4 ms·

> When Warren Buffett studies a company, he doesn’t see a checklist of mental models he has to apply. This is really a very poor and missguided assertion. It's

> When Warren Buffett studies a company, he doesn’t see a checklist of mental models he has to apply. This is really a very poor and missguided assertion. It's as if the only person worth learning from with regards to how to invest is Warren Buffer, because all those poor miserable bastards who are 1% as successful as Warren Buffet, with their pathetically underperforming $1.2 billion fortunes, certainly can't teach you nothing that will help you improve yourself as an investor. No, no. Either you learn from the guy with a $120B fortune or you are better off doing something else like sitting on your ass browsing Instagram or reading drivel posted on a blog.

ebifulmanka 7y ago
It's also COMPLETELY WRONG. Charlie Munger has said several times that the NUMBER ONE thing you should do to solve complicated problems is HAVE A CHECKLIST OF MENTAL MODELS AND USE IT WITHOUT EXCEPTION. So this guy is obviously making crap up. Buffet's business partner is the guy who wrote the fucking book on making investments and problem solving this way.
- shadowsun7 7y ago
  Cool. Have you done so successfully? I have bought and read nearly every book about Charlie Munger. My conclusion is that 'have a checklist of mental models' is how he says he does what he does. He reasons a lot by analogy to things he's seen or read before, or to ideas in other fields. This does not mean it is the core of his expertise. The second nuance is that checklisting works better in 'wicked' fields of expertise (I'm using the definition from Hogarth et all, 2015 https://journals.sagepub.com/doi/10.1177/0963721415591878 https://journals.sagepub.com/doi/10.1177/0963721415591878). Stockpicking is one of those. If you are attempting to gain expertise in a field that isn't wicked, well ... good luck improving by having a checklist of mental models.
  - yuleterm 7y ago
    That wasn't the point. The response isn't pro-model model or anti-model. The point is the author is saying things that are factually, obviously incorrect. If they'd done even a marginal amount of homework, they wouldn't be claiming "Buffet does this or Buffet does that" when all public information and statements about this exact topic point to the contrary. It signals intellectual laziness at best and willful lying at worst.
    - shadowsun7 7y ago
      I am the author. I've read multiple biographies of Buffett, I've read criticisms of his approach, and I've read Hagstrom's book on Focused Portfolios (which Munger said was the most representative of what they were doing). I have attempted to emulate Buffett in the past. It is difficult. Hagstrom failed as well, rather publicly, with his mutual funds. I've begun to see Buffett not as a stock picker, as he hasn't really done such plays over the past decade or so. Rather, he is a capital allocator in the true sense of the word: he buys companies with high FCF, and reinvests the FCF in either stock if he finds an underpriced opportunity, or ownership of private companies if he does not. In the previous decade, he has mostly done the latter, as it has become more and more difficult to generate alpha in the former. He has also been willing to enter into advantageous contracts (warrants, etc) in times of economic turmoil. I have demonstrated some understanding of the topic. Now my question to you is this: are you as well read on this as I am? If so, point me to a chapter in one of the biographies and I will self correct.
      - Talanes 7y ago
        That's all very interesting and does show that you're well familiar with the topic at hand. Which only makes me more skeptical of the fact that you have said nothing to back up your original assertion.

ebifulmanka 7y ago

It's also COMPLETELY WRONG. Charlie Munger has said several times that the NUMBER ONE thing you should do to solve complicated problems is HAVE A CHECKLIST OF MENTAL MODELS AND USE IT WITHOUT EXCEPTION. So this guy is obviously making crap up. Buffet's business partner is the guy who wrote the fucking book on making investments and problem solving this way.

shadowsun7 7y ago
Cool. Have you done so successfully? I have bought and read nearly every book about Charlie Munger. My conclusion is that 'have a checklist of mental models' is how he says he does what he does. He reasons a lot by analogy to things he's seen or read before, or to ideas in other fields. This does not mean it is the core of his expertise. The second nuance is that checklisting works better in 'wicked' fields of expertise (I'm using the definition from Hogarth et all, 2015 https://journals.sagepub.com/doi/10.1177/0963721415591878 https://journals.sagepub.com/doi/10.1177/0963721415591878). Stockpicking is one of those. If you are attempting to gain expertise in a field that isn't wicked, well ... good luck improving by having a checklist of mental models.
- yuleterm 7y ago
  That wasn't the point. The response isn't pro-model model or anti-model. The point is the author is saying things that are factually, obviously incorrect. If they'd done even a marginal amount of homework, they wouldn't be claiming "Buffet does this or Buffet does that" when all public information and statements about this exact topic point to the contrary. It signals intellectual laziness at best and willful lying at worst.
  - shadowsun7 7y ago
    I am the author. I've read multiple biographies of Buffett, I've read criticisms of his approach, and I've read Hagstrom's book on Focused Portfolios (which Munger said was the most representative of what they were doing). I have attempted to emulate Buffett in the past. It is difficult. Hagstrom failed as well, rather publicly, with his mutual funds. I've begun to see Buffett not as a stock picker, as he hasn't really done such plays over the past decade or so. Rather, he is a capital allocator in the true sense of the word: he buys companies with high FCF, and reinvests the FCF in either stock if he finds an underpriced opportunity, or ownership of private companies if he does not. In the previous decade, he has mostly done the latter, as it has become more and more difficult to generate alpha in the former. He has also been willing to enter into advantageous contracts (warrants, etc) in times of economic turmoil. I have demonstrated some understanding of the topic. Now my question to you is this: are you as well read on this as I am? If so, point me to a chapter in one of the biographies and I will self correct.
    - Talanes 7y ago
      That's all very interesting and does show that you're well familiar with the topic at hand. Which only makes me more skeptical of the fact that you have said nothing to back up your original assertion.