Charlie Munger, Warren Buffet’s business partner, is a renowned investor who attributes his success to a set of principles or ‘mental models’ that guide his decision-making process. His first principle is to acknowledge the limits of one’s knowledge and not to pretend to understand something one doesn’t. He also emphasises the importance of patience, advising against rushing into decisions or actions.
Munger also advocates for the use of multiple models to approach problems, as relying on a single model can lead to narrow thinking and poor decisions. He stresses on the importance of lifelong learning and encourages reading widely to gain knowledge from various fields.
Another key principle is to recognise and manage the influence of incentives, which can often lead to biased or flawed decisions. Munger also advises against envy, as it can cloud judgement and lead to unwise decisions.
Finally, he emphasises the importance of integrity, stating that one should not compromise on it for short-term gain. He believes that maintaining integrity leads to long-term success and happiness.
These principles form the foundation of Munger’s success and provide valuable insights into effective decision-making.
Go to source article: http://www.farnamstreetblog.com/2014/06/charlie-munger-notions/