Mental models and psychology principles to help you make better decisions and avoid costly psychological mistakes.
Most traders say they want “consistent profits,” but run their accounts more like a casino than a company. A manufacturer would never bet the firm on one giant batch of inventory. Yet traders routinely take oversized positions, hoping a single big win will fix everything. Thinking of trading as a real business changes that behavior. In business,…
Failure has been the most honest teacher in my own life as an investor and writer. When a trade, project, or relationship blows up, it feels like everything is falling apart—but in hindsight, those are the moments when reality finally comes into focus. In a business, you can spend months convincing yourself that growth is…
Non‑finance mental models might sound abstract, but they quietly shape how investors see risk, cycles, and opportunity. Charlie Munger calls this “worldly wisdom”: borrowing simple ideas from physics, engineering, biology, and history to make better real‑world decisions. From physics and engineering, you get models like critical mass, breakpoints, and feedback loops. They explain why markets feel calm…
The book Poor Charlie’s Almanack collects Charlie Munger’s best talks and ideas to show how better mental models lead to better decisions in investing and in life. Instead of collecting tips, Munger wants readers to build a toolkit of big, repeatable ideas they can apply across situations. Munger’s starting point is psychology. He believed most disasters come from misjudgment,…
Charlie Munger saw mental models as the backbone of good judgment in investing and in life. He believed that if you improve the models in your head, better decisions and better long‑term results naturally follow. Munger, Warren Buffett’s long‑time partner at Berkshire Hathaway, argued that you need a “latticework of mental models” from many disciplines—psychology, economics, math,…