We Study Billionaires - The Investor’s Podcast Network

TIP740: The Great Mental Models Part 1

333 snips
Jul 27, 2025
Discover the power of mental models and how they can sharpen your decision-making in life and investing. Learn about crucial concepts like first-principles thinking and second-order thinking, which help you analyze situations deeply. Explore the importance of knowing your circle of competence and using thought experiments to forecast business outcomes. Understand probabilistic thinking to navigate uncertainties and enhance your quality of thinking by focusing on simple solutions instead of complex problems.
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INSIGHT

Power of Diverse Mental Models

  • Mental models shape how we think and understand the world below our conscious awareness.
  • Using many mental models provides a broad view and avoids oversimplified problem-solving.
ADVICE

Habituate Mental Models Use

  • Choose mental models deliberately and apply them actively while observing their effectiveness.
  • Practice regularly and reflect via journaling to deepen your understanding and usage.
ANECDOTE

Alibaba Investment Lessons

  • Kyle bought Alibaba due to its strong growth but later realized profit issues weakened the investment.
  • He updated his understanding, changed his map, and sold at a loss, improving his investment discipline.
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