Today we will talk about The Charlie Munger Reading List (45 Charlie Munger book recommendations)
Buffett’s partner Munger said: If you rely on existing knowledge, you can’t go far in life. Munger discovered early on that one needs to learn interdisciplinary knowledge in order not to do stupid things.
He is also a fan of biography books, he said, reading a biography is to make friends with the "dead great men", but if you do become friends with the dead great men in your life, then you will live a better life and get better This is much better than just talking about some great principles.
Warren Buffett, an investment guru known as the "stock god", said that he has met countless people in his life and has never met someone like Charlie Munger. "I am grateful for him beyond words."
As Buffett's golden partner and behind-the-scenes think tank, Munger and Buffett have created the best investment record ever.
Since Berkshire Hathaway was founded in 1956, its stock has grown by leaps and bounds at an average annual growth rate of 24%. The current market value is close to
US$280 billion. The company ranks third in the global market value list of listed companies.
At the annual Berkshire Hathaway and Sico International Shareholders’ Meetings, Munger recommends some books, covering a wide range of fields. Kaufman concluded that Munger "extremely mastered each It is a different discipline,
so it can take into account many factors that ordinary people would not consider when investing." If you want to get a glimpse of the business logic of this investment genius, you might as well look for the answer in the book.
"If you have not done a solid reading in this field of investment, I don't think you can become a really good investor, and I don't think there is a book that can do this for you."
In reading, establish your own "thinking pattern grid", which requires a lot of reading mathematics, biology, physics, sociology, psychology, philosophy, literature, and other subjects and important works of famous scientists in related subjects, understand Familiar with the core concepts introduced in the book, connect and integrate the thinking modes of different disciplines.
At the same time, apply these theories to investment, carry out correct thinking and independent thinking, and then invest smartly to obtain the best return on investment.
"I don't think I'm a model of a good education. I learned to get the information I want by reading. I often do this in my life. I often prefer an outstanding mentor who has passed away and does not like it. A living teacher."
If you want to get wisdom, you need to sit down and read a book quietly. This is the source of wisdom.
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1. Who is Munger
Charlie·Munger, Born January 1, 1924, American Investor, Warren·Buffett's golden partner, Berkshire·Vice Chairman of Hathaway.
The 96-year-old old man, In the past 46 years, He and Buffett teamed up to create the best investment record ever-the book value of Berkshire's stock has created an investment myth with an average annual compound rate of return of 20.3%, The stock price per share rose from
$19 to $84,487.
2. Munger's Quotations and Thinking
2.1 Reverse thinking
If you want to understand how to get happiness in life, Charlie first studied how life can become painful； We need to study how companies can become stronger and bigger, Charlie first studied how companies decayed； Most people care more about how to succeed in stock market investment, Charlie is most concerned about why most people fail in stock market investment.
2.2 Find the circle of competence
"Find out what you do best, Then persevere, Happy to do it well."This is Charlie's usual way of life.
Just be prepared, Seize a few opportunities in life, Take appropriate action quickly, and Do simple and logical things, Wealth in this life will be greatly increased.
The opportunities mentioned above are rare, They usually fall on constantly looking and waiting, People who are full of curiosity and keen to analyze various possibilities."
2.3 Interdisciplinary model + multiple thinking
"What is a mental model?? Put this way, The first rule is, You must have a multiple-thinking model——Because if you can only use one or two, The psychology of human nature shows, You will distort reality, Until it fits your mental model, Or at least until you think it fits your model.
From the perspective of the person holding the hammer in his hand, The world is like a nail."This is a dumb way to deal with problems. Encountered different companies, You need to check different factors, Apply different mental models.
Soft science should strengthen the basic scholarly spirit and methods imitating hard science. Here the hard sciences, Are exponential, physics, and the Four disciplines of chemistry and engineering.
Munger spent a lot of energy, mastering the basic academic spirit and methods of hard science, He used this method to learn various soft sciences, Increase interdisciplinary universal wisdom.
If you switch from engineering to business, you will find that probabilistic thinking conflicts with mechanical determinism thinking, If professors who study these two disciplines meet, Probably pinch.
But the moment when I feel the conflict, You will find that your thinking system begins to change from point thinking to line thinking.
If I were a two-dimensional creature, I don’t understand how three-dimensional creatures see the world, One more subject will give you another measure. "Three-body". It talked about looking at 3D from 4D, It's like a divided piece of paper is mapped in a mirror of infinite reflection.
The most important examples of these models include the redundant backup model of engineering, the Mathematical compound interest model, The tipping point of physics and chemistry, the Overturning moment, the Autocatalysis model, the Modern Darwinian Comprehensive Model of Biology, And the cognitive misjudgment model of psychology.
If you haven’t made the basic but somewhat less natural mathematical probability methods a part of your life, Then in the long life, You will be like a one-legged man in a kicking competition.
However, these disciplines——Especially psychology——Constitute the foundation on which his system rests.
Munger made a special mention in chapter four of this book, Human misjudgment psychology, I especially like this part, Because I saw a lot of people, including professionals who have inevitable results due to misjudgment or cognitive bias. Even if I understand the underlying reason, It's hard to overcome, Because of human nature.
Recommend Nobel Prize Winners in Economics, Daniel Kahneman's "Thinking, Fast and slow", Reading this book will help understand Munger’s interdisciplinary foundation, It's delicious to read the two books together.
"Let me explain why education is so bad now. Part of the reason is the status quo of old age and death between different disciplines. E.g, Psychology is most useful only when combined with the principles of other disciplines.
But if your professor doesn’t understand the principles of other subjects, Then he cannot complete this necessary integration."
I want to talk about how to cultivate the temperament to hold stocks without anxiety. Character alone is not enough. You need to have a lot of thirst for knowledge for a long, long time.
Must have a keen interest to figure out the reasons behind what is happening. If you can maintain this mentality for a long time, Your ability to pay attention to reality will gradually improve. If you don't have this mentality, So even if you have a high IQ, Also doomed to fail.
"What you need is not a lot of action, But great patience. You must stick to the principle, Wait till the opportunity comes, You just grab them hard. these years, Berkshire makes money by betting on certain things."
Many people like to do short-term, I know I don’t have that IQ, If you do a lot of short-term results, you can only pay tuition fees and pay commission fees.
But human nature is deeply attracted by greed and stimulation, Whether it’s a stock or a fund, Research a good product and hold it for a long time, Let him go, I don't move, Hope to hold on.
2.6 Crazy derivatives
"Derivatives system is simply neurotic, It's totally irresponsible. The fixed assets that people think are not real fixed assets. It's too complicated, I can't make it clear here——But you can’t believe that the amount involved is in the trillions of dollars.
You can't believe how complicated it is. You can't believe how difficult accounting for derivatives is. You can’t believe how motivating people’s wishful thinking about the value and liquidation capabilities of the company will be."
Catch the cat's tail, The man who lifted the cat upside down, Will learn lessons he can't learn elsewhere.——mark·Twain.
2.7 The efficient market hypothesis
The efficient market hypothesis has a very questionable premise, That is, investors participating in the market are sufficiently rational And be able to respond quickly and reasonably to all market information.
The theory says it, Sound in law, Function well, has High transparency, and has A fully competitive stock market, All valuable information has been timely, accurate, and Fully reflected in the stock price trend, including the current and future value of the company, Unless there is market manipulation,
Otherwise, it is impossible for investors to obtain excess profits higher than the market average by analyzing past prices.
I gave a name to those who believe in the extremely efficient market theory——Called "Neuropathy".
That is a logically self-consistent theory So that they can make beautiful math problems. So I think this kind of theory is very attractive to those with high mathematical talents. But its basic assumptions are not in line with real life. So the answer is: The market is both partially efficient, Is also partially inefficient.
2.8 Munger's checklist
a. Double-track analysis
- Look rationally, What factors really dominate the interests involved?
b. Investment and decision checklist
- Charlie's informal checklist, Lists various factors worth considering in detail.
c. Super simple common concept
- Solve the obvious questions first.
- Use mathematical skills.
- Reverse Thinking(Consider the problem in turn).
- Apply basic interdisciplinary wisdom, Never completely rely on others.
- Pay attention to the combined effect of multiple factors——The lollapalooza effect.
d. Based on psychology
- 25 standard causes of his famous human misjudgment.
2.9 Revisiting economics
"I think the current stock price has been irrationally raised, This view is the same as what you have learned from professors who have misunderstood their children, like listening to the gospel. "Effective market". the theory is just the opposite.
Your professors misled their children to believe too much in the economics "Rational man" Hypothesis, In psychology, the Irrational person "Little is known about the theory, Also lacks actual life experience.
Humans are like lemmings, In some cases "Collective irrationality" Propensity. This tendency causes smart people to have many irrational thoughts, Did a lot of irrational behavior.
So, Economics should imitate the basic methods of physics, But you should never pursue a theory as accurate as a physics formula.
The economics community puts too much emphasis on macroeconomics, And insufficient attention on microeconomics. I think this is wrong. It’s like not knowing anatomy and chemistry But wanting to master medicine. Besides, Microeconomics is fun.
It can help you understand macroeconomics correctly, It's as fun as playing acrobatics. On the opposite, I don’t think people can get so much fun studying macroeconomics. The most important reason is, They often make mistakes Because the system they want to understand is too complicated."
2.10 Importance of reading
"The smart people I met in my life(Smart people from all walks of life)Nothing is not read every day——No, not a single one. Warren reads a lot, and I read a lot, which May surprise you. My kids laugh at me. They think I am a book with two legs.
I am a fan of biographical books myself. I think if you want people to know useful and great concepts, It is best to connect these concepts with the lives and personalities of the great men who proposed them.
I think if you can and Adam·Smith makes friends, Then you can definitely learn economics better. with "Deadman" making friends, It sounds fun, But if you do become friends with the great dead in your life, Then I think you will live a better life, Get a better education. This method is much better than simply giving some basic concepts."
In the annual Berkshire Hathaway and Wesco shareholder meetings and speeches, Charlie Munger's book recommendations. The relevant books and sources are now organized as follows:
Below is a list of 45 books recommended by Munger and four books about Charlie Munger.
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger is by far the best book on Charlie Munger.
Charlie Munger’s Books: Recommended Reading List
Charlie Munger: Books
- Seeking Wisdom: From Darwin to Munger by Peter Bevelin (2008)
- Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger by Peter D. Kaufman (2008)
- Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Januaret Lowe (2003)
- Of Permanent Value by Andrew Kilpatrick
45 Books Recommended By Charlie Munger
- The Blind Watchmaker by Richard Dawkins
- Common Stocks and Uncommon Profits by Philip A. Fisher
- Paths to Wealth Through Common Stocks by Philip A. Fisher
- The Intelligent Investor by Benjamin Graham
- The Money Masters by John Train
- Fiasco: The Inside Story of a Wall Street Trader by Frank Partnoy
- Ice Age by John & Mary Gribbin
- Deep Simplicity by John Gribbin
- How the Scots Invented the Modern World: The True Story of How Western Europe's Poorest Nation Created Our World & Everything in It by Arthur Herman
- Models of My Life by Herb Simon
- A Matter of Degrees: What Temperature Reveals about the Past and Future of Our Species, Planet, and Universe by Gino Segre
- Andrew Carnegie by Joseph Frazier Wall
- Guns, Germs, and Steel: The Fates of Human Societies by Jared Diamond
- The Third Chimpanzee by Jared Diamond
- Influence: The Psychology of Persuasion by Robert B. Cialdini
- Autobiography of Benjamin Franklin by Benjamin Franklin
- Living within Limits: Ecology, Economics, and Population Taboos by Garrett Hardin
- The Selfish Gene by Richard Dawkins
- Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow
- The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor by David S. Landes
- The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy by Robert Hagstrom
- Genome: The Autobiography of a Species in 23 Chapters (P.S.) by Matt Ridley
- Getting It Done: How to Lead When You're Not in Charge by Roger Fisher and Alan Sharp
- Three Scientists and Their Gods: Looking for Meaning in an Age of Information by Robert Wright
- Only the Paranoid Survive by Andy Grove
- A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by Ed Thorp
- The Outsiders by William N. Thorndike
- Hard Drive: Bill Gates and the Making of the Microsoft Empire by James Wallace
- Master of the Game by Connie Bruck
- Benjamin Franklin by Carl Vandoren
- Judgment in Managerial Decision Making by Max H. Bazerman
- The NURTURE ASSUMPTION by Judith Rich Harris
- Darwin's Blind Spot by Frank Ryan
- Conspiracy of Fools by Kurt Eichenwald
- Fortune's Formula by William Poundstone
- No Two Alike by Judith Rich Harris
- The Martians of Science by Istvan Hargittai
- Einstein: His Life and Universe by Walter Isaacson
- Outliers: The Story of Success by Malcolm Gladwell
- Yes! by Noah J. Goldstein by Robert B. Cialdini, Steve J. Martin
- The Greatest Trade Ever by Gregory Zuckerman
- In the Plex by Steven Levy
- The Club by Leo Damrosch
- Andrew Carnegie by Joseph Frazier Wall
- Getting to Yes by Roger Fisher