Who is Charlie Munger?
How he helped Warren Buffet to make his company 20,000× bigger?
A =thread= every entrepreneur needs to read:
How he helped Warren Buffet to make his company 20,000× bigger?
A =thread= every entrepreneur needs to read:
Charles “Charlie” Munger is perhaps best known as the Vice Chairman of the world’s greatest compound interest machine: Berkshire Hathaway, Inc.
Munger and Warren Buffet as the leaders of Berkshire made the company return roughly 2,000,000% on its initial value.
Munger and Warren Buffet as the leaders of Berkshire made the company return roughly 2,000,000% on its initial value.
Charlie is known for his fluent, multidisciplinary mind.
Trained as a meteorologist during World War II and as a lawyer at Harvard before devoting himself to business.
His insights on business and life are unique, rare, and correct with unusual consistency.
Trained as a meteorologist during World War II and as a lawyer at Harvard before devoting himself to business.
His insights on business and life are unique, rare, and correct with unusual consistency.
Here are some lessons from him:
- Objectivity
“I think that one should recognize reality even when one doesn’t like it; indeed, especially when one doesn’t like it.”
Whatever you’re deciding about, it should not be influenced by your personal opinion and bias.
“I think that one should recognize reality even when one doesn’t like it; indeed, especially when one doesn’t like it.”
Whatever you’re deciding about, it should not be influenced by your personal opinion and bias.
The best course of action in any given situation is to consider the facts and circumstances, and then arrive at the best possible decision.
- Contrary thinking
“Mimicking the herd invites regression to the mean.”
Contrary thinking is the habit of questioning everything.
“Mimicking the herd invites regression to the mean.”
Contrary thinking is the habit of questioning everything.
3 key principles of contrary thinking are:
1. Never trust in widely held beliefs
2. Quietly but persistently question your own beliefs
3. Whenever making a decision, ask why you might be wrong
You must force yourself to examine all the facts and weigh up all the evidence.
1. Never trust in widely held beliefs
2. Quietly but persistently question your own beliefs
3. Whenever making a decision, ask why you might be wrong
You must force yourself to examine all the facts and weigh up all the evidence.
- Inversion
“Many hard problems are best solved only when they are addressed backward.”
Rather than thinking about your desired outcome, consider the outcome you'd like to avoid.
“Many hard problems are best solved only when they are addressed backward.”
Rather than thinking about your desired outcome, consider the outcome you'd like to avoid.
This helps you think outside of your normal thought patterns and approach problems from a different angle.
Instead of asking these:
• What can I do to solve this problem?
• How can I succeed in this project?
Ask yourself these questions:
Instead of asking these:
• What can I do to solve this problem?
• How can I succeed in this project?
Ask yourself these questions:
• What events, behaviors, or actions can prevent me from solving this problem?
• How can I fail in this project?
• What events, behavior, or action can prevent me from achieving this outcome?
• How can I fail in this project?
• What events, behavior, or action can prevent me from achieving this outcome?
- Circle of competence
“Knowing what you don’t know is more useful than being brilliant.”
Charlie Munger knows what he’s good at and what he’s bad at.
Thinking you know more than you actually do, can cause terrible mistakes.
“Knowing what you don’t know is more useful than being brilliant.”
Charlie Munger knows what he’s good at and what he’s bad at.
Thinking you know more than you actually do, can cause terrible mistakes.
- Discipline
“Preparation. Discipline. Patience. Decisiveness.”
Spend each day trying to be a little wiser than you were when you woke up.
Discharge your duties faithfully and well.
Step by step you get ahead.
“Preparation. Discipline. Patience. Decisiveness.”
Spend each day trying to be a little wiser than you were when you woke up.
Discharge your duties faithfully and well.
Step by step you get ahead.
- Learning
“Go to bed smarter than when you woke up.”
Munger himself is a learning machine. His family has described him as a “Book with legs.”
“Go to bed smarter than when you woke up.”
Munger himself is a learning machine. His family has described him as a “Book with legs.”
Learning keeps your mind engaged and body active. It helps you get new and knowledge-based perspectives on the world around you. It trains your brain to handle a wide range of challenges.
- Mental Models
Charlie Munger calls the main ideas from the major fields: Mental Models.
He has expressed the importance of learning mental models and building a latticework of mental models in your head.
Charlie Munger calls the main ideas from the major fields: Mental Models.
He has expressed the importance of learning mental models and building a latticework of mental models in your head.
“You’ve got to have models in your head. And you’ve got to array your experience both vicarious and direct on this latticework of models. “
"The best mental models that I have found have come through evolution, game theory, and Charlie Munger."
@naval
@naval
Here are some models Munger directly suggested:
(It’s not a complete set of mental models you should know, but is a good start to build off of.)
(It’s not a complete set of mental models you should know, but is a good start to build off of.)
Math:
• Gaussian distribution
• Compound interest
• Decision Tree
• Gaussian distribution
• Compound interest
• Decision Tree
Psychology:
• Social proof
• Crowd folly
• Sunk cost
Engineering
• Backup system
• Breakpoints
• Margin of safety
• Social proof
• Crowd folly
• Sunk cost
Engineering
• Backup system
• Breakpoints
• Margin of safety
Physics
• Critical mass
• Autocatalysis
• Equilibrium
Economics
• Advantages of scale
• Opportunity cost
• Specialization
• Critical mass
• Autocatalysis
• Equilibrium
Economics
• Advantages of scale
• Opportunity cost
• Specialization
“You 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."
Start reading 100 mental models
With the help of books, cards, maps, quotes, audiobook,... it will internalize mental models in your head in a way that you will use them automatically
Get your copy:
gumroad.com/a/485553267/Ax…
With the help of books, cards, maps, quotes, audiobook,... it will internalize mental models in your head in a way that you will use them automatically
Get your copy:
gumroad.com/a/485553267/Ax…
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