Ever since I started reading about mental models, there was one book that was almost universally recommended: Poor Charlie’s Almanack, by Charlie Munger. The book is a long read on how Charlie Munger, a long-time business partner to Warren Buffett, describes our world. After having read it, I have a mixed impression of this praised book. On one hand, it is a long and sometimes rather self-centered way of describing the American way as the perfect way. Here are Americans describing the American way of living and investing in American companies to Americans at Harvard and more.
On another hand, it contains wisdom on how to use mental models to interpret the world. There are some deep insights and great quotes hidden among all pages. It was for sure a long read, and I learned some valuable things from it, but I don’t think it will be my go-to reference book for mental models. Meanwhile, there are some lessons that will stay with me forever, such as:
- “Mimicking the herd invited regression to the mean.” If you do the same things as all the others, you cannot expect different results. Common plagues privately and professionally are status anxiety, social proof tendency, and the keeping-up-with-the-Joneses syndrome – doing what we can to be like the rest. It is not until you stop doing this, and instead find a unique way for yourself, that you will see other results. Stop caring so much about what others think. Really.
- “Spend each day trying to be a little wiser than when you woke up.” This goes back to the compound effect – if you advance as little as 1% in an area each day, you have improved dramatically in just a few years. This applies to everything.
- “But if you try to succeed in what you’re worst at, you’re going to have a very lousy career.” This is a typical disease that hits us when we are children and go to school. All children have different strengths that could be developed a lot if nurtured correctly. But all too often we are expected to shine in everything from math to sports and lyrics. Yes, a solid foundation in all subjects is good, but this idea of trying to even everything out can hurt your development as an adult. Therefore, find out what your true strengths are and then nourish them. Spend your time and energy going as far as you can thanks to your strengths, instead of evening out your weaker areas.
- “It’s not bringing in the new ideas that’s so hard. It’s getting rid of the old ones.” This is a quote from Keynes and it still rings true. Just look at most of the change management writing – it nearly always focuses on how to bring new things to the table and have people accept them. But where are all the ideas and methods to help people get rid of old ways of working and understanding the world?
- The Tolstoy effect: People will forever blame their upbringing, parents, schooling, spouses, you name it, for their bad luck and misfortune. It has been proven over and over and is especially true today where there are ample chances to lead a good life, that your goals and determination can become much stronger than your previous life. Self-pity is a very sad mental state, and we should change it to something a lot better.
If you are a big fan of Charlie Munger, you should definitely read the whole book with all the long speeches, and the praising of Charlie. But if you are not a big fan, you can come a long way with reading reviews of the book and then focus your time on other more specific books regarding mental models, investing, entrepreneurship, checklists and goals, and more.
The image: A dog free from status anxiety.