Tobin Arthur • May 28, 2019

Cloning

To become wise you have got to have models in your head. And you’ve got to array your experience – both vicarious and direct – on this latticework of models.

Charlie Munger

Cloning is valuable in life and in the world of investing. No, I am not referring to genetic manipulation. I am referring to the practice of adopting proven mental models with which to navigate through life.

The fact of the matter is there are few new things under the sun. When it comes to investing, and value investing specifically, Warren Buffett didn’t create the playbook. He adopted models from Benjamin Graham. Certainly he and Charlie Munger have evolved those models to reflect the changing times, but their success has been built on the shoulders of proven models.

Given that what seems new is truly old, it only makes sense to learn more history and pertinent frameworks that have been tested and proven by time.

Charlie Munger summed up mental models in this quote:

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. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.

Farnam Street has outlined some of the most studied mental models including concepts such as Second Order Thinking and Occam’s Razor. Ray Dalio has created an entire body of work on second-order thinking, including frameworks for living well, in an aptly-titled book: Principles. In it, Dalio discusses the importance of being open-minded and how doing so manifests itself in the development of wisdom. I would also recommend the book The Model Thinker by Scott Page. The book walks through the explosion of data and information available to us and articulates the value of both models to make sense of the information, but also the importance of balancing multiple models to ensure you find the right fit.

Want to up your game? Do you value wisdom? Then resolve to regularly spend time studying history, reading books, and listening to podcasts produced by proven experts and leaders… and determine to enhance your future self with proven models.

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