Poor Charlie’s Almanack

Charles T. Munger · Edited by Peter D. Kaufman

Poor Charlie’s Almanack brings together Munger’s talks and reflections on judgment, business and learning. Read it as a collection of arguments and examples, rather than a single step-by-step method.

Selected ideas

A latticework of mental models

“You’ve got to have models in your head.”

Munger argues for connecting experience to ideas from several disciplines. One familiar model is not enough to explain every problem. Source: Talk Two.

Work backward, too

“Invert, always invert.”

Munger cites the mathematician Carl Jacobi here. Consider what would cause failure, and examine how to avoid it. This is an additional way into a problem, not a replacement for forward reasoning. Source: Talk One.

Know the limits of your competence

Distinguish genuine understanding from confidence. Munger’s discussion of a circle of competence asks where your knowledge gives you an edge—and where it does not. Source: Talk Two.

Look at incentives and interacting biases

Munger emphasizes the influence of rewards and punishments, and the way multiple psychological tendencies can reinforce one another. His classification is a practical synthesis, not a complete scientific taxonomy. Source: The Psychology of Human Misjudgment.