Poor Charlie’s Almanack

Poor Charlie’s Almanack is more than a collection of investment lessons—it’s a window into the extraordinary mind of Charles T. Munger, Warren Buffett’s long-time partner at Berkshire Hathaway. Drawing from decades of speeches, interviews, and reflections, this book distills Munger’s philosophy on rational thought, human behavior, investing, ethics, and lifelong learning. Modeled after Benjamin Franklin’s Poor Richard’s Almanack, it’s a treasury of practical wisdom delivered with Munger’s trademark wit, precision, and brutal honesty.

The Discipline of Rational Thought

If there’s one word Munger uses to describe himself, it’s rational. To him, rationality is not just a virtue—it’s a competitive advantage. He insists that human beings are naturally irrational, prone to wishful thinking, emotion-driven judgments, and self-deception. The key to success, he argues, lies in training yourself to think clearly and act logically, even when your instincts or the crowd tell you otherwise.

To make rational decisions, Munger follows several guiding principles:

He also loves the mental technique of inversion—thinking backward. If you want to be successful, think about what would guarantee failure and avoid it. If you want to stay healthy, ask what behaviors destroy health. Munger borrows this from mathematician Carl Gustav Jacobi’s maxim: “Invert, always invert.”

He illustrates this with real-world examples. Engineers often solve safety problems by asking not, “How can we make this bridge stand?” but, “What might make it collapse?” Likewise, investors should ask, “What can cause this business to fail?” before asking how it might succeed.

Understanding the Psychology of Misjudgment

One of Munger’s most influential ideas is that human irrationality stems from psychological biases—automatic mental shortcuts that evolved for survival but distort judgment in modern contexts. He identified 25 of these biases, explaining how they influence behavior in business, politics, and personal life.

Some of the most notable include:

• Incentive-Caused Bias: People do what they’re rewarded to do, not what’s right. Munger warns that “incentives explain why engineers build bridges that collapse and doctors overprescribe medication.” He cites the infamous cobra effect —when the British government offered bounties for dead cobras, people began breeding them for income.

• Social Proof: Humans instinctively follow the herd. During the tech bubble of the late 1990s, investors bought internet stocks not because they understood them, but because everyone else was buying. “Imitation,” Munger says, “is part of our evolutionary toolkit, but it ...