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Charlie Munger's Wisdom, Poker and Votes

September 01, 2011

Charlie Munger is arguably one of the finest investors, with his famous quote found in "Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger":

"In my whole life, I have known no wise people who didn't read all the time-none, zero. You'd be amazed at how much Warren reads-and at how much I read. My children laugh at me, they think I'm a book with a couple of legs sticking out" from Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

Excerpts from his book can be found here http://www.poorcharliesalmanack.com/pages.html

But the more notable section of the book is the Investing Principles Checklist http://www.poorcharliesalmanack.com/pdf/page61.pdf which had spurred me to create an investing checklist of my own to investigate if the stock is worth to look.

No time to read the book? Here’s the link to the summarized version of Munger’s checklist.http://www.themoneytimes.com/featured/20091220/charlie-munger-how-become-rich-id-1094668.html

Most would agree that the majority have in some ways violated/seldom practice the following:

  • The only way to win is to work, work, work, and hope to have a few insights.

  • Acknowledging what you don't know is the dawning of wisdom.

  • Keep it simple and remember what you set out to do.

It is interesting to note that Munger composed the metaphor: “Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand.”

Which brings me to my next point: One doesn’t always need to stay invested in the market. Exercise patience and restraint as Buffett sums it up nicely: “The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!'”

Perhaps in the interim if you are feeling bored by staying out of the market, take a lesson in poker instead. That might help to hone your investing skills. See, Does poker help to improve one’s investing skills? http://www.gurufocus.com/news/142130/does-poker-help-to-improve-ones-investing-skills

What is your position in the market now? Take a vote here and you can view your fellow voters’ results on the same page.

About the author:

Graduated with BA Economics from National University of Singapore. Passed Level 1 of the CFA examination and CAIA Level I Candidate. Long-biased US equities, with strong focus on small to mid-cap stocks (NYSE, NASDAQ, AMEX, OTC & ADR) utilizing fundamental and technical analysis.

Agnostic investor, trader, writer and perpetual student of the market.

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