Two Types of Knowledge: The Max Planck/Chauffeur Test

Charlie Munger describes as worldly-wise someone who has a broad set of these tools and knows how to apply them. But this dynamic can only start if we ourselves deliberately decide to take on the task of reading and being selective about it, relying on nothing other than our own judgement of what is important and what is not.

Those who have spent their lives in reading, and taken their wisdom from books, are like people who have obtained precise information about a country from the descriptions of many travellers. Such people can tell a great deal about it; but, after all, they have no connected, clear, and profound knowledge of its real condition. But those who have sp

As Einstein is thought to have said, “Not everything that can be counted counts, and not everything that counts can be counted.”

Personally, 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 misfuncti

Charlie Munger, Warren Buffett’s partner and vice chairman of Berkshire Hathaway, stresses the importance of having a broad theoretical toolbox – not to be a good academic, but to have a good, pragmatic grip on reality. He regularly explains to students which mental models have proven most useful to help him understand markets and human behaviour.