Inspired by one of my heroes, Charlie Munger, I decided to attempt to document my “lattice work” of worldly wisdom — both learned and to be learned — here.  Hopefully this will give me a chance to internalize it and put it to good use.  What is worldly wisdom?  Let’s hear it straight from Charlie:

“What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.  You’ve got to have models in your head. And you’ve got to array your experience—both vicarious and direct—on this latticework of models.”
— A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business, Charles Munger, 1994.

The way I’m approaching this is to write a blog post on each topic that I add here.  This will firstly give more context to a particular idea and secondly allow me to internalize it better by organizing it in writing.  I might change the organization as the list grows, but for now I’ll just use a bullet list.

Advice

• Importance of having a framework of mental models: More Options, A Slot Machine Riddle, Another riddle: How do you turn $5 into $500 in two hours?
• Learn Vicariously Through Others: History, Reading and Remembering
• Learning from one’s own past mistakes: Paper Dragons, Learn by Doing
• Things to avoid:
  • Fear and Laziness
  • Two Things to NEVER do (envy and feeling sorry for yourself)
• Importance of communication: A Surprising Thing About Graduate School
• Importance of independent thought: Independent Thought
• Importance of hard work: Magic, Lessons in the Fundamentals of Go, The Grind, PhD Grind, The Sex Cash Theory
• Importance of loving what you do: Why you’re going to fail to have a great career
• Importance of being able to falsify existing beliefs (i.e. scientific method, hypothesis testing): Hypothesis Testing, On Being Lost and Learning
• Importance of having “tricks” to deal with our inherent human limitations: We Are Mere Animals
• Financial Advice: Scott Adams’ Financial Advice

Mental Models

• Limitations of Models: Models, Garbage In, Fortunetellers, Stockpickers and the Former Chairman of the Federal Reserve
• Occam’s Razor: KISS Principle, Shaving, Two Rules for Male and Female Compatibility
• Time is relative: Patience
• Inertia: Changing Tables and Inertia
• Value Investing: Investing 101, Business
• N-th order effects (aka leveling, consequences of consequences): Multi-Level Thinking
• Invert, Always Invert: Invert
• Economics:
  • Human Capital
  • Diminishing returns: Perfection
• Psychology/Sociology:
  • Constant underestimation of incentives: Incentives, Incentives and Marks
  • Inability to see one’s own limitations: Rational People, Forecasts
  • Power of Influence on Humans:
    • Social Proof/Herd Mentality: Culture, Lemmings
    • Authority Figures: The Milgram Experiment
  • Humans are poor predictors of their own happiness: Seeing the Future, You Suck at Happiness
• Probability/Luck:
  • Importance of luck: Luck, Lucky or smart?, Luck or Passion?
  • Luck Skill: Russian Roulette
  • Importance of showing up: Soy Lattes
  • Evolution/Bias: Evolution, Gambiling and Life

Tricks

Here are some tricks (in more modern vernacular “hacks”) that can be used to deal with the limitations inherent in our human nature or other difficult problems.

• Navigating Academia: Productivity tips, tricks and hacks for academics, Academia and Research
• Time Budgeting: Maker’s Schedule
• Sleep more to be happier: Sleep, A Good Night’s Sleep
• Small steps are easier than one big one (i.e. iterate!): Little by Little
• Use of repetition for learning: How I’m re-learning Chinese
• Grandma’s Rule

 

Related Links

Here are some good further readings related to this subject:

WikiLogic – A site I found which also documents mental models and inspired me to create this page.
A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business – One of Charlie’s speeches on mental models.
Poor Charlie’s Almanack – Site which sells a few very important books (Poor Charlie’s Almanack and Seeking Wisdom) which I highly recommend if you’re a fan of Charlie.
The Best of Charlie Munger: 1994-2011 – A compilation of Charlie’s writings that I found on the interweb consisting of his speeches, essays and Wesco financial meeting notes.
Charles Munger USC commencement speech (2007) – Video of Charlie speaking at the 2007 USC Commencement.