Poor Charlie’s Almanack

Why this book

I had read Munger the way most people do: one line at a time, on someone else’s feed. The lines were good. The thinking behind them never came along.

So this autumn I’m reading the talks themselves, one at a time, with a pencil. One rule: a note stays only if it changes a decision. His title borrows from Franklin’s almanac, the one my second rule comes from.

Three ideas that changed a decision

Incentives beat intentions

Talk Eleven, 1995. Read 19 Sep. Run 03 was going to count a streak. A streak rewards showing up, not the result. I dropped it. Before: a streak counter. After: a single result, on day 30.

Invert first

Talk One, 1986. Read 24 Sep. Before building QG’s memory, I listed every way it could fail. Two of five features didn’t survive the list. Before: five features. After: three, shipped 6 Oct.

The man with a hammer

Talk Two, 1994. Read 3 Oct. I was answering every problem with a new agent. Now the first question is whether it needs software at all. Before: seven automations. After: four, and three paper checklists.

I have nothing to add.

His usual reply at Berkshire’s annual meeting. Rule III, in five words.

From the margins

Talk Four is a thought experiment. Munger gives himself an absurd brief, to grow a soft drink from nothing into one of the largest brands on earth, and solves it out loud with obvious ideas only. The arithmetic comes first¹1Now the first line of every QG brief.: how much would have to be sold, every day, for the brief to come true.

What I hadn’t seen before: he takes the easy questions first²2Tried on the QG roadmap: four of seven were no-brainers.. Most of the answer falls out of decisions nobody would argue with, and what is left is small enough to think about.

The part I resist: he makes it sound inevitable. Hindsight writes very clean case studies³3Disagree, partly. Ask for a failure he called in advance. See The odds are a choice.. I’d like to watch him run the same exercise on a company that didn’t make it.

Footnotes

1. Now the first line of every QG brief. ↑

2. Tried on the QG roadmap: four of seven were no-brainers. ↑

3. Disagree, partly. Ask for a failure he called in advance. See The odds are a choice. ↑