This article is an excerpt from the Shortform book guide to "Poor Charlie's Almanack" by Charles T. Munger. Shortform has the world's best summaries and analyses of books you should be reading.
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What life lessons can we learn from Charlie Munger’s speeches? Why is Warren Buffet so important in Munger’s life?
Charlie Munger’s speeches highlight moral character, hard work, focus, good partnerships, and a great sense of humor as the secrets to his success in life. His partnership with Warren Buffet is also crucial because Buffett serves as an invaluable ally for testing out his thinking.
Read on to discover more valuable life lessons from Charlie Munger’s speeches.
Moral Character and Honesty
Charlie Munger’s speeches show how much he cares about reputation—the reputation of Berkshire Hathaway, of its owned companies, and of himself. He desires integrity from people he works with and managers of companies he wants to acquire. Companies that have a trusted brand name have a competitive advantage that can persist over time. Trust takes a long time to build, and an instant to vanish.
- “When you borrow a man’s car, you always return it with a full tank of gas.” People notice these little things.
- Track records are important, and if you develop one in an integral trait like honesty, you’ll have a big advantage in the world.
- You should be able to make plenty of money without getting anywhere close to the line of legal trouble. Often you’ll make more money by doing the right thing.
- What’s the best way to have good friends and relationships? By deserving good friends and relationships by deserving it yourself.
- “It’s hard for an empty sack to stand upright.”—Benjamin Franklin
- “Trickery and treachery are the practices of fools that have not the wits enough to be honest.”—Benjamin Franklin
Don’t Cheat
- Warren Buffett hates CEOs who manipulate their financial statements with tricks like adjusted earnings and not counting stock as compensation. “A CEO who, as his company revved up to go public, asked prospective auditors, “What is two plus two?” The answer that won the assignment, of course, was, “What number do you have in mind?”—Warren Buffett, 2016 BRK shareholder letter
- “If you mix raisins with turds, you’ve still got turds.” No accounting standards or degree of auditing can prevent unscrupulous managers from conducting fraud.
- His partner hates the idea of adjusted earnings. In one of Charlie Munger’s speeches, he said, “Every time you see the word EBITDA [earnings before interest, taxes, depreciation, and amortization], you should substitute the words “bullshit earnings.”
Charlie’s Parenting Style
Munger’s children contributed quotes in the Poor Charlie’s Almanack book. They comment on his nature—hard-working, perpetually reading, and absent-minded. But they speak well of his lessons on character, good decision making, and discipline. All seem grateful for the parenting.
His son, Charles Munger Jr. shared a teaching strategy that Munger used. He told a parable, where someone faced an ethical problem. He gave two endings, a good version where someone chose the right path, and a downward spiral tale, where someone chose the wrong path and suffered an endless series of catastrophes. One tale involved a manager who had made an accounting mistake that resulted in big losses. In the correct version of the story, he went to his boss and told him about the mistake. His boss understood, thanking him for admitting to the mistake and forgiving him, also noting that had he tried to hide the mistake, he would have been fired immediately.
Benefits of Old Age
Old age comes with declining physical health, but it comes with increased wisdom and comfort of a life well-lived.
- In the Trojan war of mythology, Agamemnon in the war on Troy “never once wished for ten more men with the strength of Ajax but, instead, wanted ten more with the wisdom of Nestor.”
- “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.”—Cicero
Work Hard on Good Work
Success doesn’t come without hard work.
- In Charlie Munger’s speeches, he repeatedly emphasized that passion is more important than natural talent or brain power. Berkshire has many companies with people who are fanatics about their business.
- Munger and Buffett are both famous for reading a lot. But reading isn’t enough—you need to have the courage to choose the right ideas and do good things with them.
- In one of Charlie Munger’s Speeches, he stated that McDonald’s is one of the most successful educational institutions in the world. It provides first jobs to millions of young people, many who have trouble in traditional education, and teaches them a valuable lesson—show up daily and do good work to succeed.
- Munger once collaborated with a construction firm with two partners who made a simple agreement—”split the work equally, and when we’re behind, we will both work 14 hours a day, every day of the week, until we’re caught up.” Naturally, they succeeded and were admired.
- “Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not. It is the first lesson that ought to be learned and however early a man’s training begins, it is probably the last lesson that he learns thoroughly.”—19th century biologist Thomas Henry Huxley
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Like what you just read? Read the rest of the world's best book summary and analysis of Charles T. Munger's "Poor Charlie's Almanack" at Shortform .
Here's what you'll find in our full Poor Charlie's Almanack summary :
- A collection of Charlie Munger’s best advice given over 30 years
- Why you need to know what you’re good at and what you’re bad at to make decisions
- Descriptions of the 25 psychological biases that distort how you see the world
