SEEKING WISDOM . Wisdom from Charles T. Munger and Warren E. Buffett. To learn more about Darwin's habits, I started to read his autobiography and October 3,, brocapazbebuh.ml Peter Bevelin begins his fascinating book with Confucius' great wisdom: "A man who has committed a mistake and doesn't correct it, is committing another mistake." Seeking Wisdom is the result of Bevelin's learning about attaining wisdom. His quest for wisdom originated partly from. Seeking Wisdom book. Read reviews from the world's largest community for readers. Peter Bevelin begins his fascinating book with Confucius' great wis.
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Bevelin, Peter - Seeking Wisdom: From Darwin to Munger Read as pdf. Charles Munger of Berkshire Hathaway is in the investing world. PDF - Seeking Wisdom: From Darwin to Munger. Peter Bevelin begins his fascinating book with Confucius' great wisdom: "A man who has committed a mistake. Seeking Wisdom: From Darwin to Munger [ebook] by Peter Bevelin (PDF).
Underestimating bias from own self-interest and incentives. We never look at projections, but we look very deeply at track records.
It's naive to think that projections have any utility whatsoever. Do not train learning by force. Lead them by what amuses them. Convince people by asking questions that illuminate consequences. Self-serving bias - overly positive view of our abilities and future. Includes over-optimism. The more we think we know about a subject, the less willing we are to use other ideas.
We solve a problem in a way that agrees with our area of expertise. Try to be consistently not stupid, instead of trying to be very intelligent. It's the strong swimmers who drown. Ask: How can I be wrong? Who can tell me if I'm wrong? Successes draw far more attention than failures. Self-deception and denial- distortion of reality to reduce pain or increase pleasure. Includes wishful thinking.
Bias from consistency tendency - being consistent with our prior commitments and ideas even when acting against our best interest or in the face of disconfirming evidence. Includes confirmation bias - looking for evidence that confirms our actions and beliefs and ignoring or distorting disconfirming evidence.
We look for evidence that confirms our ideas, beliefs, and actions. When we've made an investment or entered into a relationship, we tend to seek out evidence confirming that it was the right decision and to ignore information that shows it was wrong. The more public a decision is, the less likely it is that we will change it. We don't have a strategic plan. Thus we feel no need to proceed in an ordained direction, but can instead simply decide what makes sense. The task of man is not to see what lies dimly in the distance, but to do what lies dearly at hand.
Respond intelligently and diligently to the information and challenges at hand. Make it voluntary, for people to take inner responsibility for their actions. When internally motivated by satisfaction or interest, we feel in control, free from incentives or outside pressure.
Convictions are more dangerous enemies of truth than lies. To say you are wrong is saying you are wiser today than yesterday. When you find yourself in a hole, stop digging. Bias from deprival syndrome - strongly reacting including desiring and valuing more when something we like and have or almost have is or threatens to be taken away or "lost. In investing, it's a mistake to try to make it back the way you lost it. People respond to immediate crisis and threats. Anything that happens gradually, they tend to put off If we want people to take a risk, we should make them feel behind losing.
If we want them to stay with the status quo or reject risk, we should make them feel safe. Status quo bias and do-nothing syndrome - keeping things the way they are. Includes minimizing effort and a preference for default options. Predicting rain doesn't count; building arks does. It took Noah 20 years to build an ark. And people said he was being silly because the skies were beautiful.
And of course, the whole time, he looked stupid - until it started raining. You can spend a long time building an ark while everybody else is out there enjoying the sun. Make yourself do the thing you have to do when it ought to be done whether you like it or not. Impatience - valuing the present more highly than the future. Bias from envy and jealousy. Man will do many things to get himself loved; he will do all things to get himself envied.
Distortion by contrast comparison - judging and perceiving the absolute magnitude of something not by itself but based only on its difference to something else presented closely in time or space or to some earlier adaptation level.
Also underestimating the consequences over time of gradual changes. Bias from anchoring - over-weighing certain initial information as a reference point for future decisions. Over-influence by vivid or the most recent information. Back up vivid stories with facts and numbers. Omission and abstract blindness - only seeing stimuli we encounter or that grabs our attention, and neglecting important missing information or the abstract.
Includes inattentional blindness. Today 14 million people didn't win the lottery. We don't see the quiet losers. We don't see those who didn't predict well. Missing information doesn't draw our attention. Bias from reciprocation tendency - repaying in kind what others have done for or to us like favors, concessions, information and attitudes.
Our managers are independently wealthy. They don't need to get up and go to work at all. So I've got to create an environment where they thing they want to do most in the world is go to work.
What would make me feel that way? People don't want to feel indebted.
PDF - Seeking Wisdom: From Darwin to Munger
Allow people to give back what we've given them. Bias from over-influence by liking tendency - believing, trusting and agreeing with people we know and like. Includes bias from over-desire for liking and social acceptance and for avoiding social disapproval.
Also bias from disliking - our tendency to avoid and disagree with people we don't like. Talk to a man about himself and he will listen for hours. Bias from over-influence by social proof - imitating the behavior of many others or similar others. Includes crowd folly.
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When all are accountable, no one is accountable. Bias from over-influence by authority - trusting and obeying a perceived authority or expert. After the break-in at John's office, he said: "Of course, I believed he was a security guard, since he had a uniform. Sensemaking - Constructing explanations that fit an outcome.
Includes being too quick in drawing conclusions. Also thinking events that have happened were more predictable than they were. Everything seems stupid when it fails. In hindsight, everything seems obvious.
Look at earlier decisions in the context of their own time. If our predictions have been a little better than other people's, it's because we've tried to make fewer of them. Reason-respecting - complying with requests merely because we've been given a reason. Includes underestimating the power in giving people reasons. If you always tell people why, they'll understand it better, they'll consider it more important, and they'll be more likely to comply.
You cannot reason a person out of a position he did not reason himself into in the first place. People are more moved by what they feel than by what they understand. Believing first and doubting later - believing what is not true, especially when distracted. Memory limitations - remembering selectively and wrong. Includes influence by suggestions. Do-something syndrome - acting without a sensible reason. Man finds nothing so intolerable as to be in a state of complete rest, without passions, without occupation, without diversion, without effort.
Mental confusion from say-something syndrome - feeling a need to say something when we have nothing to say. I have often regretted my speech, never my silence. Emotional arousal- making hasty judgments under the influence of intense emotions. Includes exaggerating the emotional impact of future events.
Mental confusion from stress. I have no stress whatsoever - zero. I get to do what I love to do every day.
Seeking Wisdom: From Darwin To Munger
I'm surrounded by people that are terrific. We don't have regular staff meetings. If you've got good businesses and the right managers, you don't need that sort of thing. It is not stress that harms us but distress.
Complete freedom from stress is death. Mental confusion from physical or psychological pain, the influence of chemicals or diseases. Bias from over-influence by the combined effect of many psychological tendencies operating together. Once they start stealing, the consistency principle will make stealing habitual.
It's very very important to create human systems that are hard to cheat. You can learn to make fewer mistakes than other people - and how to fix your mistakes faster when you do make them. Get so you can handle mistakes. People go broke 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.
I now use a two-track analysis: One approach is rationality.
Evaluating the real interests, the real probabilities. The other is to evaluate the psychological factors that cause subconscious conclusions - many of which are wrong. Take all the main models from psychology and use them as a checklist in reviewing outcomes in complex systems.
Includes failing to consider secondary and higher order consequences and inevitable implications. By solving one problem, we generate another one and sometimes create an even worse one. Try to optimize the whole and not a system's individual parts. Auction: What you won was the right to pay more for something than everyone else thought it was worth. The other party is most likely to accept our offer when it is least favorable to us.
Nobody can forecast interest or currency rates, the GDP, turning points in the economy, the stock market, etc. Massive amounts of information don't help. Warren Buffett says: "It is not necessary to do extraordinary things to get extraordinary results.
Ask: How do we allocate our time, work, attention and money? Can we identify the few things that really matter? Includes failing to consider that many effects may originate from one common root cause. Includes identifying the wrong cause because it seems the obvious one based on a single observed effect. Also failing to consider information or evidence that is missing.
There is nothing more deceptive than an obvious fact. Obviousness is always the enemy to correctness. Includes not using basic math to count and quantity. Also not differentiating between relative and absolute risk. Includes underestimating the probability and severity of rare or extreme events. Most people think dramatically, not quantitatively.
If we get a once in year storm this year, another big one could happen next year. There is no memory of the past. People were more reluctant to give up a lottery ticket they had chosen themselves, than one selected at random for them. The lesson is, if you want to sell lottery tickets, let people choose their own numbers instead of randomly drawing them. We should never risk something we have and need for something we don't need.
You only have to get rich once. The added money has no utility whatsoever. Also underestimating opportunities for failure and what normally happens in similar situations. It's not that easy to make lots of money in a business in a capitalistic society. There are people that are looking at what you're doing every day and trying to figure out a way to do it better, underprice you, bring out a better product or whatever it may be.
Includes failing to consider that time horizon changes probabilities. Size of factor depends on the consequences of failure, how well the risks are understood, systems characteristics and degree of control. Simplify and standardize processes, and use checklists to decrease the likelihood of operator errors.
The most astonishingly incredible coincidence imaginable would be the complete absence of all coincidences. We pay no attention to times when nothing happens. We shouldn't find significance in amazing past events. It's easy to be a prophet. You make twenty-five predictions and the ones that come true are the ones you talk about. Nobody keeps a record of their erroneous prophecies since they are infinite and everyday.
If the opposite of a given statement is more I likely, the statement is probably false. Mysteries are not necessarily miracles. Includes failing to consider the probability of a random matth, and the probability of a false positive and false negative. Also failing to consider a relevant comparison population that bears the characteristic we are seeking. Includes not searching for explanations to why past outcome happened, what is required to make past record continue, and what forces can change it.
If you could make money based on what has worked the past 20 years, all of the richest people would be librarians. The man who fed the chicken every day wrings its neck instead. The past is a good guide to the future - but not always.
We'd rather be roughly right than precisely wrong. In other words, if something is terribly important, we'll guess at it rather than just make our judgment based on what happens to be easily countable. No victor believes in chance.
We give too little attention to failures. Do that with discipline, its likely to work out quite well. Models of reality Developing the habit of mastering the multiple models which underlie reality is the best thing you can do.. It's just so much fun - and it works so well. Ask: What is the underlying big idea? Do I understand its application in practical life?
Does it help me understand the world?
How does it work? Under what conditions does it work? How reliable is it? What are its limitations?
Seeking Wisdom - by Peter Bevelin
How does it relate to other models? Disney is an amazing example of autocatalysis. They had all those movies, owned the copyright.
When the videocassette was invented, Disney didn't have to invent anything or do anything except take the thing out of the can and stick it on the cassette. The models that come from hard science and engineering are the most reliable. The engineering idea of a backup system, of breakpoints, of critical mass. A model should be easy to use. If it is complicated, we don't use it. It is useful on a nearly daily basis. If it is not used, we forget it We need to understand and use the big ideas from all the important disciplines - mathematics, physics, chemistry, engineering, biology, psychology.
If you don't have the full repertoire of models, you'll overutilize the limited repertoire you have - including use of models that are inappropriate just because they're available to you in the limited stock you have in mind. Have a full kit of tools.
Go through them in your mind checklist-style. You must have he models and you must see the relatedness and the effects from the relatedness. Find connections between ideas. Derive new ideas from these connections. Combine ideas from different disciplines. The ideas of scaling from mathematics, systems and constraints from physics, and competitive advantage from microeconomics often explain how business value is created or destroyed. Find similarities or functional equivalents within or between disciplines.
The functional equivalent of viscosity from chemistry is stickiness in economics. Two track analysis : What are the factors that govern the interests involved, and what are the subconscious influences where the brain is automatically doing things, what could be causing psychological misjudgments. Take all the main models from psychology and use them as a checklist in reviewing outcomes. And you must pay special attention to combinatorial lollapalooza effects.
The Physics and Mathematics of Misjudgements One way to reduce unintended consequences is to stop focusing on isolated factors and instead consider how our actions affect the whole system. What key factors influence the outcome of the system and how do those factors interact? What other things may change as a consequence of some action? Over optimizing one variable could cause the whole system to perform worse.
Look at where the bullet holes are, and put extra armor everywhere else. What were the original reasons and assumptions? How did it turn out? DId you make errors in judgment? More useful models: Backup systems from engineering, Breakpoints, Critical Mass from physics.Why did that happen? Two track analysis : What are the factors that govern the interests involved, and what are the subconscious influences where the brain is automatically doing things, what could be causing psychological misjudgments.
Also bias from Persian Messenger Syndrome - not wanting to be the carrier of bad news. I don't have to pursue this thing as an obsession. Readers Also Enjoyed. Individuals are neither good nor bad merely because we associate them with something positive or negative.
From one side this repetition seems a positive presence, because despite the many reads, cognitive biases seem hard to overcome, and knowing them does not translate immediately in acting in the accordingly best way.
Includes minimizing effort and a preference for default options.
His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world. Details if other: