This is a comprehensive summary of the book Seeking Wisdom: From Darwin To Munger by Peter Bevelin. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Written by book fanatic and online librarian Ivaylo Durmonski.
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The Book In Three Or More Sentences:
Packed with wisdom, this book will help you see the world as it is. Not as you want it to be. Peter Bevelin offers a compilation of the sage advice from outstanding scientists like Darwin, Einstein, and the famous investors Charles Munger and Warren Buffett. Primarily, it’s a book about studying wisdom. The text explores what influences our thinking, what psychological flaws in our brains cause errors in our thinking, and finally, it offers ways to improve the way we reason.
The Core Idea:
Avoid the roads that lead to unhappiness. Understand when and where you are going to “die” to guarantee that you will never go there. Seeking Wisdom dumps insights from a range of books to ensure that you will never repeat the same mistake twice. The main concept of the book is to introduce the casual reader to the way smart folks think so he can defend himself, from himself. Plainly, change the way you think about business and life to change the way you act.
Reason To Read:
Rarely do we have the chance to speak with intelligent people. But we do have the chance to peek behind the curtain of their grey matter and get closer to their way of thinking thanks to books like this. The ideas and the rules to play the game of life and avoid misery suggested in the book are nothing new – especially if you have read Thinking, Fast and Slow. Yet, refreshing your knowledge on how our thoughts can influence our behavior in a bad way will distance you away from destruction and closer to making better judgments.
- Consistently avoiding stupid mistakes is often way better than consistently trying to come up with new smart ideas.
- If you are in a boat with immoral people. It’s best to change boats than trying to patch the leaks.
- Create checklists that help you avoid ruin but don’t let them prevent you from thinking.
7 Key Lessons From Seeking Wisdom:
- Lesson #1: How You Think is How You Behave
- Lesson #2: Instead of Intelligent, Be Consistently Not Stupid
- Lesson #3: Every Action Has Consequences
- Lesson #4: Eliminate Risk by Simplifying
- Lesson #5: Surround Yourself With Decent People
- Lesson #6: Avoid Elimination
- Lesson #7: Understand The Foundations of Rational Thinking
Lesson #1: How You Think is How You Behave
What happens to us is not that important. What really counts is what we think about what happens to us.
Our behavior is based on our thoughts and state of mind.
You are having a bad day not only because something awful happened. But because you interpret the events as harmful.
As Marcus Aurelius, the Roman emperor and philosopher, said a long time ago: “Our life is what our thoughts make it.”
Think you won’t do a good job, and you probably won’t.
In the book, the author shares a study that observes people who are constantly worried about their health. The results reveal that these folks who have negative expectations about their health were four times more likely to actually have health problems.
Or in other words, if you plant a seed in your head about having problems. Guess what? It’s almost certain that you will have such problems.
Opposingly, if you encode thoughts about a healthy body and a clear mind. These will take shape eventually.
I know, it sounds too good to be true.
Just change how you think to change how experience life. Where is the science in that?
But as observed by the author, the placebo effect is a famous therapeutic treatment.
The only requirement for it to work is for the patient to believe in the treatment.
If you are convinced that the medication will clear your mind and lessen the pain, it will surely do – regardless of whether the remedy is real or just a sugar pill.
Wondering why this is important?
Simply put, you can’t change the way you behave unless you first change the way you think.
Our thoughts guide our actions.
So, the conclusion is simple: Change your thoughts to change the way you act.
“A placebo is an inactive or ineffective treatment or substance (for example, sugar pills or injections with saline solution) that is often used in comparison with active treatments. Studies show that a placebo can improve a patient’s condition simply because the patient expects it will work.” Peter Bevelin
Lesson #2: Instead of Intelligent, Be Consistently Not Stupid
A counterintuitive thought by Charles Munger from the book worth exploration is the following: “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
How come not being stupid beats intelligence?
The examples are countless.
But it boils down to this: You can’t be extraordinarily smart in all areas. If you are an intelligent person. This will usually mean that you are masterfully skilled at one particular subject. Therefore, your thinking will be heavily influenced by what you know about your field. However, you will completely neglect what you don’t know about all other fields which might diminish your progress.
Focusing on not being stupid refers to our ability to take into account what we know, but also what we don’t know. What can go wrong and the consequences if we choose poorly.
If you are a great swimmer, you might try to prove your superiority to others by swimming into a hazardous sea. Is this going to be a smart move though?
You can keep being great and consistently swim where it’s safe.
The above is actually the reason the following tale exists: “It’s the strong swimmers who drown.”
Similarly, it’s better to focus on working on your average one idea instead of constantly trying to produce plenty of “groundbreaking” ideas.
Consistently avoiding stupid decisions (investing only in a set of stocks) is a lot better than consistently trying to find new ways to become rich (investing in all the stocks).
“By developing only a handful of strengths, we have an impoverished toolbox – only hammers. We need a full toolkit. Since problems don’t follow territorial boundaries, we must compensate for the bias of one idea by using important ideas from other disciplines.” Peter Bevelin
Lesson #3: Every Action Has Consequences
The challenge to anticipate all possible consequences is not only hard. It’s utterly impossible.
Everything we do has consequences – intended and unintended. Quite often, by solving one problem, we generate a new one that’s even harder to solve.
Even if we start to make a change with good intentions, they are not enough to lead to good results. As Samuel Johnson – quoted in the book – says, “The road to hell is paved with good intentions.”
The author suggests something else.
Instead of merely aiming to do good. Think about what exactly is that you’re trying to improve.
Ask yourself the following set of questions:
“What are we trying to improve? What can reasonably be expected to happen? Are the net effects positive or negative?”
The best way to avoid unwished-for side effects of our actions is to think. Think big. Think about how a particular change will affect the whole system.
For instance, reducing costs if your sales are stagnant is not the optimal solution because the perception of your product in the minds of the consumers will change.
Or something else… Exposing corruption might be a no-brainer. But if a large part of the organization is profiting from what you’re trying to uncover, your good intentions will quickly turn on you – you will create dangerous enemies (this is called the Serpico effect).
Achieving better results should first start with examining the whole system. Then, defining the key components that determine the desired outcome.
The last one is of crucial importance.
If you measure working hours instead of work produced, your mind will be fixated on the wrong things. You will chase people to work more instead of working smart. In business, you need to focus on the most important things: shipping goods and making money. These two don’t require constantly “shoveling coal”.
“When trying to improve the performance of a system, first find out the system’s key contraint(s) – which may be physical (capacity, material, the market) or non physical (policies, rules, measurements) – and its cause and effect relationship with the system. Maybe the constraint is based on faulty assumptions that can be corrected. Then try to “strengthen” or change the weakest link. Watch out for other effects – wanted or unwanted – that pop up as a consequence. Always consider the effects on the whole system.” Peter Bevelin
Lesson #4: Eliminate Risk by Simplifying
What is the best way to improve a system?
The author suggests two things:
- Eliminate risk.
- Don’t add more components.
Let’s look at the above one by one.
First, let’s talk about risk.
This is a tricky one. Eliminating risk is no picnic.
Not only because it requires a lot of calculation, predictions, and being moderately smart. But because it needs going against our human nature.
We are more prone to pay attention to things with emotional value and completely neglect statistically consistent facts.
For instance, a recent plane crash heavily distributed by all news channels can convince you to not board the plane. However, how frequently does something like this occur? Statistically speaking, you’re more likely to die from diabetes or from driving your car.
To eliminate risk, we need to consider mainly the following: Possible consequences; The magnitude of these consequences; The likelihood of the events based on past data; Dependence on humans.
Or in other words, to eliminate or reduce risk, we can ask ourselves this: “What’s the worst that can happen, and can I do something about it?”
The second option is easier to implement – at least on paper.
Since the smooth operation of a system is based on all components working together in unison. It makes perfect sense to reduce the number of components.
The more you complicate a machine, the more you increase the failure rate.
After all, all parts need to work for a plane, a car, a shuttle to work.
When you simplify a system, you make it more resilient to failure.
“System safety doesn’t reside in one component but in the interactions of all the components. If one key component fails, the system may fail. Assume a space shuttle is composed of 2,000 independent parts or smaller systems, each with a workingprobability of 99.9%. All parts need to work for the shuttle to work. The probability that at least one of the parts doesn’t work causing the shuttle to malfunction is 86% (many parts means many opportunities for failure).” Peter Bevelin
Lesson #5: Surround Yourself With Decent People
What to do if you find yourself in a leaking boat?
Change boats or try to patch the leaks?
It really depends on the type of people who are with you in the boat.
When looking to hire new people, Warren Buffett looks for the following three things: “intelligence, energy, and character.” From the three, the last one is of key importance. Buffett continuous: “If they don’t have the last one, the first two will kill you because, it’s true, if you are going to hire somebody that doesn’t have character, you had really better hope they are dumb and lazy, because, if they are smart and energetic, they’ll get you in all kinds of trouble.”
Apart from making money. Make sure to surround yourself in your business – or where you work – with people of high integrity.
Even if you’re earning good money right now. If the people in the organization are not acutely interested in being honest and having strong moral principles, eventually things won’t go far.
The above leads to the following question:
Why don’t try to change the moral principles of the surrounding people?
Based on the experience of Warren Buffett, even organizations with the most brilliant reputation can’t change businesses that have poor fundamentals in the way they think.
That’s why the suggestion is: If you find yourself in a chronically-leaking boat, focus your energy on changing vessels than trying to patch the leaks.
It’s far more important to end up in a “boat” with the right people and with the right set of values than in a damaged boat that rows fast.
Ask yourself: Are you in a company run by honest people with high integrity? And, are you such a person yourself?
“A business may look to have a huge margin of safety in price but without an able and honest management this margin may end up as an illusion. History is filled with stories about great businesses that were destroyed by poor management.” Peter Bevelin
Lesson #6: Avoid Elimination
Deriving from the famous saying by Charles Munger: “All I want to know is where I’m going to die so I’ll never go there.” It’s of high importance to remove situations that can lead to destruction – for yourself and your business.
What causes ruin?
In short, wrong decisions.
How can you prevent elimination?
Prevent situations that may lead to great sorrow by creating a decision-making system.
Warren Buffet advises: “Look for certain things that narrow down the possibilities.”
A simple tool pilots use to prevent errors is by using a checklist. Since the cockpit is full of all kinds of buttons. The checklist serves as a reminder of all the procedures that need undertaking for a safe flight.
Supporting the argument of using checklists is an accident that happened with a Northwest Airlines flight. In 1987, the flight crew didn’t complete their checklist which lead to a crash killing everyone on board except one person.
Creating a checklist will remind you of the critical items you need to check. Or in other words, it will prevent ruin.
What to include in your checklist?
It really depends on what you’re trying to achieve. In general, though. You can consider the following things suggested by Charles Munger:
- Different issues need different checklists.
- A checklist must include each critical item necessary for “safety” and avoiding “accidents” so we don’t need to rely on memory for items to be checked.
- Readily usable and easy to use.
- Agree with reality.
Lastly, and most importantly, don’t rely exclusively on checklists.
They should remind you what to check but they shouldn’t discourage thinking.
Checklists prevent making purely emotional decisions but you also need room for thinking outside of the checklist.
Always think about this: “What unexpected thing can happen?” This will prepare you for the worst.
“Avoid excessive reliance on checklists. They may sometimes give us a false sense of security. Checklists work well as long as what may happen can be foreseen. But the unexpected sometimes happens. An unmentioned item may be the core cause of a problem.” Charles Munger
Lesson #7: Understand The Foundations of Rational Thinking
How to avoid unhappiness and self-destruction? What you can do to prevent your life from turning into a fierce battle for survival instead of a healthy race towards improvement?
Peter Bevelin suggests understanding some basic thinking concepts.
After all, better thinking leads to better decisions.
The only requirement is to be open-minded and ready to change your current set of beliefs.
After observing the life of some of the most influential thinkers of our time (as the title indicates, From Darwin To Munger), the author suggests the following tools that can enhance your spirit and mind:
- Models of reality: Models of reality are needed to prevent us from doing stupid mistakes. Since we act automatically when facing a situation. It’s important to understand how the world works. In particular, what is true based on science? But knowing only one thing is not enough. You need to know all of them.
- Meaning: Knowing the name of something is not enough to understand it. This is so basic, yet so powerful. By saying the word “energy”, we think we know what’s the meaning behind it. But do we, really? Knowledge is knowing beyond words. Is knowing the implication, the purpose, and the usefulness of the word you are using in the particular moment.
- Simplification: Expressing yourself using simple words doesn’t mean that you are unintelligent. It means that you know clearly what you’re talking about. But there is more to this concept. To progress, make problems easier to solve. Disassemble situations in your head and find the core components causing the issue to find the best way to move forward.
- Alternatives: Since our time and money are limited, we need to think about how we can use these resources for maximum gain. Or in other words, you can ask yourself: “Can I do something else that will lead to better outcomes?” Saving money is a good thing but is there an alternative? Can I invest my money so they can earn me more money? As the author explains: “Every dollar we invest is a dollar unavailable for other available investments.” Our choices have costs.
- Consequences: When there is a bad result, we get fixated on “whose fault is?” But what truly matters is this, “and then what?” Even before you make a decision, ask yourself, “and then what?” The ability to predict the consequences is a sure-shot producer of wealth. Of course, you can’t be absolutely right. But you can at least try. As J.M. Keynes said, “It is better to be roughly right than precisely wrong.”
- Backward thinking: Thinking backward forces you to find the truth. Usually, when we assume something. We try to confirm it. We seek evidence that proves our idea. How is this helping? A much better idea suggested in the book is to try to disprove your initial assumption. This will help you reach the best possible decision.
- Attitude: A large part of improving our lives lies in having the right attitude towards life. Figuring out the following: “What I want?; What I don’t want?; What are my talents?; What are my limitations? What motivates me?” When we act in ways that are in line with our nature, we progress. If we try to succeed in areas where we generally suck, we won’t get far.
“What can help us see the big picture? How can we consider many aspects of an issue? Use knowledge and insights from many disciplines. Most problems need to be studied from a variety of perspectives. Charles Munger says, “In most messy human problems, you have to be able to use all the big ideas and not just a few of them.” Charles Munger
- Avoid self-deception: The famous American physicist Richard Feynman said: “The first principle is that you must not fool yourself – and you are the easiest person to fool.” Refusing to take into consideration the painful facts won’t make them disappear. It’s better to face and think about how we can deal with bad news instead of focusing on the good news. We hope our project will be successful. We expect things to go in our direction. But hoping and expecting are just wishes. They are not reality. Denying reality doesn’t change reality. Be skeptical about your predictions and face your problems – even the small ones – instead of burying them beneath positive comments. Consider this if you own a product: Good reviews feel nice, but they can rarely make your offering better. The bad ones are of importance. They offer us a chance to correct/improve things in a positive way.
- What are we busy about? “It is not enough to be busy; so are the ants. The question is: What are we busy about?”, said Henry Thoreau. Being active doesn’t mean being resourceful. Don’t confuse the two. You can spend a full day in meetings, discussing the nuances of a particular project but will this move the project forward? Most of the time, it won’t. After all, if you are driving on the wrong road, you won’t reach your desired destination. Instead of being busy for the sake of doing something, consider pausing. Think first about why you want to do this thing? Is it the right thing to waste energy on from the pile of other things?
- Large effects: A disastrous event is not necessarily caused by something big. Quite often, small things break a big system. Think about it, a bird going into the engine of an aircraft can cause a catastrophe. Doctors not washing their hands when dealing with patients leads to infection and mortality – something discovered in 1847. When something bad happens, we generally think that the cause should be something large. Something we can easily see. This focuses us on the wrong things. But it’s not always the big components that lead to a crash. Small things can easily break a system, too. Look closely at your problems to find what is causing destruction.
- Non-goals: Commonly, when we want to do something, we ask ourselves: “What should I do?” Equality important is to also consider the opposite: “What I don’t want to do?” The second question adds valuable constraints to the way you think. The “what to avoid” lens makes it easier to define what you want. If you want to become more productive, for example. You can start with “what to avoid?” first. Immediately, you can spot the tasks that undermine your progress instead of constantly trying to find new “revolutionary” techniques to increase productivity. So, establish both “what to do” and “what to avoid” rules in all areas of your life.
- Patience and time to think: Have the patience to wait for opportunities. The opposite of doing – not doing – is a lot of times a better decision. Our hurried life prompts us to do this or that. But what if you don’t do anything? Have you ever considered the possibility of not doing anything? Patiently wait for a better opportunity instead of doing all kinds of crazy things. Extra gain from this way of thinking is the following: When there is no pressure to act, we have time to think. We create free space in our heads which gives us the opportunity to solve the problem in a new and better way.
Commentary and Key Takeaway
This book is an enormous database of wisdom by (primarily) Warren Buffett and Charles Munger.
Peter Bevelin, the author, packages a collection of undying insights on how to live your life in a way that is decent and ever-growing. This includes both figuring out what to do and also what not to do.
The structure of the content is easy to navigate. There are short chapters that present the main ideas and after that, you drink from the fountain of knowledge shared by the intelligent investors.
And while the snippets are dense with wisdom. The reader itself needs to do the hard work and figure out the application of the text. You get introduced to an idea, but it requires mental work to adjust it based on your life.
On another note, it might seem like the book revolves solely around investing but that’s not entirely the case. The carefully selected anecdotes want to improve your overall way of thinking. Help reason overcomes the madness caused by our natural flaws.
Figure out the difference between what you want and what you’re good at. Spot your limitations and make conscious efforts to reduce your limitations. Plus, focus on working on things that are closer to your talents. You will improve much faster when you are naturally good at something. Besides, it’s way more fun.
“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know. An investor needs to do very few things right as long as he or she avoids big mistakes.” Warren Buffett
“Part of avoiding misjudgments and improving our lives is having the right attitude toward life. Since people are different, there is no one-size-fits-all strategy. We each must figure out our own style.” Peter Bevelin
“Life is too short to waste. Samuel Johnson said: “It matters not how a man dies, but how he lives. The act of dying is not of importance, it lasts so short a time.” We only have one life so we should try to create a life we enjoy. Comedian George Burns said: “You can either do what you love or love what you do. I don’t see there’s any other choice.” Peter Bevelin
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