Rs 1 crore and if its tails, you get zero.

Which of the options will you chose?

Now consider this.

This time he offers you a fixed bonus of Rs 2 crore for the year. From this Rs 2 crore, you can either give him Rs 50 lac back, no questions asked, or you can flip a coin.

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #8)

This post is authored by Puneet Khurana, a Safal Niveshak tribesman.

“Authority, authority!” they shout
Whose minds, not large enough to hold a doubt,
Some chance opinion ever entertain,
By dogma billeted upon their brain.
~ Ambroce Bierce

There is one thing we all have been taught from very beginning and that is to accept what our elders tell us; to accept their authority.

To do otherwise was considered to be an act of indiscipline and something that needs to be corrected.

The reason is well understood. At a young age, when our minds are not fully developed and we are not well-informed, relying on elderly wisdom served us extremely well.

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #7)

This post is authored by Puneet Khurana, a Safal Niveshak tribesman.

Today I discuss the human trait that, despite all its glory, has lead to disastrous consequences for many individuals and societies and specifically in investment world.

In fact, if there is one trait which, even though I do frequently observe in successful people in various other human endeavors, is very rare to find in the top strata of investing community.

In Munger’s speech, he calls it…

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #6)

This post is authored by Puneet Khurana, a Safal Niveshak tribesman.

Few years back, while buying a book on Amazon, I ended up buying two more books along with the intended purchase.

It was due to a feature of Amazon, which tells you what other buyers have bought along with the book you are trying to purchase. I never heard of these books earlier but after few more clicks, I was convinced enough to buy and hence my purchase.

Little I knew at that time, that psychologists have a special term for the kind of behavior I just displayed. It’s called…

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #5)

“I hated discussing ideas with investors, because I then became a defender of the idea and that influences your thought process.” ~ Michael Burry (The Big Short)

I’m sure this is one statement most of you will relate to. We often discuss stock ideas which, we understand, are contingent to future events but if we declare/discuss the ideas in public, irrespective of how the events unfold, it becomes extremely difficult (subconsciously) for us to change the stance we have taken in public.

Mohnish Pabrai of Pabrai Funds has often repeated during his annual investor meetings that he doesn’t discuss current stock investments as it clouds judgment.

I practice the same rule (but for a different reason – that of avoiding extreme embarrassment in future). 🙂

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #4)

Charlie Munger This post is authored by Puneet Khurana, a Safal Niveshak tribesman.

If you are sitting in a dark and unknown place for long time and someone switches on a light source, the initial feeling is of discomfort (especially for eyes). But once you get comfortable, you realize how different that place is from what you initially thought it to be.

In my college days, I had a similar feeling. My mind was in a mess and I was struggling to find some answers juggling myself between conflicts of religion, science, soft sciences etc.

As luck would have it, I stumbled upon the book of Richard Dawkins called The Selfish Gene.

It was a magical feeling and the world was a different place for me after that.

It influenced my views, clarified a lot of things about evolutionary qualities of human beings and also made clear the reason for apparent illogical behaviors of various species in the world.

Wit, Wisdom, Charlie: Elementary Worldly Wisdom from Charlie Munger (Issue #3)

By the time you read this article, the world’s largest economy would have decided its President for the next 4 years.

There is always an excitement in the markets worldwide when it comes to the US election and especially this time, given the state of the US and world economy. The parties have left no stones unturned and the gravity of the election is obvious from the fact that the current campaign was the most expensive ever.

I personally find the US election campaigns very interesting and there are great marketing and economic lessons to be learned from them.

Even though the tactics and key agenda points differ according to the time and the state of economy, there is always one common element to all such campaigns.

The campaigns try to channel and exploit two of the most primitive emotions of human beings. In fact, these emotions have been the central drivers of most of the historical movements, be it the mythological Mahabharata, the ancient wars, the Nazi camps, or various freedom revolutions over the course of history.