At age 29, Charlie Munger’s marriage was falling apart and his son was dying of leukemia. “A friend remembers that Charlie would visit his dying son in the hospital and then walk the streets of Pasadena crying.”

I cannot imagine anything worse. And yet, Munger came back from it.

He went on to have a total of 7 children and lived to age 99. Along the way, he accumulated a net worth of over $2 billion doing what he loved — investing.

That’s a life well lived, as far as I’m concerned. So I dug into his book, Poor Charlie’s Almanack, with gusto.

Resilience

One of the biggest lessons I learned from Charlie is resilience.

Few people have encountered harder circumstances. His son Teddy died young. Later, Charlie suffered complications from cataract surgery so severe he had to have his left eye removed.

Charlie also had reversals in business. The investing partnership he ran prior to Berkshire took two losses of over 30% in the 70’s, despite having an excellent overall record.

Every time, Charlie kept going. In one of the talks in the Almanack, he gives advice on how to be miserable:

“My third prescription to you for misery is to go down and stay down when you get your first, second, or third severe reverse in the battle of life.”

We’re all going to suffer setbacks and tough things in our lives. But the next time I run across one, I’ll be thinking of Charlie.

A Multidisciplinary Approach

One of the most fascinating parts of the book for me was Charlie’s portrait of his partner, Warren Buffett:

“If you watched him with a time clock, you’d find that about half of his waking time is spent reading. Then a big chunk of the rest of his time is spent talking one-on-one, either on the telephone or personally, with highly gifted people whom he trusts and who trust him. Viewed up close, Warren looks quite academic as he achieves worldly success.”

So what exactly is Warren reading? If he’s anything like Charlie, it just might be a history book.

Charlie advocates a multidisciplinary approach to business. He focuses on absorbing the key principles from a huge variety of disciplines: psychology, biology, history and more.

Most investors are watching CNBC or reading TechCrunch. They’re not reading books on psychology or physics.

Most investors aren’t performing that well either. To beat everyone else, you need a different approach.

I just ordered Clinical Psychology: A Very Short Introduction. After that, I’m planning to read similar books on a variety of fields.

Then, like Munger, I want to apply the key insights of those disciplines to business.

Understanding Our Minds

Munger wraps up this wonderful book by giving us a list of common reasons why we behave irrationally.

For example, what Munger calls the “social proof tendency” gets us doing whatever everyone else is doing. This effect is disastrous in financial markets — think about all those $100 million crypto seed rounds in 2021.

The deprival-superreaction tendency is one I’m especially prone to. We humans view a $10,000 loss as an awful thing, but experience way less pleasure from a $10,000 gain.

If we can recognize these biases in ourselves and others, we’ll be better at whatever we do.

Wrap-Up

Above all, Charlie attributes his success to his rationality. I would add another key trait: resilience.

Faced with Charlie’s situation as a young man, many people would’ve collapsed into alcoholism or some other dysfunction.

Charlie did not. He kept going, as hard as that must’ve been.

As Charlie built Berkshire from the ground up, he tried to make decisions as rationally as possible. For us flawed humans, that’s easier said than done.

I want to be like Charlie: rational and resilient. If I master that, I can do whatever I want.

Have you read Charlie’s book? Do you plan to? Leave a comment and let us know!

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