Rating: [3 - life] (see explanation of ratings here)
This book is true to it's name - it is in my pantheon and will join Meditations, Lessons of History and How To Win Friends and Influence People as the books I would give any high school graduate looking to better themselves. Filled with great summaries of cognitive fallacies and biases, math, physics and systems thinking - a fantastic overview of models and concepts that can be applied throughout life to great benefit.
A few favorite passages (quoted directly from the book):
- Warren Buffett says on being informed of bad news: "We only give a couple of instructions to people when they go work for us: One is to think like an owner. And the second is to tell us bad news immediately - because good news takes care of itself. We can take bad news, but we don't like it late."
- From Charles Munger: "I've gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things - which by and large are useful, but which often misfunction. One approach is rationality - the way you'd work out a bridge problem: by evaluating the real interests, the real probabilities and so forth. And the other is to evaluate the psychological factors that cause subconscious conclusions - many of which are wrong."
- Charles Munger tells us about the Navy model - a rule with net benefits: "If you're a captain in the Navy and you've been up for 24 hours straight and have to go to sleep and you turn the ship over to a competent first mate in tough conditions and he takes the ship aground - clearly through no fault of yours - they don't court martial you, but your naval career is over. Napoleon said he liked luckier generals - he wasn't into supporting losers. Well, the Navy likes luckier captains. [...] It doesn't matter whether it was your fault or not. Nobody is interesting in your fault. It's just a rule we happen to have - for the good of all, all effects considered. [...] Considering the net benefit, I don't care if one captain has some unfairness in his life. After all, it's not like he's being court marshaled. He just has to look for a new line of work.