Reblog: Charlie Munger on Getting Rich, Wisdom, Focus, Fake Knowledge and More


“In the chronicles of American financial history,” writes David Clark in The Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway’s Vice Chairman on Life, Business, and the Pursuit of Wealth, “Charlie Munger will be seen as the proverbial enigma wrapped in a paradox—he is both a mystery and a contradiction at the same time.”

On one hand, Munger received an elite education and it shows: He went to Cal Tech to train as a meteorologist for the Second World War and then attended Harvard Law School and eventually opened his own law firm. That part of his success makes sense.

Yet here’s a man who never took a single course in economics, business, marketing, finance, psychology, or accounting, and managed to become one of the greatest, most admired, and most honorable businessmen of our age. He was noted by essentially all observers for the originality of his thoughts, especially about business and human behavior. You don’t learn that in law school, at Harvard or anywhere else.

Bill Gates said of him: “He is truly the broadest thinker I have ever encountered.” His business partner Warren Buffett put it another way: “He comes equipped for rationality… I would say that to try and typecast Charlie in terms of any other human that I can think of, no one would fit. He’s got his own mold.”

How does such an extreme result happen? How is such an original and unduly capable mind formed? In the case of Munger, it’s clearly a combination of unusual genetics and an unusual approach to learning and life.

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Reblog: Warren Buffett : This is the best book I read last year…


Warren Buffett’s Berkshire Hathaway is out with its annual letter to shareholders.
Near the bottom of the letter, the billionaire investor touches on his favourite reads of 2016.

“The best book I read last year was ‘Shoe Dog’ by Nike’s Phil Knight ,” he writes. “Phil is a very wise, intelligent and competitive fellow who is also a gifted storyteller.”

He adds that Omaha, Nebraska-based retailer The Bookworm will have “piles” of the book, in addition to “investment classics by Jack Bogle,” at the annual Berkshire shareholder meeting in May.

Notably, Buffett is actually briefly mentioned near the end of “Shoe Dog.”

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Reblog: The Dhandho Investor


Value investor Mohnish Pabrai wrote The Dhando Investor: The Low-Risk Value Method to High Returns (Wiley, 2007).  It’s an excellent book that captures the essence of value investing:

The lower the price you pay relative to the probable intrinsic value of the business, the higher your returns will be if you’re right and the lower your losses will be if you’re wrong.

If you have a good investment process as a value investor, and you’re focused on cheap and good companies with low or no debt, then you are likely to be right on roughly 2/3 of your investments.  Because losses are minimized on the other 1/3 – due to the low price paid – the overall portfolio is likely to do well over time.

Mohnish sums up the Dhando approach as:

Heads, I win;  tails, I don’t lose much!

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Reblog: Crazy stock market facts


bulls-and-bears

For those of us who are stock market novices, the thought of playing the stock market is simultaneously electrifying and terrifying. The stock market seems to present an endless realm of financial possibilities, as long as you know what you are doing. However, for those of us who don’t know where our bulls start and our bears end, the stock market can seem like a dizzying, complex place.The stock market is also home to some truly unusual happenings.

Here are 7 crazy Stock Market facts:

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