Poor Charlie's Almanack

✅ When Charlie makes an investment, he doesn't pick around the edges, take initial positions, or make small speculative investments. Such behavior implies uncertainty, and Charlie's moves, few as they are, are anything but uncertainty. On those relatively few occasions when all the circumstances are just right and Charlie does invest, he will likely make a large, decisive bet. This is basically “wait patiently, then swing hard.” ✅ Mimicking the herd invites regression to the mean (average performance). Following the crowd is how you earn crowd results. ✅ Develop into a lifelong learner, through voracious reading, cultivate curiosity and strive to become a little wiser every day. Make “a little wiser” the daily unit of progress. ✅ It is better to remember the obvious than to grasp the esoteric. Most failures come from forgetting basics, not missing rare insights. ✅ Don't fall in love with an investment. Be situation-dependent and opportunity-driven. Treat positions like tools, not identity. ✅ Be fearful when others are greedy and greedy when others are fearful. This only works if you can emotionally tolerate looking wrong in the moment. ✅ Life, in part, is like a poker game wherein you have to learn to quit sometimes when holding a much-loved hand. Attachment makes you play hands you should fold. ✅ I had long looked for insight by inversion in the intense manner counseled by the great algebraist Jacobi: "Invert, always invert." I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes. I also became so avid a collector of instances of bad judgment that I paid no attention to boundaries between professional territories. After all, why should I search for some tiny, unimportant, hard-to-find, new stupidity in my own field when some large, important, easy-to-find stupidity was just over the fence in the other fellow's professional territory? Inversion is a cheat code. Study failure patterns, then design your life to avoid them. ✅ Never underestimate the man who overestimates himself Ego creates blind spots and dangerous momentum. ✅ Learn how to ignore examples from others when they are wrong, because few skills are more worth having. In other words, don't follow the herd if they're going the wrong direction. Independent thinking is a skill, not a personality trait. ✅ Benjamin Franklin: “A small leak will sink a great ship” Tiny problems compound. Fix them while they’re still small. ✅ There are ideas worth billions in a $30 history book Reading is leverage. Some books are basically underpriced software updates for your brain. Look first for someone both smarter and wiser than you are. The best partner is an advantage you can’t fake. Seek a partner who will never second-guess you nor sulk when you make expensive mistakes. The long road needs emotional stability. Look also for a generous soul who will put up his own money and work for peanuts. Aligned incentives beat enthusiastic words. Finally, join with someone who will constantly add to the fun as you travel a long road together. If it’s miserable, you won’t last long enough to win. Make friends among the eminent dead. Tie concepts to people, not just definitions. Learn elementary mathematics and probability. Otherwise you will go a long life like a one-legged man in an ass-kicking contest. Advantages of Scale: Informational advantage. You pay extra for what you recognize. Advantages of Scale: Psychology. “Gee, I don’t know much about this. They know more than I do. Therefore, why shouldn’t I follow them?” Pavlovian Association is a trap. If someone tells you what you don’t want to hear, you’ll reflexively dislike them. Train yourself out of that. Getting the incentives right is a very, very important lesson. Federal Express fixed a broken operation by paying per shift instead of per hour, then letting people go home when it was done. Bet on the quality of the business more than the quality of management. Momentum beats charisma, most of the time. Trying to minimize taxes too much is one of the great standard causes of really dumb mistakes. Taxes can’t be your north star. Anytime anybody offers you anything with a big commission and a 200 prospectus, do not buy it. Complexity plus commission is a smell test. But if you can find some fairly priced great company and buy it and sit, that tends to work out very very well indeed, especially for an individual. Patience is a strategy, not a lack of action. Don’t sell anything you wouldn’t buy yourself. Basic integrity filter. Don’t work for anyone you don’t respect and admire. Your environment trains you. Work only with people you enjoy. Life is too long to spend it with people you dread. Spend each day trying to be a little wiser than you were when you woke up. Step by step you get ahead, but not necessarily in fast spurts. Build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. Have low expectations. Have a sense of humor. Surround yourself with the love of friends and family. Above all, live with change and adapt to it. This is basically emotional survival gear. Make a checklist of every construct of Psychology. Use multiple models, not vibes. You can learn to make fewer mistakes than other people and how to fix your mistakes faster when you do make them. The goal isn’t perfection. It’s faster recovery. Handle mistakes and new facts that change the odds. Updating is not betrayal, it’s intelligence. Override credentials when incentive-caused bias is obviously present. But also know when you have no wisdom to add and should trust an expert. Know what you know and what you don't know. This is one of the most useful skills in life. Envy, resentment, revenge, and self-pity are disastrous modes of thought. They feel justified and they destroy you anyway. Every time you find you're drifting into self-pity, whatever the cause, self-pity is not going to help. It doesn't change reality; it just steals energy. Maneuver yourself into doing something in which you have an intense interest. Interest fuels stamina. Never, ever, think about something else when you should be thinking about the power of incentives. Incentives explain behavior better than speeches. Franklin put it best, “If you would persuade, appeal to interest and not to reason.” People move when their incentives move. Granny's rule. Do the unpleasant and necessary tasks first, then reward yourself with the pleasant tasks. Prompt rewards work best.