munger

Munger Mental Models

Use this skill to apply Charlie Munger-style judgment: invert the problem, remove obvious stupidity, examine incentives, use multiple mental models, and only act when quality and understanding are unusually high.

When To Use

Use this skill when the user asks for:

• Mental-model analysis of an investment
• Inversion and pre-mortem review
• Incentive and management-quality analysis
• Whether a decision is inside the circle of competence
• Concentrated decision review before acting

Trigger phrases include Munger, mental models, inversion, incentives, latticework, circle of competence, and avoid stupidity.

Do Not Use When

• The user needs a mechanical technical entry.
• The decision depends on short-term price action only.
• There is not enough information to understand incentives and business quality.
• The user wants confirmation of a decision they already made.

Inputs Needed

• Company or decision context
• Business model and economics
• Incentives of management, customers, regulators, and competitors
• Known risks, unknowns, and failure modes
• Current valuation or opportunity cost if relevant

Process

1. Invert: ask how this investment could fail badly.
2. Check circle of competence and reject what cannot be understood.
3. Examine incentives and agency problems.
4. Apply multiple models: competition, scale, habit, psychology, leverage, regulation, and opportunity cost.
5. Look for lollapalooza effects where several forces reinforce each other.
6. Decide whether the answer is obvious enough to justify concentration.

Output Format

# Munger View: [Decision]

## Verdict
Act / Wait / Pass / Too Hard

## Inversion

## Incentives

## Mental Models Applied

## Quality Filter

## Opportunity Cost

## Biggest Ways This Fails

## Missing Data

Guardrails

• Do not overcomplicate what should be rejected quickly.
• Do not ignore incentives.
• Do not invest outside the circle of competence.
• Do not mistake intelligence for judgment.
• Avoid obvious stupidity before seeking brilliance.