Mental Models--How do you 'use' them?

[netnet]

So assuming that you have a reasonable repertoire of mental models, how do use them.

 

Do you review them periodically say the whole list monthly or do you go down your list before big decisions or when confronted with a deep thinking task?

 

Personally, I (try to) review one per day and go through the whole list.  Now that would mean I would be through the list in three months and would start again.  I confess have not as yet gone through my list of ~100 in under a year.  And I have not explicitly reviewed the list before a big decision.

 

For the life of me I am not really sure what Munger does.  He seems to imply that you should go through the list explicitly, but it does not seem that he does.

[dabuff]

From what I read, Munger's approach seems to be applying the mental models as a checklist, especially when evaluating business decisions and outcomes.

This is essentially what I try to do myself: are there any factors described by the mental models that would serve as head/tailwinds for the business over the next several years? I think it's nice to take Bruce Berkowitz's model of trying to destroy an investment - and use the models as a 'railroad' for your positive and negative thinking about the character of the business.

At any rate, thinking broadly seems to be the only way to catch the elusive multi-bagger as Munger and Buffett  have done.

 

You may have already encountered this, but Farnam Street has a lot of material on the subject of mental models.

[Morgan]

I don't believe he goes through a list, at least not publically. He probably had a list at some point, but he probably remembers everything on it. It's just part of his immediate thought process now. If he did have a list I wish he would share it more explicitly.

 

Like dabuff said, Farnam Street seems to have the best list of Mental Models online.

[rogermunibond]

{insert joke about handedness}

[coc]

I suspect that Charlie uses a mental "rolodex" of models, and he rifles through them quickly. It's a learned habit, and once you do it enough, it becomes a more automatic process.

 

Think about reading a balance sheet: You probably already have a checklist in your head, you just don't know it. You look at the cash vs debt, the inventory levels, the composition of shareholders' equity, the PPE levels, etc. all automatically and quickly. At some point in your learning process, you probably needed to laboriously build your mental "checklist" of things to look at, but over time, it became automatic.

 

I think you can apply the same process to all sorts of models. Charlie has described it as learning the play golf or play bridge. You have to work at it through repetition. Practice going through your models when you read books, read articles, hear your friends tell you stories, etc. etc. What can I apply? What did I miss? What's the most fundamental way I can explain this? Read The Psychology of Human Misjudgment and then write down notes after every few models. Ingrain them in your brain. Rifle through them when you're thinking about a problem.

 

The hard part really comes when you need to synthesize several models in response to a complex problem. (Should we have free trade with China? Should the police force be privatized?)

 

And never forget, Charlie is a quasi-genius, so be careful about trying to live up to his standards exactly. Us mortals need to work hard at it. It won't happen by accident.

[feynmanresearch]

I suspect that Charlie uses a mental "rolodex" of models, and he rifles through them quickly. It's a learned habit, and once you do it enough, it becomes a more automatic process.

 

Think about reading a balance sheet: You probably already have a checklist in your head, you just don't know it. You look at the cash vs debt, the inventory levels, the composition of shareholders' equity, the PPE levels, etc. all automatically and quickly. At some point in your learning process, you probably needed to laboriously build your mental "checklist" of things to look at, but over time, it became automatic.

 

I think you can apply the same process to all sorts of models. Charlie has described it as learning the play golf or play bridge. You have to work at it through repetition. Practice going through your models when you read books, read articles, hear your friends tell you stories, etc. etc. What can I apply? What did I miss? What's the most fundamental way I can explain this? Read The Psychology of Human Misjudgment and then write down notes after every few models. Ingrain them in your brain. Rifle through them when you're thinking about a problem.

 

The hard part really comes when you need to synthesize several models in response to a complex problem. (Should we have free trade with China? Should the police force be privatized?)

 

And never forget, Charlie is a quasi-genius, so be careful about trying to live up to his standards exactly. Us mortals need to work hard at it. It won't happen by accident.

I think you are right.The way I see it, Charlie thinks automatically and reflexively because of how smart and experienced he is.

[EricSchleien]

One of the things that often is missing in the value investing world/community is that "knowing makes no difference". You can understand all the mental models you want but if it's only at the intellectual level -- they won't make much of a damn bit of difference.

 

Warren Buffett read Dale Carnegie. However he also experienced Carnegie and had a coach and was trained in their work. There's a level of experiential learning and wisdom based learning that can't be had from a book.

 

I've watched people get more in 3 days then in 10 years of reading books on personal development and mental models.

 

It's much more powerful to discover them for yourself vs being in the realm of learning a concept in a book and then trying to apply it. It's simply a function of how we're wired as human beings.

 

So mental models that I use -----

 

While I use the mental models of "Tribal Leadership" and while I read the book "Tribal Leadership", I had to experience it for me to really get it.

 

While I use mental models from Napoleon Hill, Socrates, Aristotle, Dale Carnegie, Heidegger, The Gita, Zen, and Tolle -- I always understood that stuff intellectually and thought I got it -- however it was always over a contextual framework of how I already experienced my life so it just became another thing to do on top of all my underlying framekworks which were blind to me. Doing a Landmark Forum was way more powerful than reading this stuff and reading this stuff again from a clear slate made these books way more powerful for me.

 

So someone that can teach you something viserally in the realm of transformative  or breakthrough results will allow one to gain access to these distinctions / mental models in a much more effective and quicker period of time vs spending years of reading about them and practicing them and I can pretty much guarantee the path of reading alone will always be less effective and WAY slower and inefficient of a process.

 

So that's how I personally use mental models. Find the best of the best coaching and training and do them and get lightning fast results without having to memorize anything or practice much of anything. Then over time the memorizing and practicing comes and that muscle develops.

 

Just like balance -- you can't read about it, you have to discover it for yourself.

 

Cheers!

[dabuff]

I agree with comments above - Charlie likely does not have his models written down as he has no need to - they're ingrained in his cerebrum.

It's like a recipe for a favorite food: during the early stages you may need the instructions, but eventually. But writing down the models for yourself helps to embed them in your long-term memory, which is especially important during earlier stages.

 

Ref: Use-disuse (mental model #43)

[netnet]

And never forget, Charlie is a quasi-genius, so be careful about trying to live up to his standards exactly. Us mortals need to work hard at it. It won't happen by accident.

Only a Quasi-genius, really, are you on the special parking list at UC Berkeley, i.e. for Nobel Prize winners? (no kidding there is such a thing) He is a genius period.

 

 

 

One of the things that often is missing in the value investing world/community is that "knowing makes no difference". You can understand all the mental models you want but if it's only at the intellectual level -- they won't make much of a damn bit of difference.

 

Warren Buffett read Dale Carnegie. However he also experienced Carnegie and had a coach and was trained in their work. There's a level of experiential learning and wisdom based learning that can't be had from a book...

 

 

So someone that can teach you something viserally in the realm of transformative  or breakthrough results will allow one to gain access to these distinctions / mental models in a much more effective and quicker period of time vs spending years of reading about them and practicing them and I can pretty much guarantee the path of reading alone will always be less effective and WAY slower and inefficient of a process.

 

So that's how I personally use mental models. Find the best of the best coaching and training and do them and get lightning fast results without having to memorize anything or practice much of anything. Then over time the memorizing and practicing comes and that muscle develops.

 

Just like balance -- you can't read about it, you have to discover it for yourself.

 

Cheers!

 

Good points but I have to partially disagree.  While it is true that experience is important--insert joke about teaching how to make love to a virgin. Yet you do not have to burn your hand  to learn not to touch a hot stove. (Further, I don't know about you but I was an avid consumer of all manner of Playboy and the Kama Sutra, before I knew, ahem, which end was up!)

 

I think that you may be generalizing from your experiences and everybody is not quite the same--you do have to do it the first time, which helps learning, but you don't have to be f%#ked.

 

 

I agree with comments above - Charlie likely does not have his models written down as he has no need to - they're ingrained in his cerebrum.

It's like a recipe for a favorite food: during the early stages you may need the instructions, but eventually. But writing down the models for yourself helps to embed them in your long-term memory, which is especially important during earlier stages.

 

Ref: Use-disuse (mental model #43)

 

 

Interesting except that he explicitly proclaims the usefulness of written checklist!

[xo 1]

From what I read, Munger's approach seems to be applying the mental models as a checklist, especially when evaluating business decisions and outcomes.

This is essentially what I try to do myself: are there any factors described by the mental models that would serve as head/tailwinds for the business over the next several years? I think it's nice to take Bruce Berkowitz's model of trying to destroy an investment - and use the models as a 'railroad' for your positive and negative thinking about the character of the business.

At any rate, thinking broadly seems to be the only way to catch the elusive multi-bagger as Munger and Buffett  have done.

 

You may have already encountered this, but Farnam Street has a lot of material on the subject of mental models.

This sounds exactly right.  As you use different models, they may wear a groove in your thought process so you have to be less deliberate but it isn't inconsistent with a checklist of mental models.  As I apply the mental model approach, the process amplifies two related BRK concepts:  1) WEB's punch card of 20 lifetime investments, so think as deeply as possible about an opportunity before buying; and 2) Munger's "invert, always invert "(not just in the strict mathematical sense but more broadly as thinking a problem through from as many perspectives (mental models) as possible).