A simple tool to help you learn better

Research shows that people who follow strategy B [read ten pages at once, then close the book and write
a one page summary] remember 50 percent more material over the long term than people who follow
strategy A [read ten pages four times in a row and try to memorize them]. This is because of one of deep
practices most fundamental rules: Learning is reaching. Passively reading a booka relatively effortless
process, letting the words wash over you like a warm bathdoesnt put you in the sweet spot. Less
reaching equals less learning.
On the other hand, closing the book and writing a summary forces you to figure out the key points (one
set of reaches), process and organize those ideas so they make sense (more reaches), and write them on
the page (still more reaches, along with repetition). The equation is always the same: More reaching
equals more learning.
Update: A better idea by way of Nassim Taleb: Dont write summary, write bullet points of what comes
to mind that you can apply somewhere.
identify the tasks or knowledge that are just out of your reach, strive to upgrade your performance, monitor your
progress, and revise accordingly. Susan Cain
I never allow myself to have an opinion on anything that I dont know the other sides argument better
than they do.
Charlie Munger
We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when
the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider
arguments on the other side.
Charlie Munger
The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most
valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. Its
bad to have an opinion youre proud of if you cant state the arguments for the other side better than your
opponents. This is a great mental discipline.
Charlie Munger
In the short run, the market is a voting machine. In the long run, its a weighing machine.
Weight counts eventually. But votes count in the short term. And its a very undemocratic way of
voting.
Unfortunately, they have no literacy tests in terms of voting qualifications, as youve all learned.
What youre doing when you invest is deferring consumption and laying money out now to get more
money back at a later time. And there are really only two questions. One is how much youre going to
get back, and the other is when.
Now, Aesop was not much of a finance major, because he said something like, A bird in the hand is
worth two in the bush. But he doesnt say when. Interest ratesthe cost of borrowingBuffett
explained, are the price of when. They are to finance as gravity is to physics. As interest rates vary, the
value of all financial assetshouses, stocks, bondschanges, as if the price of birds had fluctuated.
And thats why sometimes a bird in the hand is better than two birds in the bush and sometimes two in
the bush are better than one in the hand.
Its wonderful to promote new industries, because they are very promotable. Its very hard to promote
investment in a mundane product. Its much easier to promote an esoteric product, even particularly
one with losses, because theres no quantitative guideline. This was goring the audience directly, where
it hurt. But people will keep coming back to invest, you know. It reminds me a little of that story of the
oil prospector who died and went to heaven. And St. Peter said, Well, I checked you out, and you meet
all of the qualifications. But theres one problem. He said, We have some tough zoning laws up here,
and we keep all of the oil prospectors over in that pen. And as you can see, it is absolutely chock-full.
There is no room for you.
And the prospector said, Do you mind if I just say four words?
St. Peter said, No harm in that.
So the prospector cupped his hands and yells out, Oil discovered in hell!
And of course, the lock comes off the cage and all of the oil prospectors start heading right straight
down.
St. Peter said, Thats a pretty slick trick. So, he says, go on in, make yourself at home. All the room in
the world.
The prospector paused for a minute, then said, No, I think Ill go along with the rest of the boys. There
might be some truth to that rumor after all.
Well, thats the way people feel with stocks. Its very easy to believe that theres some truth to that
rumor after all.

Buffett waved a book in the air. This book was the intellectual underpinning of the 1929 stock-market
mania. Edgar Lawrence Smiths Common Stocks as Long Term Investments proved that stocks always
yielded more than bonds. Smith identified five reasons, but the most novel of these was the fact that
companies retained some of their earnings, which they could reinvest at the same rate of return. That
was the plowbacka novel idea in 1924! But as my mentor, Ben Graham, always used to say, You can
get in way more trouble with a good idea than a bad idea, because you forget that the good idea has
limits. Lord Keynes, in his preface to this book, said, There is a danger of expecting the results of the
future to be predicted from the past.
They thought alike and had the same fascination with business as a puzzle worth spending a lifetime to
solve. Both regarded rationality and honesty as the highest virtues. Quickened pulses and self-delusion,
in their view, were the major causes of mistakes. They liked to ponder the reasons for failure as a way of
deducing the rules of success. I had long looked for insight by inversion, in the intense manner
counseled by the great algebraist Carl Jacobi, Munger said. Invert, always invert. He illustrated this
with the story of a wise peasant who said, Tell me where Im going to die so I wont go there. But
while Munger meant this figuratively, Buffett took it more literally. He lacked Mungers subtle sense of
fatalism, particularly when it came to the subject of his own mortality.
The bathtub steeplechase and the information he had collected about the hymn composers had taught
him something else, however, something valuable. He was learning to calculate odds. Warren looked
around him. There were opportunities to calculate odds everywhere. The key was to collect information,
as much information as you could find.
At the time, weight training was not the stuff of serious athletes, but it had many qualities that appealed
to Warren: systems, measuring, counting, repetition, and competing with yourself.
The art of handicapping is based on information. The key was having more information than the other
guythen analyzing it right and using it rationally.
I went to Room 300, and I was the only guy who showed up. The three professors there kept wanting to
wait. I said, No, no. It was three oclock. So I won the scholarship without doing anything.
Warren had even considered actuarial sciencethe mathematics of insuranceas a career. He could
have spent decades toiling over tables of mortality statistics, handicapping peoples life expectancies.
Besides the obvious ways this suited his personalitywhich tended toward specialization; relished
memorizing, collecting, and manipulating numbers; and preferred solitudeworking as a life actuary
would have let him spend his time pondering one of his two favorite preoccupations: life expectancy.
However, his other favorite, collecting money, had won out.
From Grahams class, Warren took away three main principles that required nothing more than the
stern discipline of mental independence:
A stock is the right to own a little piece of a business. A stock is worth a certain fraction of what you
would be willing to pay for the whole business.
Use a margin of safety. Investing is built on estimates and uncertainty. A wide margin of safety ensures
that the effects of good decisions are not wiped out by errors. The way to advance, above all, is by not
retreating.
Mr. Market is your servant, not your master. Graham postulated a moody character called Mr. Market,
who offers to buy and sell stocks every day, often at prices that dont make sense. Mr. Markets moods
should not influence your view of price. However, from time to time he does offer the chance to buy low
and sell high.
He augmented his army pay by playing poker. He found he was good at it. It turned out to be his version
of the racetrack. He said he learned to fold fast when odds were bad and bet heavily when they were
good, lessons he would use to advantage later in life.
When things went wrong, Munger would set out toward new goals rather than let himself dwell on the
negative. That could come across as pragmatic, or even callous, but he viewed it as keeping the horizon
in sight. You should never, when facing some unbelievable tragedy, let one tragedy increase into two or
three through your failure of will, he would later say.