Farnam Street
Mastering the best of what other people have already figured out
“It is not greed that drives the world, but envy.” — Warren Buffett *** It is a fact of life that we are not equal. Not biologically, not culturally. Some inequities come from flawed governing systems, but most are simply due to …
People are working harder and harder to clean up otherwise avoidable messes they created by making poor initial decisions. There are many reasons we’re making poor decisions and failing to learn from them. Under the heading, Sources …
At some time or another, we’ve all sought to make big changes. And almost of all of us have, after making grand plans, discovered that changing some aspect of our lives or organizations, whether adding in a new skill or simply …
There are four principles that Gregory Mankiw outlines in his multi-disciplinary economics textbook Principles of Economics. I got the idea for reading an Economics textbook from Charlie Munger, the billionaire business partner of Warren …
The narrative fallacy leads us to see events as stories, with logical chains of cause and effect. Stories help us make sense of the world. However, if we’re not aware of the narrative fallacy it can lead us to believe we understand the …
Understanding how to think things through – to push your mind past the first step – can help you solve problems, avoid problems, and take better actions. The best way to examine the long-term consequences of our decisions is to …
Talent and resources aren’t always enough to succeed. Doing incredible things requires true passion. Sometimes a driven, inspired team can succeed against one with more talent and funding. *** In the early 1900s Samuel Pierpont Langley …
An interview I gave that I think you’ll enjoy as I talk about reading, mental models, investing, learning and more. *** Shane Parrish is the curator for the popular Farnam Street Blog, an intellectual hub of curated interestingness …
The following is an edited excerpt from The Great Mental Models Volume 1: General Thinking Tools The map of reality is not reality. Even the best maps are imperfect. That’s because maps are reductions of what they represent. If a map were …
Our desire to feel good about ourselves permeates everything we do. Wanting to maintain a positive self-image often leads us to adopt a biased image of the world. If we want to learn to align ourselves with the facts, we must stop denying …
We automatically connect a stimulus (thing/person) with pain (fear) or pleasure (hope). As pleasure seeking animals, we seek out positive associations and attempt to remove negative ones. This happens when we experience the positive or …
We expect the immediate outcome of events to represent the broader outcomes expected from a large number of trials. We believe that chance events will immediately self-correct and that small sample sizes are representative of the …
Regression to the mean is a common statistical phenomenon that can mislead us when we observe the world. Learning to recognize when regression to the mean is at play can help us avoid misinterpreting data and seeing patterns that don’t …
Solving problems almost always starts with ensuring you’re solving the actual problem. When the actions we should take are not obvious, or the problem is difficult, it’s easy to feel the need to do something … anything. We …
“What a Man wishes, he will also believe” – Demosthenes Bias from overconfidence is a natural human state. All of us believe good things about ourselves and our skills. In Seeking Wisdom, Peter Bevelin writes: Most of us believe we …
In The Art of War, Sun Tzu said: “The general who wins a battle makes many calculations in his temple before the battle is fought.” Those ‘calculations’ are the tools we have available to think better. One of the best questions …
Let’s explore the concept of the Complex Adaptive Systems and see how this model might apply in various walks of life. To illustrate what a complex adaptive system is, and just as importantly, what it is not, let’s take the example of a …
I thought this was interesting. Here is Sam Walton, in his own words, detailing the Wal-Mart Strategy from the earliest days. What was novel at the time is now a somewhat common way for businesses to expand. It’s also used in the …
Sir Karl Popper wrote that the nature of scientific thought is that we could never be sure of anything. The only way to test the validity of any theory was to prove it wrong, a process he labeled falsification. And it turns out we’re …
“Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.” — Antoine de Saint-Exupéry *** In pharmacology, the effective dose is the amount of a drug that produces the desired …
We’ve talked a lot about inversion — solving problems backwards. In this short video, grandmaster Maurice Ashley walks us through retrograde analysis, which is a method to solve game positions in chess by working backward from known …
An edited excerpt from The Great Mental Models v3: Systems and Mathematics When we interact with complex systems, we need to expect the unexpected. Systems do not always function as anticipated. They are subject to variable conditions and …
Understanding where you have an edge and where you don’t can help you prevent problems, spot opportunities others miss, and rapidly learn. We all have a circle of competence – an area in which we have a lot of earned knowledge. …
There is no one better to explain the concept of Mr. Market than Warren Buffett, who has used to to make billions of dollars and remain calm when all around him were losing their heads. In the 1987 letter to Berkshire Hathaway shareholders, …