The Mental Models to Become Successful – Charlie Munger

Charlie Munger describes how he has used mental models in his life to achieve great success. He talks about inversion, Occam’s razor, and more.

Inversion Process

  • Start with the problem rather than working backwards from the goal.
  • Don’t think about what you want, think about what you want to avoid.
  • Example Munger gives was he was a meteorologist; he was tasked to predict the weather. His goal was to clear pilots for takeoff. He looked at it as his job was to prevent killing the pilots, and the pilots can be killed by icing or if they ran out of fuel.
  •  For stocks, instead of looking for ways to gain lots of money, look for how you could lose a lot of money.

Organized Uncommon Sense

  • Take conventional sense and strip the asininity out of it
  • Whole method of operation is just to avoid asininity
  • Asininity: stupidity combined with stubbornness

Practice Humility

  • Knowledge the edge of your competency and you’re not arrogantly stepping over your boundary
  • It’s not competency if you don’t know the edge of it
  • “Better to work with a person that has 130 IQ that thinks they have 120 than a person that have 180 IQ that think they have 200”

Love Big Ideas with Instructive Powers

  • Collection of ideas and use that in daily life

Occam’s Razor

  • Everything should be as simple as possible, and no simpler
  • A scientific and philosophical rule that entities should not be multiplied unnecessarily which is interpreted as requiring that the simplest of competing theories be preferred to the more complex
  • Among competing hypotheses, the one with the fewest assumptions should be selected