SEEKING WISDOM

FROM DARWIN TO MUNGER

PETER BEVELIN
Peter Bevelin
“Peter Bevelin is one of the wisest people on the planet.” - Nassim Taleb

-Swedish Investor

Charles Robert Darwin

- Best known for his contributions to the science of evolution.

Charles Thomas Munger

- Vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett.
 I
What Influences Our Thinking
“If you want to avoid irrationality, it helps to understand the quirks in your own mental wirings
and then you can take the appropriate precautions.”
-Charles Munger
Neurotransmitters:
- Dopamine – Pleasure and pain
- Serotonin – Mood and emotion
What determines how these neurons connect and their patterns?

4 FACTORS
- Genes
- Environment
- Life experiences
- Randomness

ENVIRONMENT
GENES
LIFE EXPERIENCES
ENVIRONMENT

Charles Darwin’s Theory of Natural Selection

-Scarce resources (Survival and reproduction)

Characteristics inherited:

- Harm avoidance first.

- We behave on what best interests us.

 II
Psychological Reasons For Mistakes
Man is, and always was, a block-head and dullard,
much readier to feel and digest than to think and consider.
–Thomas Carlyle
 1. Mere Association

Keep in mind:
- Evaluate things, situations and people on their own merits.
 2. Reward and Punishment

Keep in mind:
-It is better to encourage what is right than to criticize what is wrong.
 3. Self-interest and Incentives
“ Do not train boys to learning by force and harshness, but lead them by what amuses them, so that they may
better discover the bent of their minds” - Plato

Keep in mind:
- People do what they perceive is in their best interest and are biased by incentives.
 4. Self-serving Tendencies and Optimism
“ Man suffers much because he seeks too much, is foolishly ambitious and grotesquely overestimates his
capacities” – Isaiah Berlin

Keep in mind:
-Recognize your limits.
- The truly wise person is colorblind.
 5. Self-deception and Denial
We have to see the world as it is. Not for what it was or for what we want it to be.

Keep in mind:
- Bad news that is true is better than good news that is wrong.
 6. Consistency
“ What the human being is best at doing is interpreting all new information so that their prior conclusions
remain intact.” – Warren Buffet

Keep in mind:
- Sometimes things don’t go the way we believe they will. The solution is to face it
and act.
 7. Deprival Syndrome
We don’t like to lose the freedom to choose how to act or value believe or what to have.

Keep in mind:
- Know your goals and options.
8. Status Quo and Do-nothing Syndrome
We prefer to keep things the way they are.

Keep in mind:
- The cost of doing nothing could be greater that the cost of taking an action.
 9. Impatience

Keep in mind:
- Short-term suffering may lead to long term pleasure.
 10. Envy and Jealousy

Keep in mind:
- The best way to avoid envy is to deserve the success you got.
 11. Contrast Comparison

Keep in mind:
- Evaluate people and objects by themselves and not by their contrast.
 12. Anchoring
A cognitive bias for an individual to rely too heavily on an initial piece of information offered
when making decisions.
Keep in mind:
- Adjust information to reality.
 13. Vividness and Recency

Keep in mind:
-Accurate information is better than dramatic information.
- Trends may be wrong.
 14. Omission and Abstract Blindness
We react more strongly to the concrete and specific that to the abstract.

Keep in mind:
- Always see the big picture.
 15. Reciprocation
We tend to repay in kind what others have done for us – good or bad.

Keep in mind:
-Matthew 7:12
-Be the correct example.
 16. Liking and Social Acceptance
“ The deepest principle in human nature is the craving to be appreciated.” – William James

Keep in mind:
-Don’t trade authenticity for approval.
 17. Social Proof
Imitating without thinking.

Keep in mind:
- Think for yourself.
 18. Authority

Keep in mind:
- Separate between real and false experts.
 19. Sensemaking
Our need for making sense makes us even believe in nonsense.

Keep in mind:
-
 20. Reason-respecting
Accepting a worthless reason.

Keep in mind:
-Ask “why” not just for the sake of an answer but for a better understanding.
-Back-up with evidence.
21. Believe first and doubt later
We find it easy to believe, but difficult to doubt.

Keep in mind:
- Think things through and avoid distraction.
 22. Memory Limitation

Keep in mind:
- Keep records of important events.
 23. Do-something Syndrome
“The sole cause of man’s unhappiness is that he does not know how to sit quietly in his room”
-Blaise Pascal
Keep in mind:
- Focus on what’s important and eliminate the rest.
 24. Say-something Syndrome
“Wise men talk because they have something to say; fools, because they have to say something.”
-Plato
Keep in mind:
-We don’t always need to give an answer.
 25. Emotions

Keep in mind:
- When we have just gone through an emotional experience, we should hold off on
important decisions.
 26. Stress

Keep in mind:
- Stress can be controlled by our attitudes.
27. Pain, Chemical, and Diseases
Drugs, stimulants, depressants, alcohol.
28. Multiple Tendencies
“If any of you lacks wisdom, he should ask God, who gives generously
to all without finding fault, and it will be given to him.”
James 1:5