How do we become better investors? Better decision makers? Having a latticework of mental models to hang our thoughts and choices on is a great start. Creating these models is how we learn to become better decision makers. Before creating our latticework of mental models we need to create the mental models that we will use. We must explore the big ideas from the major disciplines.

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Physics, biology, psychology, philosophy, literature, history, sociology, and others.

These are the big disciplines that we call the models.

Our goal is not to remember facts and be able to repeat them, like on a test in college. The goal is to hang these models on a latticework of mental models with concrete examples in our head to help us remember them. And apply them in our life.

The latticework of mental models puts them in a form that we can use analyze a wide variety of situations. This enables us to make better decisions. When these big ideas from multiple disciplines all point toward the same conclusion. Then we can begin to make the conclusion that we have come across an important truth.

Charlie Munger and the latticework of mental models

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This idea of a latticework comes Charlie Munger, co-chairman of Berkshire Hathaway. Munger is one of the greatest cross-disciplinary thinkers in the world.

I could try to explain his thoughts on worldly wisdom, but I would fail miserably. So instead we will use his words.

Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.

You’ve got to have models in your head. And you’ve got to array your experience both vicarious and direct on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.

What are the models? Well, the first rule is that you’ve got to have multiple models because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does…

It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine.

But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.

And the models have to come from multiple disciplines because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense.

They don’t have enough models in their heads. So you’ve got to have models across a fair array of disciplines.

You may say, “My God, this is already getting way too tough.” But, fortunately, it isn’t that tough because 80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.

Charlie Munger

In a speech that Munger gave at USC Business School in 1994, he started to delve into this idea of a latticework of mental models. Check out the pdf here.

Keep in mind, the acquiring of wisdom is a process that takes time. It is an ongoing process of discovering the significant concepts, or models. This comes from many different areas of knowledge. Then learning to recognize the similarities among them.

This is a matter of educating yourself and then learning to see and think differently

Mental Models

An explanation of someone’s thought process about how something works in the real world. It is a representation of the surrounding world, the relationships between its various parts and a person’s intuitive perception about his or her own acts and their consequences. Mental models can help shape behavior and set an approach to solving problems (akin to a personal algorithm) and doing tasks.”


The central idea of mental models is that you must have many of them. Think of them as tools, it is ideal to have all of them. Probably not possible but as many as you can allow you to have as many tools in your toolbox as you need. Imagine trying to fix something without the right tools. Not good, I speak from experience. If you have the right tools it makes the job that much easier. The same rule applies to mental models, as many as you can acquire the better.

This may seem like a natural thing, but it is actually quite unnatural to think that way. Without the right training, your brain will resort to what models do I know and love, and how can I use them in this circumstance?

Munger’s analogy for this is the man with the hammer.

To a man with only a hammer, everything looks like a nail.”

Charlie Munger

Narrow-minded thinking like this feels completely normal to us, but it leads to too many misjudgments.

When you use only one mental model, you tend to shoehorn everything into that model, no matter the situation. This can lead to dangerous thinking or decisions.

How to avoid this? By adding different models to the current ones that you know. Allow these models to compete with each other. Frankly, at first this will be uncomfortable, but that is how you know it is working.

This is why thinking is so important. It allows your brain to compete with the superior model and create vivid examples that allow us to recall them when needed.

Remember when you first learned how to ride a bike? At first, you can’t understand or believe that you are supposed to steer, pedal, and watch where you are going all at once. But eventually it catches and you can’t imagine being able to do it. Like the phrase says “it’s like riding a bike” really does make sense. Once you know how to do it, you will never forget the skill.

Tools to create a latticework of mental models

Have many tools in your mental tool bag. Don’t be the man with the “hammer”.

“You must know the big ideas in the big disciplines, and use them routinely–all of them, not just a few. Most people are trained in one model–economics, for example–and try to solve all problems in one way.”

Charlie Munger

Munger felt that thinking clearly is a trained response. He felt our brain was a muscle that needs to be exercised regularly. To be world class sprinter you need the form, which can be learned. Your natural running style may be fast but to compete with the world’s best you must train your body to adopt the correct form.

What are some of the big disciplines you ask? Here you go. Keep in mind that you don’t need to know everything about all of them. Just the big ideas.

  • Physics
  • Psychology
  • Biology
  • Math
  • Philosophy
  • History
  • Sociology

There are more, much more. To see

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