Mental Models
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.