People should obviously go read his stuff directly, but I also have to plug this podcast that I did with him, he gave many pearls of wisdom and fire anecdotes in there:
Sorry for my long comment earlier. I'll add one more, but this will be short. Likely, it'll be the last one.
6. Another book worth exploring about the subject, upon reading Cedric's blog, is the book of life by Jiddu Krishnamurti. He's an indian philosopher and the book could be considered either philosophical or religious. Now in his book, he talks about some very interesting concepts, like how every moment is fundamentally different with last moment, hence it's dangerous to rely on past experience. I believe what he talks about here is more about mental state, but we can draw comparison to our subject here. If every moment now is different than last, it's dangerous to just blindly follow whatever mental model or some predefined rule.
What a lovely thoughtful comment this is. I feel very lucky to have attracted a reader like you. To your comment on the miner mentality (I like that), I feel like part of it can be solved by a Feynman-esque approach: essentially you let yourself be drawn to content that attracts your curiosity. That will help you build discernment in an area that matches your skills, and may even eventually give you a sense for overall truth. Once you have that sense for base reality, you can really rely on your intuition.
My only quip with this article is that it Substack says it will take 12 minutes to read but I will be reading (the related readings) and thinking about this all week! Appreciate this thoughtful piece Tom!
1. Cedric's comment on Munger's mental models is absolutely spot on. I couldn't speak on other's behalf, but based on my experience and my education in engineering, Munger's models derived from engineering is really hard to grasp, especially strictly based on literal meaning.
I believe this is why some of his more practical ideas, like checklist, inversion, or his psychology theory is more adopted than others.
2. Now move on to why , quote:
> Of course expert experience is superior to learning basic rules! I think we may all abstractly know this is true, but we don’t act that way in the real world. In an existence that’s increasingly mediated by screens we can easily assume what we see is all there is. We can get everything we need from a company filing or data feed.
I believe part of the reason is knowledge also has a economy of scale. That doesn't mean the more you read the better, I think past a certain point the utility of reading start to diminish, where you got buried by so many details and cannot connect all the dots, which is why Sellers believes:
> . Reading is incredibly important, but it won't give you a big advantage over others. It will just allow you to keep up. Everyone reads a lot in this business. Some read more than others, but I don't necessarily think there is a correlation between investment performance and number of books read.
The knowledge economy of scale only start to kick in once all the detailed case studies break down into pieces and got indexed in your brain.
3. Another way to think about this is out natural tendency towards action. I don't think PMs work like, let me read today's WSJ, HBR, go through yet again great investment books or case studies and call it a day. No, they read Qs and Ks and search through bloomberg terminal, persumably with a miner's headlamp, to come up with leads or ideas to solve the *current* puzzle, regardless of the payout. Which is why post-BPL Buffett switch to a less action mode. It's really hard to prepare for the opportunities of the century when you're occupied with trading everyday.
4. Now onto some other possible reading material regarding open-mindedness. I think Feynman's Rainbow is worth reading. In it the author describe's Feynman's technique as babylonians:
> The Babylonian approach is based principally on the observation and interpretation of physical processes, and not driven by mathematics. Feynman considered himself a Babylonian, relying on his understanding of nature to guide him whenever it might lead.
Feynman is also known for his unorthodox approach of picking physics problems to solve. Contrary to his many peers, Feynman doesn't discriminate towards smaller problems, like superfluid helium. He doesn't let the holy grail in physics, the construction of theory of everything, takes up his whole mind. In theory, the theory of everything will combine all 4 forces in nature, hence becoming the bedrock of all physical principles. It's pretty similar to how some funds like LTCM trying to shoehorn everything into their quantitative theories. That being said, similar endeavors in Physics, derived of complex human interaction, may prove to be more fruitful than Finance.
Cedric rules!
People should obviously go read his stuff directly, but I also have to plug this podcast that I did with him, he gave many pearls of wisdom and fire anecdotes in there:
https://www.libertyrpf.com/p/cedric-chin-what-operators-can-teach
Excited to listen late, thanks for flagging.
Let me know what you think! It's one of my early podcasts, there were fewer people around back then so I like to bump it up!
Thought-provoking, as always :)
Thanks a lot Harold!
Sorry for my long comment earlier. I'll add one more, but this will be short. Likely, it'll be the last one.
6. Another book worth exploring about the subject, upon reading Cedric's blog, is the book of life by Jiddu Krishnamurti. He's an indian philosopher and the book could be considered either philosophical or religious. Now in his book, he talks about some very interesting concepts, like how every moment is fundamentally different with last moment, hence it's dangerous to rely on past experience. I believe what he talks about here is more about mental state, but we can draw comparison to our subject here. If every moment now is different than last, it's dangerous to just blindly follow whatever mental model or some predefined rule.
What a lovely thoughtful comment this is. I feel very lucky to have attracted a reader like you. To your comment on the miner mentality (I like that), I feel like part of it can be solved by a Feynman-esque approach: essentially you let yourself be drawn to content that attracts your curiosity. That will help you build discernment in an area that matches your skills, and may even eventually give you a sense for overall truth. Once you have that sense for base reality, you can really rely on your intuition.
My only quip with this article is that it Substack says it will take 12 minutes to read but I will be reading (the related readings) and thinking about this all week! Appreciate this thoughtful piece Tom!
Ha thanks BP, it is an absolutely textbook bait and switch
Hi Tom!
A couple of things I'd like to comment on:
1. Cedric's comment on Munger's mental models is absolutely spot on. I couldn't speak on other's behalf, but based on my experience and my education in engineering, Munger's models derived from engineering is really hard to grasp, especially strictly based on literal meaning.
I believe this is why some of his more practical ideas, like checklist, inversion, or his psychology theory is more adopted than others.
2. Now move on to why , quote:
> Of course expert experience is superior to learning basic rules! I think we may all abstractly know this is true, but we don’t act that way in the real world. In an existence that’s increasingly mediated by screens we can easily assume what we see is all there is. We can get everything we need from a company filing or data feed.
I believe part of the reason is knowledge also has a economy of scale. That doesn't mean the more you read the better, I think past a certain point the utility of reading start to diminish, where you got buried by so many details and cannot connect all the dots, which is why Sellers believes:
> . Reading is incredibly important, but it won't give you a big advantage over others. It will just allow you to keep up. Everyone reads a lot in this business. Some read more than others, but I don't necessarily think there is a correlation between investment performance and number of books read.
The knowledge economy of scale only start to kick in once all the detailed case studies break down into pieces and got indexed in your brain.
3. Another way to think about this is out natural tendency towards action. I don't think PMs work like, let me read today's WSJ, HBR, go through yet again great investment books or case studies and call it a day. No, they read Qs and Ks and search through bloomberg terminal, persumably with a miner's headlamp, to come up with leads or ideas to solve the *current* puzzle, regardless of the payout. Which is why post-BPL Buffett switch to a less action mode. It's really hard to prepare for the opportunities of the century when you're occupied with trading everyday.
4. Now onto some other possible reading material regarding open-mindedness. I think Feynman's Rainbow is worth reading. In it the author describe's Feynman's technique as babylonians:
> The Babylonian approach is based principally on the observation and interpretation of physical processes, and not driven by mathematics. Feynman considered himself a Babylonian, relying on his understanding of nature to guide him whenever it might lead.
Feynman is also known for his unorthodox approach of picking physics problems to solve. Contrary to his many peers, Feynman doesn't discriminate towards smaller problems, like superfluid helium. He doesn't let the holy grail in physics, the construction of theory of everything, takes up his whole mind. In theory, the theory of everything will combine all 4 forces in nature, hence becoming the bedrock of all physical principles. It's pretty similar to how some funds like LTCM trying to shoehorn everything into their quantitative theories. That being said, similar endeavors in Physics, derived of complex human interaction, may prove to be more fruitful than Finance.