(Charlie Munger)
A personal collection of mental models extracted from books, experience and reflection.
It's about Decision Making, Wealth & Leverage, Business & Sales, Psychology & Bias, Science, Systems & First Principles, Stoicism & Inner Game and Life, Family & Character.
These notes are not advice.
They are reminders.
First for myself.
If useful for others, that's leverage.
Category:
Science, Systems & First Principles
Core Idea:
Reality follows mathematical and physical laws.
Business, markets, and human behavior are no exception.
My Understanding:
Through physics, mathematics, and systems thinking, I learned that outcomes are not random opinions - they are consequences of constraints, incentives, probabilities, and time.
How I apply it in business:
XYX
Business failure mode:
XYX
How I apply it in trading:
XYX
Trading failure mode:
XYX
How I apply it in life:
XYX
Life failure mode:
XYX
I have to live in harmony and in respect to the nature and all matters, because everything is made out of the same things, out of Atoms.
In entrepreneurship I respect constraints (regulation, capital, incentives, timing).
I design trading systems that work even when I don’t fully understand outcomes.
I design trading systems with stringent performance and risk corridors to manage the uncertainties.
In life I focus on what I can influence, not on controlling others
In life I stop demanding perfect explanations for human behaviors.
Life is like a game I have to play, where I don't know or understand all the rules.
When faced with complex problems, I reduce them to their basics in order to understand them and be able to act.
I use valid laws that are old and I eat food that is fresh (Lindy effect).
I need to be brave and try things out to become successful.
I need to combine philosophy and science to find a path for myself.
I have to be humble and to learn daily.
I accept, that only the time will show the result.
Failure Mode:
This model fails when I mistake simplified models for reality or ignore human emotion and irrationality.
Sources:
Six Easy Pieces by Richard Feynman: Chapter 1, 2 and 4
Skin in the Game by Nassim Nicholas Taleb:
Surely You're Joking by Richard Feynman: Stories about Self-deception, scientific truth, Cargo Cull Science
The Beginning of Infinity by David Deutsch: Chapter 1-3, 7 and 12
Gödel, Escher, Bach by Hofstadter: Self reference, formal systems, Limits of logic and provability
Antifragile by Nassim Nicholas Taleb: Book I, Book II, Via Negativa
Think, Fast and Slow by Daniel Kahnemann: System 1 vs System 2, Biases, Illusion of Understanding
Naked Economics by Charles Wheelan: Incentives matter, Supply & Demand, Externalities
Naked Statistics by Charles Wheelan: Correlation vs causation, Regression to the mean, expected value