Books for Use - Common Common Sense of Poor Charlie

About this book

Poor Charlie is Berkshire's vice chairman and one of Buffett's key drivers of the company's success.

Buffett once said:

Munger's influence on me is irreplaceable:

He used the power of thought to make me evolve from gorilla to human

Otherwise I would be much poorer than I am now

It can be seen that in addition to the ability of financial management and investment, Charlie is also full of wisdom in other fields, which is worth learning from the world. The book briefly describes Munger's growth and his life-long outlook on life, and then records it in a speech. 11 lectures in total. It covers advice for young people, philosophy, financial concepts, psychology, and Charlie's unique view of the world with his own wisdom.

Advice for youth

Charlie's first lecture mainly tells young people what kind of values they hold to become the most miserable person in the world in a negative way, hoping to take this as a reference.

The book introduces the following seven points as a warning.

1. Taking drugs to change mood or feelings
2. jealous
3. resentment
4. Be capricious and don't religiously do what you're doing.
5. Get as much knowledge as you can from your own experience, and try not to learn broadly from the success or failure of others.
6. When you encounter the first, second, or third setback on the battlefield of your life, please be depressed and never recover.
7. Please ignore plain wisdom.

Charlie's seven lessons for youth are not out of the ordinary either. Many of the simple life philosophies are so simple that people never pay attention to it and follow it. There are many books in the market that use the whole content to explain a truth, to convince readers what kind of mentality should be in this society to face unknown challenges or what kind of mentality to face criticism of others and so on. And I believe that if readers can apply these seven suggestions for young people properly, they are equivalent to having mastered seven additional books for self-development.

Investment and Accounting

Investment: Most investment textbooks, investment experts and even mathematical statistics will emphasize that diversification can reduce the risk of volatility in the stock market. Charlie and Buffett themselves adopt an investment model that is contrary to the conventional way. Buy heavily when bullish stocks are cheap. However, as Charlie said, behind the bold move is actually a huge workload and a comprehensive understanding of the company's financial report, system, management class, corporate culture, competitors, and its upstream and downstream industries. Behind the seemingly crazy gamble, hidden With great control over a company.

Accounting: The financial report produced by the accountant reflects the public's evaluation and understanding of the company. Many companies want to make good financial reports in order to increase their stock price, and financial engineering through accounting is the fastest way to create good financial reports. As the public believes that the company is growing healthily, the company's stock will rise up, and it wasn't until at last that people found out that something was wrong when the company couldn't release cash as shareholders' equity, and that's when the bubble was about to burst. These accountants, the management class, and the board of directors will all be named as the culprits and harm the world.

The importance of cross-cutting

Schools always educate us to become experts in a field, and often cite the achievements of an expert in a certain field to motivate us to study in a certain field. Yet few educational systems advocate that the success of many great people comes from the application of thinking across fields. People who focus on a single field can become experts, but it is also easy to form inherent thinking, and they want to solve any problem in a predetermined way. Munger's famous quote mentioned several times in this book:

The man with the mallet sees everything as a nail

If you graduate from engineering, you will judge the world with logic, and you cannot add perceptual elements to the process of understanding the world; if you graduate from liberal arts, you will understand many logics in an intuitive way. Therefore, we should learn more about the essence of different fields and hold a non-extreme ideology at the same time, so that we can view a matter from many objective angles, gain insight into the blind spots that others cannot see, and make more accurate inferences.

Applications of Psychology

In Lecture 11, Charlie shares his views on psychology. Although he claims that he has never taken a psychology course, he must have a thorough understanding of human nature, which has helped him a lot in life and investing. And these understandings come from his observations of everyday life. Retribution of virtue, tit-for-tat (tendency to give back); the pain of losing $10 is less than the pleasure of gaining $10 (propensity to be deprived of super-responsiveness); to play the dumpling slot with the same two yards (propensity to reward super-responsiveness) ). These understandings of human psychology are explained in a very simple way by Charlie, not as long and boring as textbooks. To a certain extent, it is not rigorous enough to illustrate human psychological phenomena with simple examples. But people have never been rational, and using a completely rational argument to prove that irrational human psychology is really not a rational behavior.

In addition to this, Charlie often mentions incentives (rewards or punishments when workers complete staged tasks) in his speeches. He believes that in the human social system, those who formulate laws and company management systems should know how to set systems from the principles of incentive mechanisms. Mumbai, India is one of the most congested places in the world, and the horns are constantly blaring while waiting for red lights and cause a lot of air pollution. In order to solve this problem, the local government spent a lot on propaganda and dichang, but the people never paid the bill, and the matter could not be solved. Later, the local police station established a traffic light that would reset the red light seconds to zero when the decibel level reached 90, and the problem was solved.

Video URL (from Mumbai Police on Twitter)

Universal wisdom

The title "Poor Charlie's Common Sense" echoes the universal wisdom that runs through the book. Charlie sums up everything he has learned and realized in his life in one word, "universal wisdom". and give examples of them one by one:

Make yourself worthy of what you want to have

We always crave a lot, but always forget how much it takes to get it. Instead of chasing after money, we should move forward with the goal of serving others and let money run after us.

Gaining Wisdom is a Moral Responsibility

I always feel that some people's thinking can't keep up with the times or are too old-fashioned to communicate, but I never thought that one day I might become such a person, which leads to an increase in the gap between people. Therefore, acquiring wisdom and new knowledge is not only a self-requirement, but also a moral responsibility.

Cross-cutting importance

The human mind is deeply influenced by school education, family education and circle of friends, and most people graduated from a single department, grew up in a family and have a fixed circle of friends. Therefore, you will always let your mind fall into a fixed rut, while ignoring the existence of other things and making your own mind rigid.

Avoid extreme ideology and think in reverse

Religion and politics are easy to let us fall into unilateral extreme ideology, and form more opposition types. Even if we stand in a certain position, we should detach ourselves when thinking, and re-examine our thinking and prejudice from the standpoint of a third party.

Inequality maximization

For some things, inequality should be maximized. If you are good at playing basketball instead of volleyball, you will definitely spend more time on basketball. This unequal distribution of time maximizes, and can make your basketball skills gradually extraordinary.

Trust is the best system

No amount of regulations and management systems can restrain everyone's behavior. But if the trust between people is strong enough, it can save a lot of red tape, just like Netfix's management system for employees.

I leave my sword to those who wield it

Charlie believes that what he can give to the public is his universal wisdom. Some turned a blind eye and even criticized the outdated idea, but none of that mattered to him. For him, people who can make good use of these wisdom and create value.

in conclusion

Some books can be read for the first time to learn a lot of new knowledge and life philosophy. If you read it again after a few years, you will get different inspirations with your own growth. And poor Charlie's common sense must belong to such books. The content of the book is based on Charlie's speech as the main axis, so Charlie's personality can be read from it. He pays serious attention to everything in life, which explains why he has never taken a psychology course, but can master human psychology so incisively; he is insatiable for the knowledge in books, so he can quote scriptures in many chapters; The application is extremely dexterous, so it can explain the social phenomena that it observes by using viewpoints from many different fields. Charlie has such high achievements and wisdom, which can be realized from the scriptures in the book. He follows a few simple principles and regards them as the standard, and then uses them as the stem and branches. From the macro to the micro, let your vision be like telescopic glasses to see everything, and finally add your own life experience to interpret such a world and find out the rules that operate in it.

Sharing of good quotes from the book

To a man with a hammer in his hand, the world is like a nail

To persuade others, to appeal to interests, not to reason

What a man wants, he believes

What determines behavior is the incentive mechanism of decision makers, which is human nature

My sword is reserved for those who can wield him

If you think swearing is a good idea, you can save it for tomorrow

You have to have some mental models in your head, and frame your indirect or direct experience by the framework of these models.

(If you find this article helpful, please take three seconds to help clap your hands, these supports will assist more creative motivation)