What Charlie Munger thinks about mental models
Warren Buffett's business partner and vice chairman of Berkshire Hathaway; also chaired Wesco Financial Corporation from 1984 to 2011, where he wrote its annual letters himself.
Everything they publish, on ppll ↗
Charlie Munger did not write this page.
We collected these quotes from things they published elsewhere, and every quote links to where it was said. They have no account here and have not endorsed this site. Quotes are word for word; the short line under each one is our own restatement, not their wording. Their own site. Is this you? Claim it or ask us to remove it. Or tell us what is wrong here.
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18 dated positions, 1986 to 2007, in their own words. Our reading of what Charlie Munger has said — not written or endorsed by them.
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Their wordsAnd it doesn’t help you just to know them enough just so you can prattle them back on an exam and get an A. You have to learn these things in such a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life.
↗2007 USC Law School Commencement Addressjamesclear.com 5th of 14 in this piece
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Their wordsThose of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve. And in life, unless you’re more gifted than Einstein, inversion will help you solve problems that you can’t solve in other ways.
↗2007 USC Law School Commencement Addressjamesclear.com 6th of 14 in this piece
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Their wordsFirst, I had long looked for insight by inversion in the intense manner counseled by the great algebraist, Jacobi: “Invert, always invert.” I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 1st of 17 in this piece
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Their wordsThis maxim is a wise guide to a great and simple precaution in life: Never, ever, think about something else when you should be thinking about the power of incentives.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 2nd of 17 in this piece
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Their wordsMan-with-a-hammer tendency does not exempt smart people like Blanchard and Skinner. And it won’t exempt you if you don’t watch out.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 3rd of 17 in this piece
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Their wordsWidespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 5th of 17 in this piece
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Our readingTrained, habitual use of simple probability math is one standard antidote to foolish optimism
Their wordsOne standard antidote to foolish optimism is trained, habitual use of the simple probability math of Fermat and Pascal, taught in my youth to high school sophomores.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 9th of 17 in this piece
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Their wordsIf he reduces the number of skills he practices and, therefore, the number of skills he retains, he will naturally drift into error from man with a hammer tendency. His learning capacity will also shrink as he creates gaps in the latticework of theory he needs as a framework for understanding new experience.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 14th of 17 in this piece
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Their wordsIt is also essential for a thinking man to assemble his skills into a checklist that he routinely uses. Any other mode of operation will cause him to miss much that is important.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 15th of 17 in this piece
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Their wordsIn general, learning is most easily assimilated and used when, life long, people consistently hang their experience, actual and vicarious, on a lattice- work of theory answering the question: Why?
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 16th of 17 in this piece
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Their wordsyou can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 1st of 13 in this piece
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Their wordsyou’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 2nd of 13 in this piece
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Their wordsIt’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 3rd of 13 in this piece
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Their words80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 4th of 13 in this piece
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Their wordsIf you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest. You’re giving a huge advantage to everybody else.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 5th of 13 in this piece
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Their wordsEvery person is going to have a circle of competence. And it’s going to be very hard to advance that circle.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 9th of 13 in this piece
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Their wordsIf you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 10th of 13 in this piece
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Their wordsWhat Carson did was to approach the study of how to create X by turning the question backward, that is, by studying how to create non-X. The great algebraist, Jacobi, had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward.
↗How to Guarantee a Life of Misery (Harvard School commencement address, 1986)jamesclear.com 4th of 5 in this piece