Book

Poor Charlie’s Almanack

Charles T. Munger, Peter D. Kaufman, John Collison, and Warren Buffett

Last highlighted July 14, 2026 ← All highlights

Franklin used his self-made wealth to achieve financial independence so he could concentrate on societal improvement. (Location 350)
My dad often used the forum of the family dinner table to try to educate his children. His favorite educational tools were the Morality Tale, in which someone faced an ethical problem and chose the correct path, and the Downward Spiral Tale, in which someone made the wrong choice and suffered an inevitable series of catastrophic personal and professional losses. (Location 370)
I remember the story my dad told his kids, then ranging from age 5 to 25, about a financial officer at one of his companies who made (Location 376)
mistake that resulted in the loss of hundreds of thousands of dollars to the company. As soon as this officer realized his mistake, he went to the president of the company and told him about it. My dad told us that the president then said, “This was a terrible mistake, and we don’t want you ever to make another one like it. But people make mistakes, and we can forgive that. You did the right thing, which was to admit your mistake. If you had tried to hide the mistake, or cover it up for even a short time, you would be out of this company. As it is, we’d like you to stay.” I think back on this story every time I hear of yet another government official who chose the cover-up instead of the honest confession after making a mistake. (Location 377)
My father’s hands, gesturing alongside every colorful joke and guiding story, have molded me as surely as a sculptor’s. I can be nothing but glad, and grateful, for the touch of my father’s hands in mine, and in my son’s. (Location 463)
Much of Franklin’s success was due to the essential nature of the man—most especially his appetite for hard work, but also his insatiable curiosity and patient demeanor. Above all, he possessed a quick and willing mind that enabled him to easily master each new field of endeavor he chose to undertake. It is not surprising that Charlie Munger considers Franklin his greatest hero, for Munger is also largely self-taught and shares many of Franklin’s unique characteristics. Like Franklin, Charlie has made himself into a grandmaster of preparation, patience, discipline, and objectivity. He has parlayed these attributes into great success in both his personal and business endeavors, especially in his investing. (Location 524)
Buffett once said, “Charlie can analyze and evaluate any kind of deal faster and more accurately than any man alive. He sees any valid weakness in 60 seconds. He is a perfect partner.” (Location 530)
Not finding any existing approach adequate to the task, Charlie painstakingly created his own largely self-taught system. The “self-taught” statement is no exaggeration; he once said, “To this day, I have never taken any course, anywhere, in chemistry, economics, psychology, or business.” And yet these disciplines, especially psychology, form the foundation upon which his system is built. (Location 561)
Charlie counts preparation, patience, discipline, and objectivity among his most fundamental guiding principles. (Location 569)
When faithfully adhered to, these traits result in one of the best-known Munger characteristics: not buying or selling very often. (Location 570)
In his view, a portfolio of three companies is plenty of diversification. Accordingly, Charlie is willing to commit uncommonly high percentages of his investment capital to individual, “focused” opportunities. (Location 574)
Charlie strives to reduce complex situations to their most basic, unemotional fundamentals. Yet, within this pursuit of rationality and simplicity, he is careful to avoid what he calls physics envy, the common human craving to reduce enormously complex systems (such as those in economics) to one-size-fits-all Newtonian formulas. Instead, he faithfully honors Albert Einstein’s admonition: “A scientific theory should be as simple as possible, but no simpler.” Or, in his own words: “What I’m against is being very confident and feeling that you know, for sure, that your particular action will do more good than harm. You’re dealing with highly complex systems wherein everything is interacting with everything else.” (Location 592)
I’ve gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain, at a subconscious level, is automatically doing these things—which, by and large, are useful but which often misfunction? (Location 603)
“Quickly eliminate the big universe of what not to do; follow up with a fluent, multidisciplinary attack on what remains; then act decisively when, and only when, the right circumstances appear.” (Location 611)
Is it worth the effort to develop and adhere to such an approach? Charlie seems to think so: “It’s kind of fun to sit there and outthink people who are way smarter than you are because you’ve trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.” (Location 612)
To stay within these circles, he first applies a basic, overall screen, designed to limit his investment field to only “simple, understandable candidates.” As he says, “We have three baskets for investing: yes, no, and too tough to understand.” (Location 618)
To identify potential “yes” candidates, Charlie looks for an easy-to-understand, dominant business franchise that can sustain itself and thrive in all market environments. Understandably, few companies survive this first cut. Many investor favorites such as pharmaceuticals and technology, for example, go straight to the “too-tough-to-understand” basket. Heavily promoted “deals” and IPOs earn immediate nos. Those that do survive this first winnowing are subjected to the screens and filters of Charlie’s mental-models approach. The process is intense and Darwinian but also efficient. (Location 620)
Above all, he attempts to assess and understand competitive advantage in every respect—products, markets, trademarks, employees, distribution channels, societal trends, and so on—and the durability of that advantage. Charlie refers to a company’s competitive advantage as its moat: the virtual physical barrier it presents against incursions. (Location 641)
“a great business at a fair price is superior to a fair business at a great price.” (Location 650)
While poor outcomes are excusable in the Munger–Buffett world—given the fact that some outcomes are outside of their control—sloppy preparation and decision-making are never excusable because they are controllable. (Location 668)
On those relatively few occasions when all the circumstances are just right and Charlie does invest, he will likely make a large, decisive bet. He does not pick around the edges, take initial positions, or make small, speculative investments. Such behavior implies uncertainty, and Charlie’s moves, few as they are, are anything but uncertain. As he says, he practices “extreme patience combined with extreme decisiveness.” (Location 670)
we see the important role played by the right kinds of temperamental qualities: self-discipline, patience, calm, independence. Charlie’s level of investment performance is arguably impossible without them. (Location 675)
What makes a great business model for Charlie? His recommended reading materials provide some guidance. Guns, Germs, and Steel, The Selfish Gene, Ice Age, and Darwin’s Blind Spot all have a certain theme: a focus on the issue of competitive destruction and an examination of why some entities are nevertheless able to adapt, survive, and even dominate over time. (Location 676)
How many investors ever consider, as Charlie routinely does, such a broad and sophisticated spectrum of factors? To name but a few, he routinely considers factors such as conversion, i.e., how the laws of thermodynamics intersect with laws of economics (for instance, how paper and petroleum become a newspaper delivered to a front door); psychological tendencies and incentives (notably the extreme behavioral pressures they create, both good and bad); and fundamental sustainability over time (the constant and often deadly interplay between positive factors such as moats and the ravages of competitive destruction). (Location 681)
Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day. More important than the will to win is the will to prepare. (Location 702)
If you want to get smart, the question you have to keep asking is “Why, why, why?” (Location 704)
Acknowledging what you don’t know is the dawning of wisdom. (Location 705)
Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat. Guard against the effects of hubris and boredom. (Location 727)
Face your big troubles, don’t sweep them under the rug. (Location 729)
In the end, it comes down to Charlie’s most basic guiding principles, his fundamental philosophy of life: Preparation. Discipline. Patience. Decisiveness. (Location 733)
Like his hero, Benjamin Franklin, Charlie Munger painstakingly developed and perfected unique approaches to personal and business endeavors. Through these methods, and through the development and maintenance of sound, lifelong habits, he has achieved extraordinary success. (Location 741)
Carson’s prescription for sure misery included: Ingesting chemicals in an effort to alter mood or perception Envy Resentment (Location 790)
While susceptibility varies, addiction can happen to any of us through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken. And yet, I have yet to meet anyone, in over six decades of life, whose life was worsened by fear and avoidance of such a deceptive pathway to destruction. (Location 795)
cannot here pass by a reference to a life described as “wonderful so far” without reinforcing the “so far” aspects of the human condition by repeating the remark of Croesus,5 once the richest king in the world. Later, in ignominious captivity, as he prepared to be burned alive, he said, “Well now do I remember the words of the historian Solon: ‘No man’s life should be accounted a happy one until it is over.’” My second prescription for misery is to learn everything you possibly can from your own experience, minimizing what you learn vicariously from the good and bad experiences of others, living and dead. This prescription is a sure-shot producer of misery and second-rate achievement. (Location 816)
The other aspect of avoiding vicarious wisdom is the rule of not learning from the best work done before yours. The prescription is to become as non-educated as you reasonably can. (Location 826)
My third prescription to you for misery is to go down and stay down when you get your first, second, or third severe reverse in the battle of life. Because there is so much adversity out there, even for the lucky and wise, this will guarantee that, in due course, you will be permanently mired in misery. (Location 832)
What Carson did was to approach the study of how to create X by turning the question backward—that is, by studying how to create non-X. The great algebraist Jacobi had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward. (Location 840)
It is my opinion, as a certified biography nut, that Charles Robert Darwin10 would have ranked near the middle of the Harvard School graduating class of 1986. Yet he is now famous in the history of science. This is precisely the type of example you should learn nothing from if bent on minimizing your results from your own endowment. (Location 846)
In contrast, most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact. They become people of whom Philip Wylie observed, “You couldn’t squeeze a dime between what they already know and what they will never learn.” (Location 851)
Einstein said that his successful theories came from “curiosity, concentration, perseverance, and self-criticism.” And by self-criticism, he meant the testing and destruction of his own well-loved ideas. (Location 855)
now believe even more strongly that 1) reliability is essential for progress in life and 2) while quantum mechanics is unlearnable for a vast majority, reliability can be learned to great advantage by almost anyone. (Location 864)
What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. (Location 890)
You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and fail in life. You’ve got to hang experience on a latticework of models in your head. (Location 892)
It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And, of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models. And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense. They don’t have enough models in their heads. So you’ve got to have models across a fair array of disciplines. (Location 897)
First, there’s mathematics. Obviously, you’ve got to be able to handle numbers and quantities—basic arithmetic. And the great useful model, after compound interest, is the elementary math of permutations and combinations. (Location 905)
At Harvard Business School, the great quantitative thing that bonds the first year class together is what they call decision tree theory. All they do is take high school algebra and apply it to real life problems. And the students love it. They’re amazed to find that high school algebra works in life. (Location 912)
If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one legged man in an ass kicking contest. You’re giving a huge advantage to everybody else. One of the advantages of a fellow like Buffett, whom I’ve worked with all these years, is that he automatically thinks in terms of decision trees and the elementary math of permutations and combinations. (Location 920)
you have to know accounting. It’s the language of practical business life. It was a very useful thing to deliver to civilization. (Location 923)
had another rule, from psychology—which, if you’re interested in wisdom, ought to be part of your repertoire, like the elementary mathematics of permutations and combinations. His rule for all the Braun Company’s communications was called the five Ws: You had to tell who was going to do what, where, when, and why. And if you wrote a letter or directive in the Braun Company telling somebody to do something and you didn’t tell him why, you could get fired. In fact, you would get fired if you did it twice. (Location 936)
“Why, why, why?,” if you always tell people why, they’ll understand it better, they’ll consider it more important, and they’ll be more likely to comply. Even if they don’t understand your reason, they’ll be more likely to comply. So there’s an iron rule that just as you want to start getting worldly wisdom by asking “Why, why, why?,” in communicating with other people about everything, you want to include why, why, why. Even if it’s obvious, it’s wise to stick in the why. (Location 941)
Then, when you get into psychology, of course, it gets very much more complicated. But it’s an ungodly important subject if you’re going to have any worldly wisdom. And the reason why is that the perceptual apparatus of man has shortcuts in it. The brain cannot have unlimited circuitry. So someone who knows how to take advantage of those shortcuts and cause the brain to miscalculate in certain ways can cause you to see things that aren’t there. (Location 961)
And so, just as a man working with a tool has to know its limitations, a man working with his cognitive apparatus has to know its limitations. And this knowledge, by the way, can be used to control and motivate other people. (Location 967)
The elementary part of psychology—the psychology of misjudgment, as I call it—is a terribly important thing to learn. There are about 20 little principles. And they interact, so it gets slightly complicated. But the guts of it is unbelievably important. Terribly smart people make totally bonkers mistakes by failing to pay heed to it. In fact, I’ve done it several times during the last two or three years in a very important way. You never get totally over making silly mistakes. (Location 973)
Pascal said, “The mind of man at one and the same time is both the glory and the shame of the universe.” And that’s exactly right. It has this enormous power. However, it also has these standard misfunctions that often cause it to reach wrong conclusions. It also makes man extraordinarily subject to manipulation by others. (Location 977)
Just as in an ecosystem, people who narrowly specialize can get terribly good at occupying some little niche. Just as animals flourish in niches, people who specialize in the business world—and get very good because they specialize—frequently find good economics that they wouldn’t get any other way. (Location 990)
Just doing something complicated in more and more volume enables human beings, who are trying to improve and are motivated by the incentives of capitalism, to do it more and more efficiently. The very nature of things is that if you get a whole lot of volume through your operation, you get better at processing that volume. That’s an enormous advantage. And it has a lot to do with which businesses succeed and fail. (Location 995)
So when TV came in, the branded companies that were already big got a huge tailwind. Indeed, they prospered and prospered and prospered until some of them got fat and foolish, which happens with prosperity, at least to some people. And your advantage of scale can be an informational advantage. If I go to some remote place, I may see Wrigley chewing gum alongside Glotz’s chewing gum. Well, I know that Wrigley is a satisfactory product whereas I don’t know anything about Glotz’s. So if one is 40¢ and the other is 30¢, am I going to take something I don’t know and put it in my mouth—which is a pretty personal place, after all—for a lousy dime? So, in effect, Wrigley, simply by being so well known, has advantages of scale—what you might call an informational advantage. (Location 1007)
We are all influenced—subconsciously and, to some extent, consciously—by what we see others do and approve. Therefore, if everybody’s buying something, we think it’s better. We don’t like to be the one guy who’s out of step. Again, some of this is at a subconscious level and some of it isn’t. Sometimes, we consciously and rationally think, “Gee, I don’t know much about this. They know more than I do. Therefore, why shouldn’t I follow them?” (Location 1014)
So occasionally, scaling down and intensifying gives you the big advantage. Bigger is not always better. (Location 1042)
CBS provides an interesting example of another rule of psychology, namely Pavlovian association.17 If people tell you what you really don’t want to hear, what’s unpleasant, there’s an almost automatic reaction of antipathy. You have to train yourself out of it. It isn’t foredestined that you have to be this way. But you will tend to be this way if you don’t think about it. (Location 1060)
He played the chain store game harder and better than anyone else. [Sam] Walton invented practically nothing. But he copied everything anybody else ever did that was smart—and he did it with more fanaticism and better employee manipulation. So he just blew right by them all. (Location 1085)
But at any rate, it’s an interesting model of how the scale of things and fanaticism combine to be very powerful. And it’s also an interesting model on the other side—how, with all its great advantages, the disadvantages of bureaucracy did such terrible damage to Sears, Roebuck. Sears had layers and layers of people it didn’t need. It was very bureaucratic. It was slow to think. And there was an established way of thinking. If you poked your head up with a new thought, the system kind of turned against you. It was everything in the way of a dysfunctional big bureaucracy that you would expect. (Location 1096)
When technology moves as fast as it does in a civilization like ours, you get a phenomenon that I call competitive destruction. You know, you have the finest buggy whip factory, and all of a sudden, in comes this little horseless carriage. And before too many years go by, your buggy whip business is dead. You either get into a different business or you’re dead—you’re destroyed. It happens again and again and again. (Location 1152)
When you’re an early bird, there’s a model that I call surfing—when a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows. But people get long runs when they’re right on the edge of the wave, whether it’s Microsoft or Intel or all kinds of people, including National Cash Register21 in the early days. The cash register was one of the great contributions to civilization. It’s a wonderful story. [John Henry] Patterson was a small retail merchant who didn’t make any money. One day, somebody sold him a crude cash register, which he put into his retail operation. And it instantly changed from losing money to earning a profit because it made it so much harder for the employees to steal. But Patterson, having the kind of mind that he did, didn’t think, “Oh, good for my retail business.” He thought, “I’m going into the cash register business.” And, of course, he created National Cash Register. And he surfed. He got the best distribution system, the biggest collection of patents, and the best of everything. He was a fanatic about everything important as the technology developed. (Location 1155)
In a long life, you can expect to profit heavily from at least a few of those opportunities if you develop the wisdom and will to seize them. At any rate, surfing is a very powerful model. (Location 1167)
So you have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence. (Location 1175)
It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it—who look and sift the world for a mispriced bet—that they can occasionally find one. And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple. (Location 1233)
you can get very remarkable investment results if you think more like a winning pari mutuel player. Just think of it as a heavy-odds against game full of bullshit and craziness with an occasional mispriced something or other. And you’re probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It’s just that simple. (Location 1243)
For example, Graham didn’t want to ever talk to management. And his reason was that, like the best sort of professor aiming his teaching at a mass audience, he was trying to invent a system that anybody could use. And he didn’t feel that the man in the street could run around and talk to management and learn things. (Location 1312)
[Most investment managers are] in a game where the clients expect them to know a lot about a lot of things. We didn’t have any clients who could fire us at Berkshire Hathaway. So we didn’t have to be governed by any such construct. And we came to this notion of finding a mispriced bet and loading up when we were very confident that we were right. So we’re way less diversified. And I think our system is miles better. (Location 1323)
And it makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. You’re much more likely to do well if you start out to do something feasible instead of something that isn’t feasible. Isn’t that perfectly obvious? How many of you have 56 brilliant insights in which you have equal confidence? Raise your hands, please. How many of you have two or three insights that you have some confidence in? I rest my case. (Location 1335)
How do you get into these great companies? One method is what I’d call the method of finding them small—get ’em when they’re little. (Location 1346)
If you sit on your ass for long, long stretches in great companies, you can get a huge edge from nothing but the way income taxes work. (Location 1372)
Anytime somebody offers you a tax shelter from here on in life, my advice would be don’t buy it. In fact, anytime anybody offers you anything with a big commission and a 200 page prospectus, don’t buy it. (Location 1379)
call it the cancer surgery formula. They look at this mess, and they figure out if there’s anything sound left that can live on its own if they cut away everything else. And if they find anything sound, they just cut away everything else. Of course, if that doesn’t work, they liquidate the business. But it frequently does work. (Location 1416)
What should a young person look for in a career? I have three basic rules—meeting all three is nearly impossible, but you should try anyway: Don’t sell anything you wouldn’t buy yourself. Don’t work for anyone you don’t respect and admire. Work only with people you enjoy. (Location 1478)
What overall life advice do you have for young people? Spend each day trying to be a little wiser than you were when you woke up. (Location 1482)
Slug it out one inch at a time, day by day, and at the end of the day—if you live long enough—like most people, you will get out of life what you deserve. Life and its various passages can be hard, brutally hard. The three things I have found helpful in coping with its challenges are: Have low expectations. Have a sense of humor. Surround yourself with the love of friends and family. Above all, live with change and adapt to it. (Location 1484)
what you need is a latticework of mental models in your head. And you hang your actual experience and your vicarious experience that you get from reading and so forth on this latticework of powerful models. (Location 1506)
I would argue that academia has a lot to teach about worldly wisdom and that the best academic values really work. (Location 1519)
Similarly, I’ve told you to think forward and backward. Well, great declarers in bridge think, “How can I take the necessary winners?” But they think it through backward, too: “What could possibly go wrong that could cause me to have too many losers?” Both methods of thinking are useful. So in the game of life, get the needed models into your head and think it through forward and backward. What works in bridge will work in life. (Location 1533)
And it’s kind of fun to sit there and outthink people who are way smarter than you are because you’ve trained yourself to be more objective and multidisciplinary. Furthermore, there’s a lot of money in it—as I can testify from my own personal experience. (Location 1545)
Okay. We’ve been through some of the general ideas in the search for worldly wisdom. And now I want to turn to something even more extreme and peculiar than the talk I’ve already given you. Of all the models that people ought to have in useful form and don’t, perhaps the most important lie in the area of psychology. (Location 1590)
There’s a very interesting history if you take Warren Buffett as an example of worldly wisdom. Warren adored his father, who was a wonderful man. But Warren’s father was a very heavy ideologue—right wing, it happened to be—who hung around with other very heavy ideologues—right wing, naturally. Warren observed this as a kid, and he decided that ideology was dangerous and that he was going to stay a long way away from it. And he has throughout his whole life. That has enormously helped the accuracy of his cognition. (Location 1609)
And life is one damn relatedness after another. It’s all right to think that, on balance, you suspect that civilization is better if it lowers the minimum wage or raises it. Either position is okay. But being totally sure on issues like that with a strong, violent ideology, in my opinion, turns you into a lousy thinker. So beware of ideology-based mental misfunctions. (Location 1619)
Most professors solve this problem, in effect, by assuming “If I can’t demonstrate it with my experiments, then it doesn’t exist.” However, obviously, that’s asinine. If something is very important but can’t be perfectly and precisely demonstrated because of ethical constraints, you can’t just treat it like it doesn’t exist. You have to do the best you can with it, with such evidence as is available. (Location 1663)
But English sailors were a tough, cranky, and dangerous bunch in that day. They hated “krauts.” And they were used to their standard food and booze. So how do you get such English sailors to eat sauerkraut? Well, Cook didn’t want to tell ’em that he was doing it in the hope it would prevent scurvy—because they might mutiny and take over the ship if they thought that he was taking them on a voyage so long that scurvy was likely. So here’s what he did: Officers ate at one place where the men could observe them. And for a long time, he served sauerkraut to the officers but not to the men. And then, finally, Captain Cook said, “Well, the men can have it one day a week.” In due course, he had the whole crew eating sauerkraut. (Location 1688)
It can’t be emphasized too much that issues of morality are deeply entwined with worldly wisdom considerations involving psychology. For example, take the issue of stealing. A very significant fraction of the people in the world will steal if a) it’s very easy to do and b) there’s practically no chance of being caught. And once they start stealing, the consistency principle—which is a big part of human psychology—will soon combine with operant conditioning to make stealing habitual. (Location 1700)
It’s very, very important to create human systems that are hard to cheat. Otherwise, you’re ruining your civilization, because these big incentives will create incentive-caused bias and people will rationalize that bad behavior is okay. Then, if somebody else does it, now you’ve got at least two psychological principles: incentive-caused bias plus social proof. Not only that but you get Serpico41 effects: If enough people are profiting in a general social climate of doing wrong, then they’ll turn on you and become dangerous enemies if you try and blow the whistle. It’s very dangerous to ignore these principles and let slop creep in. Powerful psychological forces are at work for evil. (Location 1705)
Let’s say you have a desire to do public service. As a natural part of your planning, you think in reverse and ask, “What can I do to ruin our civilization?” That’s easy. If what you want to do is to ruin your civilization, just go to the legislature and pass laws that create systems wherein people can easily cheat. It will work perfectly. (Location 1712)
So it’s much better to let some things go uncompensated—to let life be hard—than to create systems that are easy to cheat. (Location 1719)
And no one could tell them, “You can’t do it anymore.” Incidentally, that’s Pavlovian mere association, too. When people get bad news, they hate the messenger. (Location 1726)
This sort of tragedy is caused by letting the slop run. You must stop slop early. It’s very hard to stop slop and moral failure if you let it run for a while. (Location 1731)
And we only find a few, maybe one or two a year. We have no system for having automatic good judgment on all investment decisions that can be made. Ours is a totally different system. We just look for no-brainer decisions. As Buffett and I say over and over again, we don’t leap 7-foot fences. Instead, we look for 1-foot fences with big rewards on the other side. So we’ve succeeded by making the world easy for ourselves, not by solving hard problems. (Location 1747)
However, both Warren and I are very good at changing our prior conclusions. We work at developing that facility because without it, disaster often comes. (Location 1774)
Why should we want to play a competitive game in a field where we have no advantage—maybe a disadvantage—instead of in a field where we have a clear advantage? (Location 1783)
In fact, one trick in life is to get so you can handle mistakes. Failure to handle psychological denial is a common way for people to go broke. You’ve made an enormous commitment to something. You’ve poured effort and money in. And the more you put in, the more the whole consistency principle makes you think, “Now it has to work. If I put in just a little more, then it’ll work.” And deprival-superreaction syndrome also comes in: You’re going to lose the whole thing if you don’t put in a little more. People go broke that way because they can’t stop, rethink, and say, “I can afford to write this one off and live to fight again. I don’t have to pursue this thing as an obsession, in a way that will break me.” (Location 1800)
don’t like to be with many of the types who hang around card parlors and so forth. On the other hand, I do like the manly art of wagering, so to speak. And I like light social gambling among friends. But I do not like the professional gambling milieu. (Location 1834)
sometimes tell my friends, “I’m doing the best I can. But I’ve never grown old before. I’m doing it for the first time, and I’m not sure that I’ll do it right.” (Location 1860)
I am trying to teach you something. When you don’t know and you don’t have any special competence, don’t be afraid to say so. (Location 1900)
And to one degree or another, all of you were born with the gift, and you can hone it too. (Location 1945)
People adapt to a changing litigation climate. They have various ways of doing it. That’s how it’s always been and how it’s always going to be. (Location 2006)
When I gave Talk Three in 1996, I argued that intense political animosity should be avoided because it causes much mental malfunction, even in brilliant brains. Since then, political animosity has increased greatly, both on the left and the right, with sad effects on the ability of people to recognize reality, exactly as I would have expected. (Location 2144)
Instead, what works best for me in coping with all disappointment is what I call the Jewish method: humor. (Location 2154)
The first helpful notion is that it is usually best to simplify problems by deciding big no-brainer questions first. (Location 2179)
The best way to avoid envy, as recognized by Aristotle,54 is to plainly deserve the success we get. (Location 2303)