Legendary investor Charlie Munger loved 'The Rebel Allocator' so much he called the author and encouraged him to make it a movie. Here are the book's 3 key takeaways.

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• Jacob Taylor, CEO of Farnam Street Investments and author of "The Rebel Allocator," said his 25-minute phone call with Charlie Munger was "the most surreal experience" of his life.
• Through a fictional lens, Taylor teaches readers timeless lessons in business.
• He says "people are afraid to think for themselves."
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It's not everyday that Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett's right-hand man, calls you personally.

"It was more than you could ever imagine for a Munger fanboy like myself," said Jacob Taylor, CEO of Farnam Street Investments, on "The Good Life," an investing podcast. "You pick up the phone and on the other end is Charlie's voice, and, it's like, almost kind of the voice of God in a way."

He continued: "It was the most surreal 25 minutes of my life."

Exaggerations aside, Taylor was in awe of the investment legend. Especially when Munger praised Taylor's book: "The Rebel Allocator."

"His biggest thing that he wanted to tell me, was encourage me to get the book made into a movie," he said. "I haven't made a ton of progress yet on that."

And it wouldn't have been a conversation with Munger without some market wisdom from the investing legend.

"He had read some of my quarterly letters that I write for being the CEO of Farnam Street," he said. "He told me if I was finding too much right now [investment opportunities] he'd actually be worried ... Just to be patient, and look where others aren't looking, and don't be afraid to go where the fish are. It was just an incredible experience."

Taylor's book is designed to teach timeless business lessons to readers through a fictional mentor/mentee relationship.

It centers around a young man, Nick, who's studying for his MBA, but is skeptical of capitalism. That is, until he befriends Mr. X - a Mr. Miyagi-esque, billionaire mentor. Through a series of exchanges, Mr. X slowly changes Nick's views of business and capitalism as a whole, and also shares a series of timeless life/business advice.

Taylor notes that Mr. X's character is really an amalgamation of different business "heroes" - and attributes of Warren Buffett, Charlie Munger, Ray Kroc, Sam Walton, and Henry Singleton are all incorporated into his character.

"I did try to make as much of it obsolescence-proof as I could," he said. "The lessons are very generalized. It's more trying to teach you how to think about the problem and frame the problem correctly."

Key takeaways

1. The importance of capital allocation

"When I say capital allocation, at the end of the day it's what you spend your money on inside your business," he said. "Everybody that works in a business or does anything is doing capital allocation at all times."

Capital allocation - and how to improve/grow in this area - is a recurring theme throughout the book. Taylor says it applies in all aspects of our lives.

"What do you spend your money on? What do you spend your time on? What do you spend your energy on?" he said. "Capital in this instance happens to be for a business context, but all of those lessons that apply to business also apply to life, and family, and friends, and leadership. You're a capital allocator whether you want to be or not."

2. Inner scorecard

"People are afraid to think for themselves," he said. "At the end of the day, I really wanted the book to a boost to their confidence to follow their own decision making, and to follow their own inner scorecard."

For the uninitiated, the inner scorecard is a principle that Warren Buffett has advocated for incessantly over the years. In short, one's inner scorecard encompasses values, morals, ethics and the ability to do the right thing when decision making. It's identifying what's important to you, thinking independently, and not avoiding herd mentality.

Buffett's unblemished record of decades of business transactions is a testament to this way of thinking.

"If everyone's thinking for themselves, it's actually a much more robust system," he said.

3. Capitalism is not the enemy

"Capitalism is a little bit under pressure right now," he said. "I think the tide is probably swinging the other way - and I think it's really easy for people to forget about the little mundane, nice things that free markets provide for us everyday."

Statistics back Taylor's thesis.

According to a recent YouGov poll, 70% of millennials say they're likely to vote socialist in the upcoming 2020 election. What's more, 36% say the approve of communism.

"We really take that ease of life that comes from free markets, and capitalism, and competition - we take it for granted," he concluded. "I do have concerns - especially for younger people - that they haven't been impressed with enough appreciation for the good things that come from it. I purposefully tried to skew the book a little bit younger for that reason. I wanted it to resonate with a younger person."

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