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“I read and think,” Buffett once said.
“So I do more reading and thinking, and make less impulse decisions than most people in business.”
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In response to a query about how to become a better investor, Buffett told the students, “Read 500 pages like this every day,” while reaching toward a stack of manuals and papers. “That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
Reading is one of the most powerful ways of expanding your circle of competence. It has benefitted me greatly over the last decade.
Understanding these links through the context of mental models
Readers will also benefit greatly by understanding the world through an expanded use of what Charlie Munger calls “mental models”.
Mental models are simply models we use to help us better understand the world. They help shape how we think and understanding when we process huge amounts of information. They simplify complexity and help us select the pieces of information we choose to takeaway.
Why bother to expand you understanding of mental models?
In 1994, Charlie Munger gave a famous speech where he discussed some of the success that he and Buffett had. He attributed much of it to the fact that they were learning machines. Over the course of several decades, they had collected new mental models about how the world worked. They utilized the models they had to obtain a better understanding of reality to make better decisions.
To learn more about mental models, I recommend the following links:
Mental Models: The Best Way to Make Intelligent Decisions (109 Models Explained)
Charlie Munger: How to Get Smarter by Using Mental Models
and of course the original speech by Charlie Munger himself:
A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business Charles Munger, USC Business School, 1994
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