Chapter 3 : Obtaining Worldly Wisdom Through A Latticework Of Mental Models
- Any field you enter, from finance to engineering, requires some degree of specialization. Once you land a job, the process of specialization is only amplified. You become a specialist in certain aspects of the organization you work for. This approach, however, doesn’t help solve problems. Because you don’t know about the big ideas from the key disciplines, you start making decisions that don’t take into account how the world really works. And investing is a liberal art that involves cross-pollination of ideas from multiple disciplines.
- Charlie Munger believes that by using a range of different models from many different disciplines—psychology, history, mathematics, physics, philosophy, biology, and so on—a person can use the combined output of the synthesis to produce something that has more value than the sum of its parts.
- We need more than a deep understanding of just one discipline—we need a working knowledge of many disciplines and an understanding of how they interact with each other.
- Munger think that's the correct path for most of us is to specialise and get very good at something that society rewards, and then to get very efficient at doing it. But even if you do that, he thinks we should spend 10 to 20 percent of our time on trying to know all the big ideas in all the other disciplines.
- Every statistician knows that a large, relevant sample size is their best friend. What are the three largest, most relevant sample sizes for identifying universal principles? Bucket number one is inorganic systems, which are 13.7 billion years in size. It’s all the laws of math and physics, the entire physical universe. Bucket number two is organic systems, 3.5 billion years of biology on Earth. And bucket number three is human history, you can pick your own number, I picked 20,000 years of recorded human behaviour. Those are the three largest sample sizes we can access and the most relevant.
- Thinking is a surprisingly underrated activity. Researchers published a study in 2014 that revealed that approximately a quarter of women and two-thirds of men chose electric shocks over spending time alone with their own thoughts.
- Brilliant people aren’t a special breed—they just use their minds differently. They practice certain habits of thinking that allow them to see the world differently from others. In their book The 5 Elements of Effective Thinking, Dr. Edward B. Burger and Dr. Michael Starbird outline some practical ways for us to improve our thinking :
- Understand deeply : When you learn anything, go for depth and make it rock solid. Any concept that you are trying to master is a combination of simple core ideas. Identify the core ideas and learn them deeply.
- Make mistakes : Mistakes highlight unforeseen opportunities as well as gaps in our understanding. And mistakes are great teachers. As Michael Jordan once said, “I’ve missed more than nine thousand shots in my career. I’ve lost almost three hundred games. Twenty-six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed."
- Raise questions : If you want to deepen your understanding, you need to raise questions.
- Follow the flow of ideas : To truly understand a concept, discover how it evolved from simpler concepts.
- Change : You need to shrug off a lifetime’s habit of accepting a relatively superficial level of understanding and start learning more deeply.
