Li Lu’s Foreword to Poor Charlie’s Almanack

First, the series on Valuation will fire back up shortly: I ended up going to NYC for 5 days last week and the wheels fell off the study wagon… meaning I fell rapidly behind on my actual homework in the Valuation course so I’ve been frantically trying to catch up, thus no update since the last post on the Risk Free Rate. I came across this English translation of the foreword to the Chinese version of Poor Charlie’s Almanack by Li Lu. You can find it on this link through the internet archives, but I thought I’d post it here in case it ends up disappearing. Everything below is a copy and paste from the original article. Enjoy!

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Inverting Chains of Habit

There’s a quip that Warren Buffett likes to throw around frequently which goes along the lines of:

The chains of habit are too light to be felt until they are too heavy to be broken.

What’s the first impression you got after reading that? That’s right: a negative impression. You most likely thought of the negative consequences of habit. Things like hookers, blow, needles, hooch, etc.

While it’s advisable to avoid these things in life, there is a whole other side of the equation of that nugget of wisdom that takes a little more effort to ferret out.

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The Problem with Atheist Vegans: Or the Problem with Ideology

Well, apparently writing about philosophy has me thinking even more about philosophy. It got me thinking of a problem a friend of mine has with me: why I always seem to be sitting on the fence in terms of issues. In this specific case with this friend, why I can’t seem to come out on a concrete position on atheism and veganism.

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Mental Model: An Introduction to Mental Models and First Level Thinking

Too often in life, I come across crippling cases of people thinking in very simple terms, going through life auto-piloted to first level thinking. Howard Marks, the legendary junk bond investor, talks about first level thinking and second level thinking in his book The Most Important Thing: Uncommon Sense for the Thoughtful Investor. Too many people seem to lack the mental models necessary to interpret reality. Wait. Let me back up: what are mental models? I tend to get in the habit of reading benders, getting totally intoxicated and consumed with binging on my neverending pile of books, reports, and articles. Coming back from the 2015 Berkshire Hathaway annual meeting, I finally got my hands on Poor Charlie’s Almanack and a few other Munger  books (Seeking Wisdom and Damn Right). While not the originator of any of the 100 or so major ideas spanning multiple disciplines, Charlie Munger synthesized the importance of a multi-discipline approach to life by becoming fluent in these major ideas, or mental models, and hanging these mental models in a latticework in his mind in order to avoid the man with a hammer syndrome. What is the man with a hammer syndrome?

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Charlie Munger’s Secret Investing Formula

One of the questions asked at the 2015 Berkshire Hathaway Annual Meeting was in regards to what the secret investing formula Warren Buffett and Charlie Munger utilized to achieve such tremendous success over their careers. If you read that giant write up on our road trip to Omaha for the annual meeting, you would know that the answer that was given by Charlie Munger was that there was no specific formula. However, I was recently perusing Poor Charlie’s Almanack and Munger actually provided a specific formula! It’s such a no brainer. I really think Charlie outdid himself with this tremendous formula. Take a look. It will change your life.

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