Seeking Wisdom

One of the things we don't pay enough attention to is the context, especially when we talk about numbers. Speaking about something "big" or "small" does not make any sense if you do not frame the value in its context.

We are often stunned by coincidences that seem astonishing to us. If Maja is thinking of Robert and the phone is ringing and it is Robert, Maja will think that it is a really extraordinary fact because her brain does not consider and does not keep track of non-events, the number of times when she thought of Robert and the phone didn't ring. The same mistake is happening when people don't consider that if a thing has a chance in a million to happen, in a country of 60 million people like Italy, this thing could happen 60 times a day.

Again: if we toss a coin and get 10 heads in a row, we think it's extraordinary, instead of considering that probability has no memory, every time we toss the coin into the air the past clears and the odds are always 50%. What came out in the previous toss does not affect the possibility of getting head for the 11th time.

The art of simplification

To be successful, it is fundamentally important to be problem-oriented, not method-oriented. It is important to learn how to turn big problems into small ones, breaking them down, but continuing to look holistically at the problem as a whole. We often try to gather too much information, and just as often we focus on irrelevant details. You need to cancel the background noise and look at the big picture. Wondering: why am I doing this? What is the really important thing?

Focus

The focus guides understanding and efficiency. It is impossible for our brain to process too many things at once. Decisions and actions are simplified when focusing on one of them at a time.

Often the best thoughts come when we are not stressed, we have no time limits, there are no judgments hanging over us. Thinking takes time, the simple truth is that we often don't do it well because we are busy doing something else.

Filters

What is a filter? Something that quickly helps us make decisions because it helps us automatically exclude some things. We can establish criteria based on evidence, in order to verify them during the formation of our judgment as if we were following a sort of checklist.

To give you a clear example of this, Warren Buffett responded to those who asked him how he assessed the new business proposals submitted to him: "Can I understand you? This is the first filter. If it passes, here is the second: does it seem to have some kind of competitive advantage? If yes, take the third filter: is the management team made up of honest and reliable people? Finally, is the price right? If the idea also passes this last filter, I take out my chequebook ".

Reverse thought: try to start with the conclusion in the head

It is important to learn how to avoid behaviours that can cause the opposite of what you want to achieve. If we say to someone, "Don't think of red," that person will immediately think of red. Why? It's simple: to know what it should not do, the human brain must first think of it. This is why it is important to focus on phrases like: "I want to hit the ball well", instead of "I don't want to hit the ball badly".

The method of inverse thinking applies this way: let's imagine that we have already achieved our goal, and ask ourselves: what is the purpose? Was this what I wanted? If the answer is yes, let's move on. What is really needed to achieve it? We continue step by step in the process of "thinking backwards", going back to the beginning. In reverse, we can easily see how and if something works.

The golden rules of Charlie Munger

Finally, here is the list of Charles Munger's golden rules, to be applied both in personal and professional life:

• Knowledge produces wealth and compound interests (reserve an hour a day for your growth)
• If you continue to read and to think, you will never have work problems
• Admit your stupidity (so as not to repeat an error)
• Don't sell what you wouldn't buy
• Every year you destroy one of your ideas
• Don't have ideologies (they hide the facts)
• Expand your way of looking at things

I follow them. Do you?