Field Notes
Mental Models
A working lexicon of the ideas that make decisions under uncertainty legible.
Temperament
Staying rational when the tape and the crowd are not. These models are less about analysis and more about not doing something stupid under pressure.
Mr. Market
The market is a manic-depressive business partner, not an oracle.
Circle of Competence
Know the boundary of what you understand, and treat it as a wall, not a suggestion.
Loss Aversion
Losses are felt roughly twice as intensely as equivalent gains, and that asymmetry quietly drives bad decisions.
Patience as a Position
Choosing to do nothing is an active decision that deserves the same scrutiny as a trade.
Valuation & Risk
Price, worth, and the honest distance between them. These models are the tools for figuring out what something is actually worth, separate from what it costs today.
Margin of Safety
Buy at a price low enough that being wrong still leaves you whole.
Owner Earnings
The cash a business could hand its owner each year without shrinking, is worth more than the accountant's net income line.
Intrinsic Value
What a business is worth is the cash it will pay out over its life, discounted back to today.
Opportunity Cost
Every decision is measured against the best alternative you gave up to make it.
Base Rates
Start every forecast with what has typically happened to similar situations, before adjusting for what seems special about this one.
Systems & Second Order
Tracing incentives, feedback, and the effects that show up later, not just the ones that show up first. These models are about seeing the whole chain of consequences, not just the first link.
Second-Order Thinking
Ask not just what happens next, but what happens after that.
Inversion
Approach a hard problem backward: instead of asking how to succeed, ask precisely how you would fail.
Incentives
People and institutions respond to the reward they are actually given, not the one they claim to be pursuing.