Charlie Munger: Mental Models for Investing and Life (Part 5)

Charlie Munger is one of the great minds of the 20th century. Charlie Munger says that “developing the habit of mastering the multiple models which underlie reality is the best thing you can do.”


Those models are mental models.


Mental Models fall into a few categories, two of which are: (1) ones that help us simulate time (and predict the future) and better understand how the world works (e.g. understanding a useful idea autocatalysis), and (2) ones that help us better understand how our mental processes lead us astray (e.g., availability bias).


In this video (Part 5), we cover the following Charlie Munger's mental models for investing and life:

  1. Physics envy

  2. Vaguely Right Beats Precisely Wrong

  3. Secondary and Tertiary Effects

  4. The Cancer Surgery Formula

  5. Scale

Do see this video to understand more on these mental models.


 



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