An Investment Approach That Works
There are as many investment strategies as there are investment opportunities. Some are good; many are terrible. Here’s the one that I lean on the most when I’m looking for low risk and above average …
Charlie Munger
The Best of Farnam Street 2018
We read for the same reasons we have conversations — to enrich our lives. Reading helps us to think, feel, and reflect — not only upon ourselves and others but upon our ideas, and our relationship …
Complexity Bias: Why We Prefer Complicated to Simple
Complexity bias is a logical fallacy that leads us to give undue credence to complex concepts. Faced with two competing hypotheses, we are likely to choose the most complex one. That’s usually the …
The Power of Incentives: The Hidden Forces That Shape Behavior
Incentives are what drive human behavior. Understanding incentives is the key to understanding people. Conversely, failing to recognize the importance of incentives often leads us to make major …
Charlie Munger on Getting Rich, Wisdom, Focus, Fake Knowledge and More
“In the chronicles of American financial history,” writes David Clark in The Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway’s Vice Chairman on Life, Business, …
Who’s in Charge of Our Minds? The Interpreter
One of the most fascinating discoveries of modern neuroscience is that the brain is a collection of distinct modules (grouped, highly connected neurons) performing specific functions rather than a …
What Are You Doing About It? Reaching Deep Fluency with Mental Models
The mental models approach is very intellectually appealing, almost seductive to a certain type of person. (It certainly is for us.) The whole idea is to take the world’s greatest, most useful …
Bias from Disliking/Hating
(This is a follow-up to our post on the Bias from Liking/Loving, which you can find here.) Think of a cat snarling and spitting, lashing with its tail and standing with its back curved. Her pulse is …
Bias from Liking/Loving: Why We Comply With Those We Love
The decisions that we make are rarely impartial. Most of us already know that we prefer to take advice from people that we like. We also tend to more easily agree with opinions formed by people we …
Sol Price on Becoming Your Customer’s Best Friend
Sol Price is a legend in the retail business. Price founded one of the first discount retailers, FedMart, in the 1950s, and then later the pioneer warehouse club Price Club, which he later sold to …
Eager to Be Wrong
“You know what Kipling said? Treat those two impostors just the same — success and failure. Of course, there’s going to be some failure in making the correct decisions. Nobody bats a thousand. I …
Seneca on Letting the Eminent Dead Guide You
There’s a core part of Charlie Munger’s operating system for life that we adhere to: Learn deeply from the eminent dead. Bathe in the wisdom of great people who lived before you. He calls …
The Munger Operating System: How to Live a Life That Really Works
In 2007, Charlie Munger gave the commencement address at USC Law School, opening his speech by saying, “Well, no doubt many of you are wondering why the speaker is so old. Well, the answer …
Towards a Greater Synthesis: Steven Pinker on How to Apply Science to the Humanities
The fundamental idea behind Farnam Street is to learn to think across disciplines and synthesize, using ideas in combination to solve problems in novel ways. An easy example would be to take …
Elon Musk and the Question of Overconfidence
Ashlee Vance’s book on Elon Musk is well read for a good reason: It’s a fascinating look at a fascinating person. You can interpret the book however you like. It’s a tale of genius. …
Multitasking: Giving the World an Advantage it Shouldn’t Have
Echoing the comments of William Deresiewicz, Charlie Munger offers some sage advice on multi-tasking: I will say this, I know no wise person who doesn’t read a lot. I suspect that you can read on the …