Comprehensive from the period of joy.
GPT generated 200 classic and practical thinking models (tool models), here are ten thinking models highly relevant to investment decision-making.
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<li>First Principle Thinking - Rethinking complex problems or ideas from scratch. By breaking down complexity into its basic elements, the aim is to decompose complexity.</li>
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<img src="https://pub.pbkrs.com/uploads/2024/e245b65c280bae3d618bbcc142e597de?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/e245b65c280bae3d618bbcc142e597de"/>
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<li>Second-Order Thinking - This concept goes beyond simple first-level analysis. It requires considering not only the direct consequences of a choice but also second or third-order consequences, known as chain reactions.</li>
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<img src="https://pub.pbkrs.com/uploads/2024/626ec1b67fd130e825beb912d7dc244d?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/626ec1b67fd130e825beb912d7dc244d"/>
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Inversion - Inversion is the idea of solving problems in the opposite way. Instead of focusing on what you need to do, you focus on what you must avoid. By looking for potential negative outcomes or obstacles to prevent or mitigate, you can reduce risks and increase chances of success.
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Opportunity Costs - This model comes from economics. It refers to the value of the next best alternative that must be considered when making a choice. It involves the dilemma of balancing in decision-making. If you go through one door, all other doors will close...
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<img src="https://pub.pbkrs.com/uploads/2024/26103227b2f48061701e677b26cd1aaf?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/26103227b2f48061701e677b26cd1aaf"/>
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Leverage - The concept of leverage is to achieve disproportionately larger results with a small amount of effort, money, etc. It is a strategy to enhance the effectiveness of actions or investments using external factors or tools. I believe rapid learning of modular knowledge is the greatest information leverage.
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Margin of Safety - The core concept of margin of safety is to plan for errors in decision-making (or more precisely, the assumptions you make). This concept was popularized by Benjamin Graham in the investment world.
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<img src="https://pub.pbkrs.com/uploads/2024/426c96dcc84200fdf6d992804db77ef8?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/426c96dcc84200fdf6d992804db77ef8"/>
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Occam's Razor - When analyzing competing hypotheses or explanations, choose the simplest one. The characteristic of the simplest one is the fewest assumptions. If this explanation does not hold, move on to the next simplest explanation.
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Law of Diminishing Returns - The more variable inputs (such as labor or capital) you add to fixed resources (like land), the less additional output or return you get from it
In the end, the value will actually decrease.
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<img src="https://pub.pbkrs.com/uploads/2024/2ebc457417d9ecc4e94d62ccaf686480?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/2ebc457417d9ecc4e94d62ccaf686480"/>
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地图与领土—— Map vs. Territory
The map is a simplified, abstract model of the territory, which almost never captures the complexity of reality. The concept of map vs. territory reminds us of the importance of recognizing that our mental models, beliefs, and perceptions are not equivalent to the objective reality they represent.
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不对称赌注——Asymmetric Bets
In asymmetric bets, the potential upside significantly exceeds the potential downside or loss. The more you bet, the higher the chances of success.
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<img src="https://pub.pbkrs.com/uploads/2024/d59b4f986abe6931002b9ba82d917329?x-oss-process=style/lg" alt="Image" original-src="https://pub.pbkrs.com/uploads/2024/d59b4f986abe6931002b9ba82d917329"/>

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BRK.A

First Principle Thinking, Second-Order Thinking, Inversion

Ten models of thinking related to investment decisions