It's been well documented that Warren Buffett spends most of his time reading, and he attributes the secret of his success to spending most of his day hunkered down in the details of company annual reports, business periodicals, and numerous other books. The same can be said for Charlie Munger, best known as Buffett's right-hand man and co-chairman of Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) .
Describing Munger as Buffett's sidekick ignores much of Munger's talent, because Munger also happens to be a billionaire who's made a name for himself through a deadpan yet hilarious delivery of timeless investment advice. It's clear that he's had a beneficial impact on Berkshire's success, as well as that of Wesco Financial, a Berkshire subsidiary that Munger leads
Like Buffett, Munger concedes that being well-read has proved invaluable in earning superior investment results through holdings such as Costco (Nasdaq: COST ) , where he is also on the board. In that spirit, for those interested in learning more about Munger, his enduring investment philosophies, and his views on just about everything, let's go through an overview of three key books that make the rounds during Berkshire's annual shareholder meeting in Omaha.
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, edited by Peter Kaufman
Now in its third edition and topping out at more than 500 pages, Poor Charlie's Almanack offers the most thorough and insightful summary you'll find on why Munger has become an investing legend. Buffett and Munger cooperated on this book as a collection of writers compiled Munger's biographical details, lectures, and public commentaries. There are also countless interviews offering a firsthand account of Munger's personal life and investment wit.
The best chapters cover a series of talks Munger gave from 1992 to 1995, collectively titled "The Psychology of Human Misjudgment," in which he summarizes 25 inherent psychological traits that frequently trip up investors. I read through the second edition recently and can't recommend Poor Charlie's Almanack enough.
Seeking Wisdom: From Darwin to Munger, by Peter Bevelin
I picked up a copy of Seeking Wisdom at this year's meeting. What drew me to the book is its overview of world-renowned thinkers who have a penchant for thinking clearly and avoiding the psychological pitfalls that cause humans to act irrationally.
Chock-full of findings from many academic disciplines, the book mirrors Munger's thinking that a combination of factors, or "Lollapalooza effects," work together in producing potentially exponential investment returns. Berkshire's holdings in Coca-Cola (NYSE: KO ) , Wells Fargo (NYSE: WFC ) , and Procter & Gamble (NYSE: PG ) are prime examples of the benefits of these effects.
Influence: The Psychology of Persuasion, by Robert Cialdini
A frequent recommendation from Munger himself, Cialdini's Influence dives into the art of persuasion and the tactics that salespeople successfully employ to persuade people to buy goods. It's fascinating to see how savvy marketers effectively employ compliments, clothing, and social acceptance to get you to buy a product. Better yet, Cialdini offers a game plan to better withstand their sly advances. I can't say it will prove successful in negotiating a lower price for my next Ford (NYSE: F ) , but the lessons the book has taught me so far are definitely eye-opening.
So if you want to learn from the investing masters, consider picking up some of these books. As Munger and Buffett would attest, sitting on your rear end cozied up with a good read has its advantages.