Thursday, April 06, 2006

Book review part II

My last post was a quick review of three books...being short on time I did not go into too much detail. One of the books,

I plan on doing a very indepth review of because I know it is popular and the hot thing right now, hopefully will have this fdone by the weekend.

But I wanted to talk about this book

a little more.

While as a book reader I did not think it was a great read, that does nt mean I did not learn anything or failed to take away ideas form the book. On the contrary several points in the book were actualy quite valuable, they just dont go into very much detail.

Charlie Munger is quoted several times in the book as setting forth why he exactly set out to invest or as some would say become rich. Mr. Munger simply said he did it so he could be independant,

or to put it more vulgar, he was looking for F-U money (this is the little known accounting term which is deifned has having enough money so that you can tell anybody F-U).

And I get what he is saying. If you think about some of the most succesful self made people in the world, they dont accumalate wealth for wealth's sake, they actually set out to do something they love. While the money is nice their passion and drive is fueled by some other motivation. In Mr. Munger's case his goal was to collect money so he could secure his freedom, so to speak.

So I think that it is a very important lesson, and one which I will elaborate on in more detail later on, as it forms a cornerstone of why I am investing.

But for now I will leave you with this thought, as a new investor I think that a good thing to ask before you invest, or at least invest large sums, is why exactly are you investing? other than the hope of having more money down the road than you have now.

because I think that if you have some sort of idea of why you are investing, then that will help you be more succesful because when you are deciding in what it is you wish to invest in, you can ask yourself, how does this investment fit with my goal and does it help me reach my goal? or better yet how does this investment put my goal at risk of not being reached? (as Munger/Buffett teache (from Einstein I believe) you must always invert).

So that is what I learned from this book. Like I said while I did not like the book as a book to read (for me a good book is one that you dont want to put down because you cant wait to see whats on the next page) I do recommend it because it does have a few key points from Munger which may help you better orient your investing mindset.


Geoff Gannon said...

I agree with you about the book. It's not terribly written or anything, and the subject is fascinating - but, it doesn't get into a lot of the stuff I really would have liked reading about.

Poor Charlie's Almanack offers more in that respect. But, it might not appeal to everyone. Munger's an interesting guy that has said some very interesting things about investing; but, there isn’t a book out there on him that’s as interesting as Lowenstein’s biography of Buffett.

One notable difference between Buffett and Munger is why each made all that money. Munger wanted the freedom. Buffett wanted the points one accumulates for playing the game well (where “well” means better than anyone else).

I really believe that is Buffett's money making motivation. Maybe it comes from having known Graham, a man who was so generous in giving out his ideas, and so reluctant to just make more money from investing.

But, I don't think so. It was probably something he was born with. Munger has slowed down (and pursued other interests) in a way I don't think Buffett ever will. Despite all this speculation about retirement, I still doubt there will be much time between the day the newspapers write of Buffett's retirement and the day they run his obituary. I've always thought the two events would coincide, absent some sort of long hospital stay.

Judging by how long the average CEO sticks around these days, Buffett may just outlast most of the CEOs who get the job this year. Not a bad thought for Berkshire shareholders.


Excellent book