How to Make Better Investment Decisions? | Charlie Munger & the Mental Model Factory

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In this video, we explore how mental models are the frameworks that shape our actions and guide us in decision-making. To help us with this, we'll explore the mental models used by the legendary Charlie Munger and pick some of the best ones that have helped Mr. Munger with better decision making. We'll look at:
1. Swiss Army knife approach wherein having a diverse toolkit of mental models equips us to navigate life's complexities
2. Inversion i.e. thinking in reverse and by understanding what not to do, you can arrive at superior solutions
3. Compounding is where we start small and grow our investments steadily leading to exponential returns over time
4. Occam's Razor focusses on simplicity; Munger and Buffett emphasize investing in simple businesses that require fewer assumptions, ultimately yielding better outcomes
5. Specialization and like organisms in nature, businesses that specialize in specific niches thrive. Focusing on what you excel at can set you apart in both nature and business.
6. Betting Odds and Value Investing: Analyzing betting odds parallels investing - seeking undervalued assets with favorable odds is the key to successful investing.
7. Margin of Safety: A safety buffer in investments guards against errors in estimation
8. Incentives: Understanding and aligning with the right incentives is crucial. Incentives drive behaviour and profoundly influence outcomes in business and life.

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👉 Video Chapters:
00:00 What is a Mental Model?
01:23 1. Swiss Army Knife
02:52 2. Invert, Always Invert
04:51 3. Compounding
06:24 4. Occum's Razor
09:14 5. Survival of the Fittest
11:14 6. Parimutuel Betting
13:00 7. Margin of Safety
14:22 8. Superpowerful Incentives
15:14 Shankar's Viewpoint

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👉 Additional Reading material:

#mentalmodels #charliemunger #survivalofthefittest #inversion #swissarmyknife #compounding

Disclaimer: I am not a SEBI registered investment advisor or research analyst. I am not registered with PFRDA or IRDA either. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented. Some of the links I have posted in the video, the description, the comments and other related resources might be affiliate links

[karthikeyanv]

"I am just Shankar and not Jaishankar"... 😂😂😂.. but you are 'Dhan'Shankar for us😊

[deepakshukla]

Highly undervalued channel... I'll invest in it.... With high margin of safety 😅

[onceuponascale]

A Surprising angle of approach for that one. Which makes it all the more interesting, as you bring more than the usual balance sheet and momentum critireas. And ultimately offers a lot of very insightful ideas and concept. Thank you.

[dhwanilrambhiya]

Shankarji can you make a video on career roadmaps or future jobs in capital markets and investment industry?

[Sarwesh-ndhv]

Respect to the guy who is editing, feels fresh

[satishrana]

TRULY A GREAT VIDEO I HAVE COME ACROSS... GREAT

[baibhavRishu]

Amazing sir, do more of these kinds of video

[Anbu-Ini]

Thanks for the great content Shankar sir.. learnt awesome new concepts..

[atulmittal]

Hello Shankar, how long does it take you to make a gem of video like this ?

[wisdomhatchwithsuresh]

Every 3 days of School makes me divinely feel❤❤❤Shankar Anna means class❤❤❤

[finsk-xg]

awaiting for the exciting series on mental models.

[amirtharajrathinam]

Thankyou Mr SN for your wonderful video.

[ashok______]

Thank you so much for these videos Shankar Sir. Could I somehow invest in your YouTube channel. I'm sure this is a future multibagger.

[talktomanick]

Please create similar topics, thank you 🙏

[Sarwesh-ndhv]

Sir, Try to do daily one video on how market went today, it will help to follow you daily and market, because your explanation can be understood by anyone, just an 10min video of overview and we are good 😊

[murga]

Pls do make such more videos on mental models

[venkateshrvd]

Shankar, why dont you share same content in Tamil . i thought you know tamil . because all your content are good as well us media power to reach another side of india . just my view

[hemanthkaja]

Great content as always. Thanks for the video Shankar ji. Could you also add how to effectively get these mental models working in our heads? Where and how do we start? How to progress? Everyone can know the Model but true learning comes with the application, I believe and that makes a big difference 🙂

[vimalkumarg]

Please do a video on allother legends sir.thanks

[akhaleefa]

You are one of the best Shankar Nath Ji. Please aim to take up a big job of teaching stock market investment to the whole country. Your knowledge and skills seems to be amazing related to stock market. If you can do free service passionately in this field retail investors of India will grow fastest. A country of 143 crore people cannot remain developing even after 75 years of independence. So please see if you can think of benefitting many many Indians by your knowledge and skills of stock market. Thank you Shankar Nath Ji.