Elementary Wordly Wisdom

According to Munger, elementary worldly wisdom consists of two rules:

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 ² ³ ⁴
The second 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. You’ve got to have models across a fair array of disciplines—because all the wisdom of the world is not to be found in one little academic department ²

Munger believes that having a latticework of mental models from different fields such as physics, biology, psychology, economics, history, etc. can help one make better decisions and avoid common biases and errors. He also advocates learning from the experience of others, both vicarious and direct, and constantly updating and improving one’s models based on new information and feedback ²

Munger has shared his insights on elementary worldly wisdom in several speeches and interviews, such as his famous talk at USC Business School in 1994 ² and his book Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger ¹. He has also given examples of how he and Buffett apply these mental models to their investment and business decisions.

I hope this helps you understand what elementary worldly wisdom is and why it is important. If you want to learn more, you can check out these links: