Author Topic: Mental Models  (Read 2471 times)

galumay

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Mental Models
« on: August 30, 2016, 08:29:40 PM »
If you completely ignored your goals and focused only on your system, would you still get results?

1. Goals reduce your current happiness.
When you’re working toward a goal, you are essentially saying, “I’m not good enough yet, but I will be when I reach my goal.”

The problem with this mindset is that you’re teaching yourself to always put happiness and success off until the next milestone is achieved. “Once I reach my goal, then I’ll be happy. Once I achieve my goal, then I’ll be successful.”

SOLUTION: Commit to a process, not a goal.

2. Goals are strangely at odds with long-term progress.
You might think your goal will keep you motivated over the long-term, but that’s not always true.

Consider someone training for a half-marathon. Many people will work hard for months, but as soon as they finish the race, they stop training. Their goal was to finish the half-marathon and now that they have completed it, that goal is no longer there to motivate them. When all of your hard work is focused on a particular goal, what is left to push you forward after you achieve it?

This can create a type of “yo-yo effect” where people go back and forth from working on a goal to not working on one. This type of cycle makes it difficult to build upon your progress for the long-term.

SOLUTION: Release the need for immediate results.

ref - http://jamesclear.com/goals-systems

There is little evidence that a full moon actually impacts our behaviors. A complete analysis of more than 30 peer-reviewed studies found no correlation between a full moon and hospital admissions, casino payouts, suicides, traffic accidents, crime rates, and many other common events.

But here’s the interesting thing: Even though the research says otherwise, a 2005 study revealed that 7 out of 10 nurses still believed that “a full moon led to more chaos and patients that night.”

What’s going on here?

The nurses who swear that a full moon causes strange behavior aren’t stupid. They are simply falling victim to a common mental error that plagues all of us. Psychologists refer to this little brain mistake as an “illusory correlation.”

Delayed Gratification

http://jamesclear.com/delayed-gratification


galumay

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Re: Mental Models
« Reply #1 on: October 23, 2016, 07:18:12 PM »
Some of Buffett's thoughts,

“Our ideas are so simple that people keep asking us for mysteries when all we have are the most elementary ideas…There’s nothing remarkable about it. I don’t have any wonderful insights that other people don’t have. Just slightly more consistently than others, I’ve avoided idiocy…It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Munger
“It really is simple – just avoid doing the dumb things. Avoiding the dumb things is the most important.” – Buffett

galumay

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Re: Mental Models
« Reply #2 on: November 07, 2016, 08:47:30 PM »
..... Sometimes you don't change
people's opinions by showering them with logic. In Jonathan Swift's words:
"You cannot reason a person out of a position he did not reason himself into
in the first place."

galumay

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Re: Mental Models
« Reply #3 on: November 07, 2016, 08:53:59 PM »
On Activity.

• The 19th Century American writer Henry David Thoreau said: "It is not
enough to be busy; so are the ants. The question is: What are we busy about?"
Don't confuse activity with results. There is no reason to do a good job with
something you shouldn't do in the first place.
• Charles Munger says, "We've got great flexibility and a certain discipline in
terms of not doing some foolish thing just to be active - discipline in avoiding
just doing any damn thing just because you can't stand inactivity."
• What do you want to accomplish? As Warren Buffett says, "There's no use
running if you're on the wrong road.

galumay

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Re: Mental Models
« Reply #4 on: November 07, 2016, 08:54:49 PM »
Wise men talk because they have something to
say; fools, because they have to say something.
- Plato

galumay

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Re: Mental Models
« Reply #5 on: November 07, 2016, 08:59:56 PM »
"Worry about the what ares, not the what ifs."

The smartest thing my dad ever said - and he said a lot of smart things!

I would take it a step further, "Work out which category your concerns/issues fall into, then do something about the what ares, and ignore the what ifs."


galumay

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Re: Mental Models
« Reply #6 on: November 07, 2016, 09:01:38 PM »
Charles Munger gives an illuminating example on the issue of stealing:
A very significant fraction of the people in the world will steal if (A) it's very easy to do
and, (B) there's practically no chance of being caught. And once they start stealing, the
consistency principle will soon combine with operant conditioning to make stealing
habitual. So if you run a business where it's easy to steal because of your methods, you're
working a great moral injury on the people who work for you ...
It's very, very important to create human systems that are hard to cheat. Otherwise you're
ruining your civilization because these big incentives will create incentive-caused bias and
people will rationalize that bad behavior is OK.
Then, if somebody else does it, now you've got at least two psychological principles:
incentive-caused bias plus social proof. Not only that, but you get Serpico effects: If enough
people are profiting in a general social climate of doing wrong, then they'll turn on you
and become dangerous enemies if you try and blow the whistle.

galumay

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Re: Mental Models
« Reply #7 on: November 07, 2016, 09:17:55 PM »
Follow these three pieces of advice from Charles Munger:
(1) I don't want you to think we have any way oflearning or behaving so you
won't make a lot of mistakes. I'm just saying that you can learn to make fiwer
mistakes than other people - and how to fix your mistakes fosterwhen you do make
them. But there's no way that you can live an adequate life without [making] many
mistakes. In fact, one trick in life is to get so you can handle mistakes. Failure to
handle psychological denial is a common way for people to go broke: You've made
an enormous commitment to something. You've poured effort and money in. And
the more you put in, the more that the whole consistency principle makes you
think, "Now it has to work. IfI put in just a little more, then it'll work."
And deprival super-reaction syndrome also comes in: You're going to lose the
whole thing if you don't put in a little more. People go broke that way - because
they can't stop, rethink and say, "I can afford to write this one off and live to fight
again.
I don't have to pursue this thing as an obsession - in a way that will break me." Part ofwhat you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand.
(2) I've gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things - which by and large are useful, but which often misfunction. One approach is rationality - the way you'd work out a bridge problem: by evaluating the real interests, the real probabilities and so forth. And the other is to evaluate the psychological factors that cause subconscious conclusions - many ofwhich are wrong.
(3) Take all the main models from psychology and use them as a checklist in reviewing outcomes in complex systems. No pilot takes off without going through his checklist: A, B, C, D ... And no bridge player who needs two extra tricks plays a hand without going down his checklist and figuring out how to do it...And, to repeat for emphasis, you have to pay special attention to combinatorial effects that create lollapalooza consequences.


galumay

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Re: Mental Models
« Reply #8 on: November 09, 2016, 09:12:39 PM »
"Look a t where the bullet holes are a n d p u t extra armor every place else. "
During World War II, the statistician Abraham Wald tried to determine where one should add extra armor to airplanes. Based on the patterns ofbullet holes in returning airplanes, he suggested that the parts not hit should be protected with extra armor. How could he reach that conclusion? Because he also considered planes that didn't return. Assume that all planes had been hit more or less uniformly. Some planes hit in marked areas were still able to return. This means that planes that didn't return were most likely hit somewhere else - in unmarked places. These were the areas that needed more armor.

galumay

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Re: Mental Models
« Reply #9 on: November 17, 2016, 08:43:53 AM »
At a press conference in 2001, when Warren Buffett was asked how he evaluated new business ideas, he said he used 4 criteria as filters.
- Can I understand it? If it passes this filter,
- Does it look like it has some kind ofsustainable competitive advantage? If it
passes this filter,
- Is the management composed of able and honest people? If it passes this filter,
- Is the price right? If it passes this filter, then we write a check
What does Warren Buffett mean by "understanding?" Predictability: "Our definition of understanding is thinking that we have a reasonable probability of being able to assess where the business will be in 10 years."
« Last Edit: November 17, 2016, 09:03:22 PM by galumay »

galumay

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Re: Mental Models
« Reply #10 on: November 17, 2016, 09:02:06 PM »

Marcus Porcius Cato wrote: "Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes ofthe fools, but fools do not imitate the successes of the wise."

galumay

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Re: Mental Models
« Reply #11 on: November 21, 2016, 09:20:05 PM »
Buffett: Some businesses are a lot easier to understand than others. And Charlie and I don't like difficult problems. Ifsomething is difficult to figure... We'd rather multiply by 3 than by n.

Munger: That's such an obvious point. Yet so many people think that if they just hire somebody with the appropriate labels, they can do something very difficult. That is one of the most dangerous ideas a human being can have. All kinds of things can create problems by causing complexity. The other day I was dealing with a problem - it was a new building. And I said, "This problem has three things I've learned to fear - an architect, a contractor and a hill." Ifyou go through life like that, I think you'll at least makefewer mistakes than people who think they can do anything, no matter how complex, by just hiring somebody with a credible label. You don't have to hire out your thinking ifyou keep it simple...

Buffett: Ifyou get into some complicated business, you can get a report that's 1,000 pages thick and you can have Ph.D.'s working on it. But it doesn't mean anything. What you'll have is a report. But you won't have any better understanding of that business and what it's going to look like in 10 or 15 years. The big thing to do is to avoid being wrong.

galumay

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Re: Mental Models
« Reply #12 on: December 30, 2016, 09:14:13 PM »
“Since Auschwitz we know what man is capable of.
And since Hiroshima we know what is at stake.


Excerpt From: Viktor E. Frankl, Harold S. Kushner & William J. Winslade. “Man's Search for Meaning.” iBooks. https://itunes.apple.com/us/book/mans-search-for-meaning/id476023633?mt=11

“It is we ourselves who must answer the questions that life asks of us, and to these questions we can respond only by being responsible for our existence.”

Excerpt From: Viktor E. Frankl, Harold S. Kushner & William J. Winslade. “Man's Search for Meaning.” iBooks. https://itunes.apple.com/us/book/mans-search-for-meaning/id476023633?mt=11
« Last Edit: December 30, 2016, 09:16:23 PM by galumay »

galumay

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Re: Mental Models
« Reply #13 on: January 08, 2017, 02:07:12 PM »
"Passion is actually just taking an interest in something, and then getting good at it"

(Kel Newport, Be So Good they Cant Ignore You.)

Resonates completely with me and coffee!

galumay

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Re: Mental Models
« Reply #14 on: February 04, 2017, 11:19:11 AM »
This is something I have read before and not bothered to really understand, its a powerful tool for selecting employees or partners!

WARREN BUFFETT’S AND CHARLIE MUNGER’S TOP 7 TIPS FOR THE CLASS OF 2016
John | June 14, 2016 | All Posts, Charlie Munger, Most Popular, Superinvestors, Warren Buffett | 0 Comments
warren buffett and charlie munger tips

1. WORK FOR THE PERSON OR COMPANY YOU ADMIRE THE MOST

Warren Buffett says that he often gets asked the question: “Who should I go to work for when I graduate college?”

“I’ve got a very simple answer… the real thing to do is to get going for some institution or individual that you admire. I mean it’s crazy to take in-between jobs just because they look good on your resume, or because you get a little higher starting pay.

I was up at Harvard a while back, and a very nice young guy, he picked me up at the airport, a Harvard Business School attendee. And he said, ‘Look. I went to undergrad here, and then I worked for X and Y and Z, and now I’ve come here.’ And he said, ‘I thought it would really round out my resume perfectly if I went to work now for a big management consulting firm.’ And I said, ‘Well, is that what you want to do?’ And he said, ‘No,’ but he said, ‘That’s the perfect resume.’ And I said, ‘Well when are you going to start doing what you like?’ And he said, ‘Well I’ll get to that someday.’ And I said, ‘Well you know, your plan sounds to me a lot like saving up sex for your old age. It just doesn’t make a lot of sense.’

I told that same group, I said, ‘Go to work for whomever you admire the most.’ I said, ‘You can’t get a bad result. You’ll jump out of bed in the morning and you’ll be having fun.’ The Dean called me up a couple weeks later. He said, ‘What did you tell those kids? They’re all becoming self-employed.’ So, you’ve got to temper that advice a little bit.”

Why would you want to be around the people you admire most? Here’s a lesson Warren Buffett learned spending part of the first summer after graduating college fulfilling his obligation to the National Guard:

“It’s a very democratic organization. I mean, what you do outside doesn’t mean much. To fit in, all you had to do was be willing to read comic books. About an hour after I got there, I was reading comic books. Everybody else was reading comic books, why shouldn’t I? My vocabulary shrank to about four words, and you can guess what they were.

I learned that it pays to hang around with people better than you are, because you will float upward a little bit. And if you hang around with people that behave worse than you, pretty soon you’ll start sliding down the pole. It just works that way.”

2. COPY THE HABITS OF THE MOST SUCCESSFUL PEOPLE YOU KNOW

Here’s another thought exercise that Warren Buffett had a class of MBA students play: Imagine that you can pick any one of your classmates and you could get 10% of their earnings for the rest of their lives. Who would you pick?

“What goes through your mind in determining which one of those you would pick? You can’t pick the one with the richest father, that doesn’t count. I mean, you’ve got to do this on merit. But, you probably wouldn’t pick the person that gets the highest grades in the class.

I mean, there’s nothing wrong with getting the highest grades in the class, but that isn’t going to be the quality that sets apart a big winner from the rest of the pack… You’ve all got the ability, you wouldn’t be here otherwise. And you’ve all got the energy. I mean, the initiative is here, the intelligence is here throughout the class. But some of you are going to be bigger winners than others.

It gets down to a bunch of qualities that, interestingly enough, are self-made. I mean it’s not how tall you are. It’s not whether you can kick a football 60 yards. It’s not whether you can run the 100 yard dash in 10 seconds. It’s not whether you’re the best looking person in the room… It’s integrity, it’s honesty, it’s generosity, it’s being willing to do more than your share, it’s just all those qualities that are self-selected.“

Now, imagine that you can sell short one of your classmates – you have to pay 10% of what they do. Who would you pick?

“Again, it isn’t the person with the lowest grades or anything of the sort. It’s the person who just doesn’t shape up in the character department.

We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don’t have the latter, the first two will kill you, because if you’re going to get someone without integrity, you want them lazy and dumb. I mean, you don’t want a spark of energy out of them. So it’s that third quality. But everything about that quality is your choice.”

Now look at those two people. Wright down the qualities of the person that you’d like to buy 10% of and ask yourself, “Is there anything on that list I couldn’t do?” Buffett says there won’t be. Now look at the person you sell short and look at those qualities that you don’t like. Do you see any of those in yourself that you can’t get rid of? Buffett concludes:

“Ben Franklin did this and my old boss Ben Graham did this at early ages in their young teens, Ben Graham looked around and he said, ‘Who do I admire?’ And he wanted to be admired himself and he said, ‘Why do I admire these other people?’ And he said, ‘If I admire them for these reasons, maybe other people would admire me if I behave in a similar manner.’ And he decided what kind of a person he wanted to be.

And if you follow that, at the end you’ll be the person you want to buy 10% of. I mean that’s the goal in the end, and it’s something that’s achievable by everybody.”