Implementing Charlie Munger's Mental Models to Transform My Life and Achieve My Goals

"Make friends with the eminent dead" - the quote from Charlie Munger that inspired me to start this all.

For those who haven't heard of Charlie Munger, he is the longtime partner of Warren Buffett, a billionaire investor, vice chairman of Berkshire Hathaway, legal scholar turned businessman, and one of the most influential teachers of multidisciplinary decision-making in modern capitalism. As a pioneer of mental-model thinking, I believe there is much I can learn from his documented multidisciplinary approach to business to improve various areas of my own life, ranging from my hobbies to finances and ultimately, my life vocation.

I could have tried to improve my life by following all the self-improvers who are posting on social media nowadays. The reason I chose to follow in Charlie Munger's footprints first though, is because of that one quote - "Make friends with the eminent dead". If you are like me, you would imagine conversing with a cartoon skeleton. Of course, that's not it, and he probably isn't that weird. Munger means that you should deliberately study the great thinkers of the past - across disciplines - and treat their ideas as trusted mentors. This idea might sound normal to some of you, but to me, this sounded profound.

I've always been a fan of learning from history, dating back to my high school days, where a wall-mounted poster with the quote from George Santayana, "those that don't know history are doomed to repeat it" still lingers with me today. I'm sure that poster has since been taken down. In fact, the last time I saw that poster was in 2013, but I haven't needed to revisit that classroom, as the quote has always stuck to the inner walls of my mind. I always wondered how I could put that into practice, after all, history is so expansive that the greatest limitation to learning it all lies in the storage capacity of my mind. You can probably imagine what a fortune it was when I learned about the concept of mental models. I can leverage lessons that those before me have learnt so that I don't have to repeat their mistakes. At least, that is the optimistic outlook on it.

Maybe I'll prove Santayana wrong that I could still repeat history after learning it. After all, Napoleon knew the dangers of invading Russia from Charles XII's failures, but he never learned from that, and Hitler didn't learn from either of them (not that I want to be compared to him), which was probably the nail in the coffin for both of their careers. I may be making a lot of references to history as I continue to blog, since it is something that I have an avid interest in, but I think that is the nature of a blog like this. Truthfully, I had to Google who wrote the original quote because I never paid attention to the name Santayana as the author. I can only hope that paying homage to him is sufficient recompense for my tunnel vision.

Applying mental models to personal growth

Now, I'll embark on a journey to find out how I can preserve and use the knowledge of past luminaries to enhance my own life. Finance has been a big focus of mine recently, and as someone who loves order and processes, I am naturally drawn to Munger and the mental models that he used to assess company finances. These models helped him make better investment decisions by understanding human behaviour, economics, and business principles. Warren Buffett once wrote in a Forbes article, "Charlie has the best 30-second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you even finish the sentence". As someone who strives to become better every day, that became the foundation for what I wanted to learn - how to see the true essence of a problem and how to use it. To do this, I knew I had to adapt his business-focused mental models to solve my everyday problems. Of course, Munger later humbly states that Buffett was just being a supportive friend when he wrote that, but I have no doubt there is a sugary grain of truth in there.

My theory is that, by applying these mental models to my own life, I can bring clarity and focus to my goals. My biggest focuses this year will be to learn a new language, grow my career, improve finances and build stronger relationships. I will be making a series of blogs that explores how I am using Munger’s mental models in these areas, the successes and the outcomes. Maybe it will be one model per blog, maybe it will be more, depending on what is needed. I will share the practical examples and insights that have worked for me regarding when to use which model, and in doing so, hopefully leave behind something for others to do the same. Here is the list of mental models I could find that Munger used. I know - it is seemingly endless and can be discombobulating to read.

Thinking & Reasoning

• The Map Is Not the Territory

• Circle of Competence

• First Principles Thinking

• Thought Experiment

• Second-Order Thinking

• Probabilistic Thinking

• Inversion

• Occam’s Razor

• Hanlon’s Razor

Mathematics & Statistics

• Regression to the Mean

• Base Rates

• Bayesian Updating

• Expected Value

• Law of Large Numbers

• Power Laws

• Pareto Principle

• Fat-Tailed Distributions

Systems & Physics

• Feedback Loops

• Equilibrium

• Bottlenecks

• Scale

• Relativity

• Leverage

• Compounding

• Critical Mass

• Activation Energy

• Autocatalysis

• Emergence

• Irreducibility

• Breakpoints

Economics & Decision Making

• Marginal Thinking

• Law of Diminishing Returns

• Opportunity Costs

• Comparative Advantage

• Specialization

• Tradeoffs

• Supply and Demand

• Elasticity

• Scarcity

Markets & Strategy

• Market for Lemons

• Game Theory

• Nash Equilibrium

• Prisoner’s Dilemma

• Coordination Problems

• Network Effects

• Path Dependence

• Lock-In Effects

• Competitive Advantage

• Switching Costs

• Economies of Scale

• Diseconomies of Scale

• Learning Curves

• Experience Curves

Biology & Evolution

• Red Queen Effect

• Natural Selection

• Adaptation

• Evolution

• Ecosystems

• Niches

• Replication

• Survival of the Fittest

• Mutation

• Extinction

• Self-Preservation

• Stress Adaptation

• Feedback in Biology

Risk & Uncertainty

• Margin of Safety

• Redundancy

• Backup Systems

• Fragility

• Robustness

• Optionality

• Antifragility

• Black Swan Events

Psychology & Behavioural Biases

• Sunk Cost Fallacy

• Loss Aversion

• Availability Bias

• Anchoring Bias

• Confirmation Bias

• Social Proof

• Authority Bias

• Commitment and Consistency Bias

• Liking Bias

• Reciprocity Bias

• Incentive-Caused Bias

• Status Quo Bias

• Deprival Superreaction Tendency

• Overconfidence Bias

• Self-Serving Bias

• Narrative Fallacy

• Survivorship Bias

• Hindsight Bias

• Groupthink

• Man-with-a-Hammer Tendency

• Lollapalooza Effect