Translator's Preface
introduction

Chapter 1: The Grid Mental Model: Stock Investment as a Field of Worldly Wisdom

Charlie Munger's Special Lecture
Benjamin Franklin's groundbreaking proposal
Cognitive science reveals how the mind works
An easy way to understand the grid mental model: metaphors
The concept of a grid mental model
Stock investment is part of 'worldly wisdom'

Chapter 2 Physics: Newton's Theory That Dominated Economics and the Stock Market

Understanding the world through science
Newton's 'Wonderful Year'
A New Perspective on the World, Principia
Economists who accepted the 'equilibrium theory'
Economics Turns to the Stock Market
Why Predicting the Future Is Difficult
An alternative perspective on the market

Chapter 3 Biology: Evolution and Natural Selection, Evolution and Stock Market Selection

Finch encountered in the Galapagos
"The Origin of Species" Changes Humanity's Mindset
Biological Interpretation of the Economy
From the old paradigm to the new paradigm
The Case of the Bar "El Parol" - The Survival Race of Predictive Models
Financial ecosystem and biological ecosystem
Two perspectives: Newton versus Darwin

Chapter 4: Sociology: The Mysterious Relationship Between Investors and the Stock Market

Understanding collective behavior
The diverse evolution of social science
self-organizing social system
The phenomenon of emergence
Public vs.
individual
The Impact of Diversity and Independence on Decision-Making
Doubting the 'wisdom of crowds'
The Sandpile Experiment and the Stock Market
Is the stock market constantly volatile?

Chapter 5: Psychology: What Makes Investors tick?

A psychologist who shook the foundations of classical economics
The human nature of 'loss aversion'
An investment master who overcame the instinct of 'loss aversion'
Frequent traders and infrequent traders
When investors become brave and when they become timid
Seeing the world through mental models
Why Stock Experts' Arguments Are Compelling
Market noise and investment
Beware of the 'Psychology of Misjudgment'

Chapter 6: Philosophy: Becoming a Critical and Flexible Investor

Philosophy as a field of inquiry
Disorder is just order we don't understand.
Wittgenstein's triangle
Amazon.com: A Company That's Not Easy to Explain
Harmony of narrative and statistics
Truth is determined by its usefulness in the world.
A Special Lecture on Pragmatism by Star Instructor William James
Pragmatism and the Grid Mental Model
Having a different way of interpreting things

Chapter 7 Literature: What Investors Learn from Imaginary Experiences

Reading classes at St. John's College
The art of reading
Adler's Four-Step Reading Method: The Path to Becoming a High-Level Reader
Reading method of 'Books that impart knowledge'
Correlation between reading and analytical skills
The Power of Creative Literature and Investors
Reading Program at West Point
Investment Wisdom Learned from Mystery Novels
Becoming a wise and analytical reader

Chapter 8: Mathematics: Tools to Reduce Market Uncertainty

The Best Investment Strategy Found in Aesop's Fables
The birth of the concept of present value discounting
History of probability theory
Investment decision-making using Bayes' theorem
Kelly's criteria also worked in Las Vegas
Misconceptions about the median, misconceptions about the sideways market
regression to the mean
Yesterday's average is not tomorrow's average.
Black Swan: Extreme Uncertainty Beyond the Ordinary
The world is neither rational nor irrational.

Chapter 9: Decision Making: The Impact of Various Academic Disciplines on Decision Making

The two minds of intuition and reason
Decision-making between the hedgehog and the fox
What Intelligence Tests Miss
Lazy self-control of smart people
How to Create an Effective Investment Model
To a person with only a hammer, every problem looks like a nail.
How to Look at the Stock Market Broadly for Better Investment Decisions

Acknowledgements
St. John's College Reading List
Americas
References
Characters appearing in this book

How to Read the World, How to Succeed in Investment
What do profitable investors read and think?

“I have never met a single wise man who did not read something all the time.

“You'd be amazed at how much Warren Buffett and I read on a wide range of topics.”
- Charlie Munger

A New Perspective on Investment: "Investment Studies of Insight and Culture"

The author, who is well-versed in Warren Buffett's investment methods and is renowned for writing popular investment guides, focuses on how to develop insight and perspective on the stock market and investing to achieve greater success.
In other words, if you're wondering, "What do money-making investors read and what do they think?", the answer is right here in this book.

The original title of this book is 'Investing: The Last Liberal Art'.
The title itself is provocative.
The argument is that stock investment is the last liberal arts subject that encompasses all academic disciplines.
When we get into the content of the book, it goes a step further.
A book about investing incongruously draws on a variety of academic disciplines, including physics, biology, sociology, philosophy, psychology, literature, and mathematics.

But if you delve a little deeper into the book, the situation changes.
You just have to look more broadly and more deeply.
This is because each of these disciplines is directly connected to investment or economics.
Examples include how Darwin's 'theory of evolution' can provide us with insights when combined with 'efficient market theory', and how Adler's 'strategic reading' can be effectively applied to investment research.

The author notes that most of the world's leading investment experts are avid readers.
Their characteristic is that their interests are not limited to the stock market.
It means reading about various fields and seeing the world from a broader perspective.
Furthermore, based on this, various ideas drawn from academics and knowledge in each field are actively utilized to make better investment decisions.

Anyway, you have to read the world properly to invest properly.
A specific example is Charlie Munger, the business partner and advisor of the 'investment genius' Warren Buffett.
The book begins with Charlie Munger's story about the essence of investing.

Chapter 1: The Grid Mental Model: Stock Investment as a Field of Worldly Wisdom

Charlie Munger emphasizes that the stock market, finance, and economics are not separate knowledge systems, but rather parts of a larger knowledge system that encompasses various academic disciplines.
When approached from this integrated perspective, each discipline and body of knowledge can be interwoven to create an excellent 'mental model' that allows for a comprehensive understanding of the world.
Charlie Munger's 'grid mental model' refers to a structure in which these various thinking models are combined with each other.
Developing the ability to view investments as part of a larger, integrated whole is the core investment philosophy that runs throughout this book.

Chapter 2 Physics: Newton's Theory That Ruled Economics and the Stock Market

Many people believe that physics is too difficult for the average person to understand or too abstract to be of practical use in the stock market.
But in reality, that's not the case.
Let's take an antique shop as an example.
If the store owner has too much inventory, price negotiation may be possible.
On the other hand, if you are determined to have a unique item, it will likely command a high price due to its rarity.
However, if you have a strong desire to have that item, you will be willing to pay a high price.
What happens in a store is governed by the laws of supply and demand.
The same goes for the stock market.
This is a classic example of Newton's 'laws of equilibrium' in action.
And 'balance' is one of the core concepts of physics.

Chapter 3 Biology: Evolution and Natural Selection, Evolution and Stock Market Selection

At first glance, the idea of ​​gleaning investment insights from biology might seem surprising.
Darwinian evolution is steady, slow, and continuous.
But no matter what the pace, we must always remember that change is happening.
This is why we must abandon Newton's world and embrace Darwin's.
In Newton's world, there is no change.
If you repeat Newton's physics experiment thousands of times over thousands of years, you will always get the same result.
But in Darwin's world, in Darwin's economy, that's not possible.
For some time, businesses, industries, and the economy may not show any noticeable changes.
But eventually it changes.
The paradigm we have become accustomed to gradually or abruptly collapses.

Chapter 4 Sociology: The Mysterious Relationship Between Investors and the Stock Market

Sociologists have realized that all human-created systems, whether political, economic, or social, are complex systems.
Furthermore, we have come to realize that a universal characteristic of all social systems is 'adaptability'.
From these pioneering scientists studying complex adaptive systems, we can gain insights into the great social system we call humanity, and even into the workings of specific systems like the stock market.
Adaptability is central to emergence theory.
Emergence refers to the process by which individual components, such as cells, neurons, or consumers, come together to create something greater than the sum of its parts.
Paul Krugman introduces Adam Smith's 'invisible hand' as a perfect example of emergent action.

Chapter 5 Psychology: What Makes Investors tick

Psychology studies how the human mind works.
At first glance, it may seem far removed from the impersonal world of financial statements and income statements.
But in the late 20th century, a new notion emerged that psychology plays a significant role in economic decision-making.
It was a radical idea that shook the foundations of the classical economic model.
Because modern portfolio theory is built on the assumption that humans are rational, the idea that people can make irrational decisions was revolutionary in itself.
It captivated a new generation of thinkers and forced us to look at the economy from a new perspective.
This new group of thinkers came from the field of psychology, not economics.

Chapter 6: Philosophy: Becoming a Critical and Flexible Investor

Pragmatism is the exact opposite of most previous philosophical ideas.
Other philosophical thinkers believed that the truths they dealt with were absolute and unchangeable.
But pragmatism holds that we can never have absolute evidence about anything.
For example, trying to prove whether God exists or not is a waste of time because the question itself is invalid.
We can only ask what difference believing in God or not believing in God makes in our lives.
The same goes for the stock market.
A pragmatic investor can and should use secondary models that help generate profits as long as they do not conflict with the primary model, and discard models that are useless.

Chapter 7 Literature: What Investors Learn from Imagined Experiences

Investors must be able to analyze data and critically evaluate its contents.
Because you need to be able to judge whether the material is valuable and worth taking the time to read in depth.
This process is similar to analyzing potential investments.
That's why reading is important for investors.
The act of reading itself greatly enhances these analytical skills.
It is also directly linked to improving investors' cool-headed decision-making ability.
Literary works, in particular, convey things that corporate materials cannot.
“Do not deny the influence of literature.
“Let the book do what it wants to do with the reader,” advises Mortimer Adler.
The point is that there is something to be learned even from fiction and imagination.

Chapter 8: Mathematics: Tools for Reducing Market Uncertainty

Almost every decision investors make, whether they are conscious of it or not, is a probabilistic action.
To be successful, you need to calculate probabilities by combining past records with the most recent data available.
This is Bayesian analysis performed in reality.
Mathematical tools such as probability, variance, regression to the mean, and fat tails help reduce the uncertainty that exists in the market.
But it doesn't completely remove it.
It comes from this one old saying with the most profound conclusion.
'When God created the world, he forgot to include certainty.'
Therefore, most of the information we have is inaccurate or incomplete.

Chapter 9 Decision Making: How Different Disciplines Affect Decision Making

Investing isn't a crazy numbers game.
But thinking differently about investing means thinking creatively.
We need to take in information and create mental models in new and innovative ways.
To create a new grid mental model, you must first learn to think from various perspectives through the framework of various fields of knowledge and to extract core ideas.
Then, we need to use metaphors to connect what we've learned back to the world of investing.
Metaphors help us move from areas we know and understand to new areas we don't know.
Building good mental models requires a comprehensive understanding of the core concepts of various academic systems, as well as the ability to think metaphorically.