Short reviews: “A Mind at Play”, “Poor Charlie’s Almanack”, and “The Man Who Solved the Market”

I recently read three books that are tangentially related:

I’d feel comfortable recommending checking out all three; in terms of enjoyment, for me “A Mind at Play” comes first. Perhaps in terms of practical advice, the book by and about Munger should come first, the others also provide examples of how to live and how not to live.

One common thread is Claude Shannon, connected to the others via his and his wife Betty‘s interest investing and gambling.

For me (and I guess most everyone else), “The Man Who Solved the Market” reveals a bit about how Renaissance makes its money. As I gather, it’s mostly through exploiting weak patterns in the market, like reversion to the mean, not through estimating the value of companies and commodities. This is as opposed to Munger (and the Shannons) who were more focused on assessing value.

One point that “A Mind At Play” makes is that Betty Shannon deserves more credit for the Shannon family’s investment work: “The stock market intrigued her, and it was Betty, not Claude, who first drew the family into investing.” The book quotes their daughter Peggy Shannon: “Their work in the stock market was completely a team effort. It is not the case that my father had these mathematical ideas about the stock market and then figured out how to put them to work to make money… it was a joint project.”

The book quotes from Claude Shannon:

A lot of people look at the stock price, when they should be looking at the basic company and its earnings. There are many problems concerned with the prediction of stochastic processes, for example the earnings of companies… My general feeling is that it is easier to choose companies which are going to succeed, than to predict short term variations, things which last only weeks or months, which they worry about on Wall Street Week. There is a lot more randomness there and things happen which you cannot predict, which cause people to sell or buy lots of stock.

Claude Shannon, as quoted in “A Mind At Play”.

Before reading “A Mind At Play”, I was vaguely aware of Shannon inventing information theory — I remember Steve across the hall from me in the dorm reading “A Mathematical Theory of Communication” [PDF] — but I was pretty much ignorant otherwise, including missing his foundational contribution to computing via his master’s thesis “A symbolic analysis of relay and switching circuits” [PDF], connecting circuits and Boolean logic.

Along with Shannon’s work on computing and information theory, another work of his that I’d like to return to are his thoughts on how to tackle a problem. The authors of “A Mind At Play” have an article summarizing these here: One of the fathers of modern computing used this 6-step process to solve any problem. Based on the picture there, it looks this is the original article from Shannon corresponding to that: “Creative Thinking” (around page 528 in “Miscellaneous Writings”). The blog post where I found the link to the article.

I was also happy to come across this Reddit AMA with “A Mind At Play” authors.

Some things I take from the Shannon biography: an appreciation for whimsy and for building things. I also take from it that even being a genius in good physical shape (unicycling, running) with lots of hobbies (math, juggling, building contraptions) is not enough to save you from Alzheimer’s. That scares me a little as one who is not a genius and who is not in super good shape. (I can at least work on the exercise bit.) Maybe smoking didn’t help.

The Munger book consists mostly of speeches given at various events: graduations, etc. Munger emphasizes the importance of mental models and checklists. The editor tries to provide an approximation to this before getting to the speeches and Munger provides a few lists, but I’d still be curious to see a longer synthesis of the rules Munger actually applied in practice. (This blog post captures the editor’s list.)

There’s a fair amount of repetition across the speeches. I suppose that makes it less forgivable if I didn’t pick up all the lessons they intended to convey.


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