Charlie Munger: Mental Models For The Rest Of Your Life (Part 6)
Lesson summary:
The second to last video in the series on billionaire investor Charlie Munger and his mental models is about practical limits for stock market investors, non-linearity, managing expectations, the iron prescription for life, and the power of addressing the 5 Ws when trying to convince someone. Munger advises investors to consider the growth of GDP, dividends, and return on assets to determine how fast the revenue or profits of the stock market could grow. He also explains the concept of non-linearity, which suggests that 1 amount of input doesn’t always result in 1 amount of output, and provides examples such as the critical mass and cyclicals. Additionally, Munger argues that happiness is a result of actual accomplishments and expectations, and that reducing expectations can lead to more joy and financial gains. He also advises not to feel sorry for oneself or believe that the world is mistreating them, and to address the 5 Ws, especially the “why,” when trying to convince someone.
