Peter Bevelin - Seeking Wisdom: From Darwin to Munger

FROM DARWIN

TO MUNGER

PETER BEVELIN

CONTENTS

Part One One

Two

Three

Part Two One Two

Part Three One

Two

Three Four Five Six Seven Eight Nine

Part Four One

Two Three Four Five Six Seven Eight Nine Ten Eleven Twelve

WHAT INFLUENCES OUR THINKING

Our anatomy sets the limits for our behavior Evolution selected the connections that produce useful behavior for survival and reproduction Adaptive behavior for survival and reproduction

THE PSYCHOLOGY OF MISJUDGMENTS

Misjudgments explained by psychology Psychological reasons for mistakes

THE PHYSICS AND MATHEMATICS OF MISJUDGMENTS

Systems thinking Scale and limits Causes

Numbers and their meaning

Probabilities and number of possible outcomes Scenarios

Coincidences and miracles Reliability of case evidence Misrepresentative evidence

GUIDELINES TO BETTER THINKING

Models of reality Meaning Simplification Rules and filters Goals Alternatives Consequences Quantification Evidence

Backward thinking Risk

Attitudes

Charles T. Munger speech on prescriptions for guaranteed misery in life Wisdom from Charles T. Munger and Warren E. Buffett

Probability Checklists

To my two children, Victor and Sonia

SEEKING WISDOM

From Darwin to Mun g er

By Peter Bevelin Third Edition

Copyright 2003, 2005, 2007 by Post Scriptum AB. All rights reserved.

For permission to use copyrighted material, grateful acknowledgment is made to

the copyright holders on next page, which is hereby made part ofthis copyright page. The author and publisher extend their apologies for any errors ofomissions and encourage any copyright owners inadvertently missed to contact them. Any errors, oversight or omissions will be corrected in subsequent editions.

Original publisher Post Scriptum AB

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PCA Publications L.L.C. Published under license from Post Scriptum AB, copyright owner.

Disclaimer ofWarranties and Exclusions ofDamages: The author and publisher make no representations or warranties with respect to the accuracy or completeness ofthe contents ofthis book and specifically disclaim any implied warranties ofmerchantability or fitness for a particular purpose. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional advisor before making any financial or life style decisions. Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Some ofthe names, characters, places and incidents in this book are products of the author's imagination or are used fictitiously. Any resemblance to actual events, locales, or persons, living or dead, is entirely coincidental.

Printed in the United States ofAmerica by Walsworth Publishing Company. ISBN-13: 978-1-57864-428-5 (hard cover: alk. paper)

ISBN-IO: 1-57864-428-3 (hard cover: alk. paper)

- PERMISSION ACKNOWLEDGMENTS

Excerpt from "Track record is everything." From Across the Board, October 1991. Copyright

1991 by Across the Board. Reprinted by permission of The Conference Board Review; all rights reserved.

Excerpts from Berkshire Hathaway Inc. Annual Reports and An Owner's Manual.

Copyright 1977-2006 by Warren E. Buffett. Reprinted by permission of Warren E. Buffett; all rights reserved.

Excerpts from Darwin, C.R. 1871. lhe decent of man, and selecion in relation to sex.

London: John Murray, 1st edition. Volume 1. Copyright 2002-2007 lhe Complete Work of Charles Darwin Online - University of Cambridge - CRASSH 17 Mill Lane - Cambridge; all rights reserved.

Excerpt from Forbes Magazine. "The not-so-silent partner" by Robert Lenzner and David

S. Fondiller, January 22, 1996. Copyright 1996 by Forbes Inc. Reprinted by permission of Forbes Magazine 2009 Forbes Media LLC; all rights reserved.

Excerpt from Cheating Monkeys and Citizen Bees: lhe Nature of Cooperation in Animals and

Humans, by Lee Dugatkin. Copyright 1999 by Lee Dugatkin. Reprinted with the permission of The Free Press, a Division of Simon & Schuster, Inc.

Excerpt from Living Within Limits: Ecology, Economics, and Population Taboos, by Garrett Hardin. Copyright 1995 by Oxford University Press, Inc. Reprinted by permission of Oxford University Press, Inc.; all rights reserved.

Excerpt from The Ostrich Factor: Our Population Myopia, by Garrett Hardin. Copyright

1999 by Oxford University Press, Inc. Reprinted by permission of Oxford University Press, Inc.; all rights reserved.

Excerpt from lhe Psychology ofSpeculation, by Henry Howard Harper. Copyright 1966

by Fraser Publishing Company. Reprinted by permission of Fraser Publishing Company. Excerpt from "Speed, Simplicity, Self-Confidence: An Interview with Jack Welch."

Reprinted by permission of the Harvard Business Review. From "Speed, Simplicity, Self Confidence: An Interview with Jack Welch" by N. Tichy & R. Charan, Sept/Okt 1989. Copyright 1989 by the Harvard Business School Publishing Corporation; all rights reserved. Excerpt from OfPermanent Value: lhe Story ofWarren Buffett, by Andy Kilpatrick. Copyright

2000 by Andrew Kilpatrick. Reprinted by permission of Andrew Kilpatrick; all rights reserved.

Charles T. Munger.

Excerpts from Outstanding Investor Digest (OID) are reprinted by permission from Outstanding Investor Digest, Inc. Copyright 1986-2006; 295 Greenwich Street, Box 282, New York, NY 10007. All rights reserved. Telephone: (212) 925 3885. Website: www.oid.com. Excerpts from "What is science?" by Richard Feynman. Reprinted with permission from lhe Physics Teacher, Vol. 7, Issue 6, Page 313-320, 1969. Copyright 1969, American