Mental models can help shape behaviour and set an approach to solving problems akin to a personal algorithm and doing tasks. If the facts dont hang together on a latticework of theory, you dont. Get ebooks poor charlie s almanack on pdf, epub, tuebl, mobi and audiobook for free. Transcripts of lectures munger gave at various periods in different places. Mar 02, 2017 charlie munger s commencement address at usc. It contains everything you need to get started on the path of learning how to make better decisions, become more rational, and best of all become more successful at anything you choose. Charlie munger and his mental models decoding markets. After many hours of research, i have sorted through more than 1,000 mental models and distilled them into a short list of the most important mental. Charlie munger refers to a latticework of about 100 mental models that he and warren. Charles t munger is vicechairman of berkshire hathaway, one of the largest companies in the world, and the developer of the mental models concept.
The phrase latticework of mental models comes from berkshirehathaways charles munger, who is a person that has spent most of his life working out ways to, for lack of a better term, think better. Charlie munger on the value of thinking backward and forward you need to learn how to invert a problem in order to solve it most effectively. Youve got to hang experience on a latticework of models in your head. Charlie munger mental models kestrel capital group. I figured there is no full set of these mental models he does say he has roughly 8090 of them. May 11, 2018 charlie munger has spoken a lot about mental models and their use in thinking better. Adding mental models to your minds toolbox charlie explains his concept of developing multiple mental models to add to your thinking toolbox. Charlie, for those who do not know, is warren buffetts quieter half in their partnership at berkshire hathaway. Nobody in his head imagines all the world, government or country. Mental models are what charlie munger refers to the key ideas in each discipline.
Rather than just knowing the names of various mental models, charlie munger is very focused on acquiring a deep understanding of these models so they can help him better understand the world. The talks with checklists of mental models he uses in the checklist, the psychology behind every models and antidotes he found that helps to control influence caused by particular models. And i think to some extent, before you are going to be a great stock picker, you need some general education. You need a different checklist and different mental models for different companies. Apr 04, 2016 charlie munger also mentions models in natural science and shows how the ecosystem model can offer insight. How warren buffetts billionaire deputy at berkshire hathaway. Well, the first rule is that you cant really know anything if you just remember isolated facts and try and bang em back. Mungers system has steered his investments for forty years and has guided generations of successful investors. Jan 19, 2016 charlie munger s old charlies almanack outlines at a high level munger s use of a latticework of mental models follow this process to success. A dozen things ive learned from charlie munger about. Munger, vice chairman of berkshire hathaway, is warren buffetts partner at. C business school, what you need is a latticework of mental models in your head. The ecosystem, a community of plants and microorganisms that are linked to one another and interact with the physical environment, is much like. In multiple speeches, and in the book poor charlies almanack.
I have set up a bookmarks system in the pdf file to ease your navigation, which you can access by. May 5, 1995 the theory of modern education is that you need a general education before you specialize. Munger and buffett have spent decades accumulating mental models. A list of top 100 mental models for business by rob d. I first discovered what a mental model was and how useful the right one could be while i was reading a story about richard feynman, the. Learn how charlie mungers system of mental models helped the contrarian. How warren buffetts billionaire deputy at berkshire. Charlie munger also mentions models in natural science and shows how the ecosystem model can offer insight. The psychology of human misjudgement charlie munger full. The subject of the speech was what munger called worldly wisdom.
One point in his article makes it clear mental models are useful to the extent that they edit the world around. He believes that it is through the application of models in a varied range of settings in life that genuine learning takes place. And, of those, only a mere handful really carry very heavy freight. In fact he credits mental models for his unusually sharp understanding of the world. His mental models, drawn from every discipline imaginable, recur repeatedly and, in no way, focus on. Aug 22, 2015 rather than just knowing the names of various mental models, charlie munger is very focused on acquiring a deep understanding of these models so they can help him better understand the world. Without a latticework of models, youll fail in school and life.
There are more than 1 million books that have been enjoyed by people from all over the world. One of the best ways to do this is to expand the set of mental models you use to think. Lesson on elementary, worldly wisdom charlie munger. Poor charlies almanack by charlie munger book summary and pdf. Munger points out that if you dont master the multidisciplinary approach of such mental constructs, you will remain in the middle ranks or shallows in life.
Poor charlies almanack is a collection of charlie mungers best advice given over 30 years, in the form of 11 speeches given as commencement addresses and roundtable talks. I first learnt about mental models from reading about warren buffetts business partner charlie munger and who bill gates called the broadest thinker hes ever encountered. Mental models introduction youve got to have models in your head and youve got to array your experience both vicarious and direct onto this latticework of mental models. The best way to make intelligent decisions 1 models explained i also stumbled upon a document consisting of the best of charlie munger from 1994 to 2011. Mental models i find repeatedly useful gabriel weinberg. Jan 01, 2005 munger is indeed full of wisdom and seems to be one of the progenitors of using mental models as daily decisionmaking tools, which both shane and i find immensely helpful. Munger, along with buffett, is one of the main inspirations behind the book seeking wisdom. The top 100 mental models inspired by charlie munger rob kelly. Munger doesnt suggest you learn them all, which would be an almost impossible task. Munger is indeed full of wisdom and seems to be one of the progenitors of using mental models as daily decisionmaking tools, which both shane and i find immensely helpful. Berkshire hathaway, inc in the time of his and warren buffetts reign as the leaders of berkshire, the company has returned roughly 2,000,000% on its initial value, or 20,000 to 1. Charlie munger is talking about the art of investing. There are many different types of mental models from the circle of competence first espoused by buffet in a 1996 shareholder meeting to fundamental financial concepts like the law of diminishing returns. I can never make it easy by saying, here are three things.
Charlie munger over the very longterm, history shows that the chances of any business surviving in a manner agreeable to a companys owners are slim at best. Charlie mungers old charlies almanack outlines at a high level mungers use of a latticework of mental models follow this process to success. Mar 20, 2017 in a speech that munger gave at usc business school in 1994, he started to delve into this idea of a latticework of mental models. The phrase latticework of mental models comes from berkshirehathaways charles munger, who is a person that has spent most of his life working out ways to, for lack of a better term, think better munger has come to the conclusion that in order to make better decisions in business and in life, you must find and understand the core. A dozen things ive learned from charlie munger about mental. Charles charlie munger, a longtime resident of pasadena, california, is perhaps best known as the vice chairman of the worlds greatest compound interest machine. While we all use mental models to think, mungers idea is to actively go and learn the big timetested ideas men. Forrester defined mental models as the image of the world around us, which we carry in our head, is just a model. The munger network of mental models focus investor. Mar 31, 2018 here is an excellent articleblog on compilation of mental models of charlie munger 1 models as of today. Charlie munger is an american businessman, lawyer, investor, and philanthropist. Mungers worldly wisdom consists of a set of mental models framed as a latticework to help solve critical business problems. Here is an excellent articleblog on compilation of mental models of charlie munger 1 models as of today.
Charlie munger refers to a latticework of about 100 mental models that he and warren buffett credit for their successful investing. Jan, 20 audio of the often referred to speech by charlie munger on the psychology. This book presents the essential steps of mungers investing strategy, condensed here for the first time from interviews, speeches, writings, and shareholder letters, and paired with commentary from fund managers, value investors. Munger calls this the latticework of mental models. Charles t munger is vicechairman of berkshire hathaway. While not an easy read, this book provides a better structure and lays out the big mental models to. Thus people like charlie munger encourage others to add more models in the toolkit. Apr 01, 2018 the mental models approach helps you understand reality. Theyve even developed a famous checklist they use to assess every investment opportunity.
Munger suggested that we all need a set of mental models at our disposal, and that we should apply these models to understanding and evaluating our experiences and circumstances. Recently i was reading about charlie munger, and i came across a speech he made before the usc business school in 1994. Keep in mind, the acquiring of wisdom is a process that takes time. There are obviously positive aspects to this tendency for society, but they rarely have place in making investment decisions. In doing so, buffett was using another mental model, inversion, to take a bad habit confirmation bias and try to invert it to generate some potentially constructive new information. The mental model of confirmation bias aka goal seeking or. A dozen things ive learned from charlie munger about mental models and worldly wisdom. Charlie mungers unique approach to being an expertgeneralist developing the habit of mastering the multiple models which underlie reality is the best thing you can do. Audio of the often referred to speech by charlie munger on the psychology.
Im going to play a minor trick on you today because the subject of my talk is the art of stock picking as a subdivision of the art of worldly wisdom. He has a list of these ideas mental models in his mind and quickly picks the ones applicable to the given situation, much as a pilot automatically goes through a checklist prior to takeoff. Each idea is a concept or model about how the world really works that can be used to understand and solve real problems and predict real outcomes. Always update books hourly, if not looking, search in. Each idea is a concept or model about how the world really works that can be. Munger is pointing out that people tend to ignore or deny the faults of people they love and even distort facts to facilitate that love. This will help you understand how munger thinks through mental models. Munger s worldly wisdom consists of a set of mental models framed as a latticework to help solve critical business problems. He went through how to build mental models that you can use in business and life. The ecosystem, a community of plants and microorganisms that are linked to one another and interact with the physical environment, is much like similar businesses in certain industries. The top 100 mental models inspired by charlie munger rob. This article on inversion continues my quest to list out the top 100 mental models needed to.
In a famous speech in the 1990s, charlie munger summed up the approach to practical wisdom through understanding mental models by saying. Mar 12, 2017 mungers system has steered his investments for forty years and has guided generations of successful investors. In this summary of poor charlies almanack, ive extracted the most important points. What are the 100 mental models mentioned by charles munger. Let me explain what i mean by sharing a story about a worldclass thinker. Aug 07, 2018 if you are new to the world of charlie munger and mental models then this page is for you. In all his talks, he shows wit, rationality, and incredible clarity of thought. The biography of charlie munger with annotations and references explained. Mental models are a way of making sense with the world and our immediate environment. But finding all of their mental models listed in one place is impossible. And when you understand things at a deeper level you make better decisions.
This website, inspired by the work of charles munger, provides over 100 models that can be brought consciously to mind to aid the thinking process. The top 100 mental models inspired by charlie munger. Success investing and the latticework of mental models. The mental models approach helps you understand reality. To quote charlie munger, 80 or 90 important models will carry about 90% of the freight in making you a worldlywise person. According to charlie munger, its important to have a latticework of mental models with which to hang your ideas and. Jan 17, 2020 building a latticework of mental models. A lesson on elementary, worldly wisdom as it relates to. Mental models are how charlie refers to the key ideas in each discipline. Charlie munger has spoken a lot about mental models and their use in thinking better.