Charlie Munger is a fascinating character. Rich, but not quite as famous as his partner Warren Buffet, he’s been very successful and has tried to pass on his experience, knowledge and wisdom without much fanfare. Buffet credits him more for the success of Berkshire Hathaway than he does himself. There’s a bit of humility in that, but I think Charlie indeed has contributed immensely to that business.

Charlie passed away in 2023 and I was inspired to pick up a book and read about him. I always knew he was interesting and this was a good nudge to learn more about his life philosophy. Incidentally Stripe press published Poor Charlie’s Almanack at a similar time, so I bought a copy. It’s the closest thing to an autobiography of Charlie. It’s a collection of several talks Charlie has done over his lifetime, which he has then revisited and edited with new additional comments and reactions. This is my attempt to summarise what I learned from that book.

Multidisciplinary skills and a latticework of mental models

Throughout the book, one clear theme is Charlie’s insistence that not using multi-disciplinary skills is the biggest mistake you can make. He talks a lot about building a latticework of mental models in your head, so you can solve different types of problems. Most of those models aren’t just expertise in a particular field, but stealing the best ideas from what he calls “hard sciences” - physics, math, biology. Charlie also particularly values lessons from psychology - the behavioural rather than clinical kind.

While the debate about broad vs deep expertise has been ongoing for a long time, I find it interesting how strong Charlie’s opinion in favour of breadth is. This aligns strongly with my experience so that was reassuring. In most complex disciplines, being good at one thing is not enough. People can still succeed, but they cannot be in the top percentiles of performers if they only rely on a single field.

Old school values

One interesting aspect of Charlie’s success is that he has a set of traditional, old-school values. Charlie grew up and lived during a time when people had social mechanisms upholding morality and behaviour. He himself talks about how religion was what policed and ensured that society was held accountable when it comes to morality. So that traditional upbringing and behaviour distinguishes him. Being reliable and doing what you say you are going to do, or optimising for “good” are things he constantly talks about in his talks. He makes decisions which improve his overall quality of life and that of others around him, not just decisions that benefit him in the moment.

The reason his values stuck in my head while reading the book, is because it’s not something often talked about. Everyone has values, even if they don’t define them explicitly or share them publicly. But it’s hard to know what most people’s values are in our modern society. We’ve become so good at embracing our differences that we’ve lost the public discourse about our common values. We also don’t understand how each of us should embrace the values of the society we live in. So it’s memorable to read about someone who does adhere to his. It’s a sign of independence.

Wisdom

Charlie’s goal, in his writing and talks, but also in life, is to acquire worldly wisdom. The word “wisdom” isn’t really used often in modern times. Many leaders, even the ones avoiding sensationalism today, look for success, power, knowledge or popularity. But few look for wisdom, or if they do, they don’t call it that. I like the word wisdom. Charlie obviously does too. I think it captures a well-rounded outcome that is bigger than just success or knowledge. Wisdom is knowing how to lead a better life. It’s knowing good from bad and being able to stand up for what you believe in. I find that a much more appealing ideal than just being successful, and I’ll try to embed that into my life too.

Being reliable

In one of his talks, Charlie used his favourite method of inversion to demonstrate the value of being reliable. He did the opposite: he talked about how being unreliable is a guaranteed way to failure. He talks about this mental model of inversion at great length in the book, and it’s great to see it applied in this particular chapter as well. Being reliable underpins any other character trait or skill. Regardless of someone’s intelligence, expertise or knowledge, Charlie argues you cannot succeed if you can’t apply that consistently and work with other people. We often reach for quick wins or optimise for the next immediate milestone by cutting corners. Reliability requires us to think about the long-term value we create for others too.

The power of incentives

In the last chapter of the book, we can find Charlie talking about incentives:

I think I’ve been in the top 5% of my age cohort almost all my adult life in understanding the power of incentives, yet I’ve always underestimated that power.

It shows how much he believes in incentives. Another example of how important this is for him is that he quotes Benjamin Franklin often

If you would persuade, appeal to interest and not to reason

Humans are most productive and persistent when they have something to gain or lose from what they are doing. This basic principle is so foundational, that it may be the cornerstone of the entire capitalistic market economy system. Maybe market economies with democratic values win, because they trust this as a fundamental human trait. Charlie reminds us of it, but grounds it in practice. He teaches us we can often solve a problem not by thinking harder of the solution, but by changing the incentives for the people involved.

What not to take from Charlie

When learning from someone, it’s helpful to ask what they are not good at, or what some of their shortcomings may be. It helps make popular people human and fallible, and grounds what you can learn from them in reality. So what are Charlie’s weaknesses (as I see them) or what are things he recommends that I wanted to ignore?

One correct solution to each problem

I don’t know if this is just style, but I felt Charlie often assumes there is one best solution to each problem - the one that he has learned. He often explicitly says other solutions are inferior and does not present options and contrasting viewpoints in his talks. This could be an attempt to synthesise, or sound confident and direct. But I found it to be a “strong opinions, strongly held” approach. I doubt Charlie is a person who refuses to acknowledge he is wrong, but that’s how he comes across in the book.

Correlation vs. causation

When demonstrating why a specific mental model works, Charlie gives examples. What I found lacking in those examples was evidence that specific success or failure was caused by what Charlie describes. Yes, there was often correlation, but no direct causation.

Style

Charlie was immensely successful in his career. He is well respected by many other successful people and someone that we should definitely learn from. The one aspect of the book I didn’t like is Charlie’s writing and talking style. He is very direct, and likes to invent his own words. What he is not, is a professional writer. He is not someone who will keep you glued to a chair looking forward to finishing a chapter. He succeeds at being non-sensational, but that also takes away some of the “fun” from the book. His reputation and experience carries enough weight to encourage us to learn from him. But if you expect a thriller, this is not the book you should start.

I recommend that everyone reads Poor Charlie’s Almanack or at least some of his thinking and background. I learn the easiest by trying to understand the thinking and character of other great thinkers and leaders, which is why I love biographies. Charlie is such a colourful and rich character that I’m sure most of us will find something to learn from him. I know I did.