The Trick Charlie Munger Uses To Make Better Decisions

Hey there!

With all the things we have to distract us in the world, how can we be better at simply making judgements, and thinking about how to solve things. I can tell you that understanding one key concept can make all the difference in the world. I want to share that concept, in plain English with you:

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Hope this helps!


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hey there it’s David H Lawrence the 17th
and today’s heroes are a familiar name I
think to some of you and an unfamiliar
name to most of you
the familiar name is Charlie Munger if
you don’t know who Charlie Munger is
he’s Warren Buffett’s partner and has
been his business partner for almost all
of Warren Buffett’s life and his kind of
the guy in the background the guy that
doesn’t like to be well-known and
everything but he’s getting more and
more well-known because he’s brilliant
but the name that you probably don’t
know is Kenneth Creek crai Kay Kenneth
Creek and he wrote a book he’s actually
a philosopher but he was fascinated with
how humans think evaluate and explain
things and if you’ve ever wondered how
people who always seem to make good
choices or at least for the most part
always seem to consider the right stuff
have some intelligence about what they
do don’t make a lot of mistakes seem to
be lucky it’s very likely that they
follow what Kenneth Craig called the
mental model now in the 40s he was
thinking a lot about this he wrote a
book called the nature of explanation
and I would link to it for you here on
the video but when I went to Amazon they
used copies that they had of it were 663
dollars so I’m not linking to it I’m
just gonna give you the Cliff’s Notes
version so what he considered and came
to the conclusion of his the people that
do a really good job of thinking about
things coming up with great solutions
and conclusions so on they used
something called the mental model now
that sounds like a pretty general thing
but the way he described it a mental
model is what you use to compare what is
in reality with what you think it should
be so the mental model is what you think
it should be what actually happens in
reality and if you look at those two two
things for all the different things that
you’re you’re thinking about doing and
saying and and you know solutions and
strategies and tactics
because we’re human and because we don’t
know everything we tend to make stuff up
if we don’t have the answer oh well it
must be that you know casting directors
must tell everybody who to cast right
you know III don’t know all the things
that I don’t wanna I don’t want to take
anybody off and say vaccinations cause
diseases I don’t believe that but there
are people that do so you know the this
thing called the mental model is what
you use to look at reality and see if it
jives with what you’ve been thinking if
it doesn’t it’s worth looking into why
and if it does it’s worth relying on
even if it’s counterintuitive Charlie
Munger has said that he uses this all
the time and as I was reading it I
realized I do most of the time I always
think is that really true is that really
what happens we talk a lot about this
when we look at the habits that we
create as performers and the things that
we hear from other performers about how
to get things done well right and how
not to make mistakes and how to get
booked and how to get auditions and how
to find an agent and all that sort of
thing well a good thing to do would be
to create a mental model and then
compare it with actual facts not what
you think is fair and that ties in with
how to be a world-class complainer you
know post what you know not what you
think you know and post what you know is
true has been proven to you you know
it’s true not it must be true right so
the nature of explanation is the book
maybe you can find it cheaper somewhere
it’s worth reading it’s written in a
kind of 1940s style so be aware of that
there’s some some sample pages on Amazon
but if it’s good enough for Charlie
Munger it’s good enough for me to look
into and as I was thinking about how I
think of things I thought huh that’s
pretty close to what I do so I thought
maybe it would help you so and Kenneth
Creek is the guy’s name the nature of
explanation Charlie Munger is is Warren
Buffett’s partner and he seems to have
done fairly well for himself I think
that kid’s gonna make something of
himself someday
listen if you have any questions about
this if this resonates with you or if it
doesn’t resonate with you I just throw
darts at the wall and see what what
hangs on the target let me know it’s
cool I mean you can disagree with me if
you want to give me an alternative but
if what I’m talking about also resonates
with you if it give it if it kicks for
you let me know that too in the comments
below if you’d like to subscribe to my
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because I pay them to do that I’m David
H Lawrence xvii I really appreciate you
watching and I’ll talk to you tomorrow



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  1. I have never heard of “The Nature of Explanation” before! Thanks for sharing. I have always admired by brother for his willingness to compare what he knows with facts and even come up with new ways of thinking. Now I realize he uses the mental model!

  2. Great video! Here’s the problem as I see it though, because what we can observe and experience is limited by our physical constraints- we can’t be everywhere all the time, we must rely on others, either by what we’ve heard, or read to establish what we know to be true. For instance, in the U.K., there is a big debate about Brexit- is leaving the European Union good or bad for the British? The average citizen does not have enough personal knowledge on such a vast subject to make a decision pro or con. He/she must rely on advocates on either side to be truthful about what they are claiming. Same with the US border problem. My relatives live in Michigan; should they believe one side when they say we must have a border wall, or the other side who say the wall is unnecessary? Short of traveling 2,000 miles and spending several days (weeks) to ascertain what is actually transpiring, how is it possible to come up with an accurate description of reality?

    Perhaps you are restricting your parameters of this philosophy to our personal lives and the things that occur around us. I can agree with this assessment; we should strive to be open minded enough to listen to opinions of people who we respect and form our opinions about reality (our worldview?) based on all the input we have gathered understanding that new data may surface in the future. My personal example- I was brought up in a godly home, went to church 3 times a week, then in my teens realized that there were other worldviews ‘out there’ and could not, from the evidence I had defend my worldview above those other world views. Later in life, at the age of 40 I did a 180 turn and came back to the Christian faith realizing that the way things should be in my mind didn’t match the way things really were. The Christian dogma best fit reality. Nothing I’ve experienced in the subsequent 28 years has changed my mind.