We thought you ought to start the week with something really special.
This is what Warren Buffet has to say about Charlie Munger:
“Charlie has the best 30-second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you can even finish the sentence.”
🙇♂️ Woah… How is this possible?
Charlie makes it possible by observing reality and running it against his mental models.
🤝 We’ll cover a few of these models today, and a few later in the week. Make sure you’re on our free mailing list to receive it!
Read, enjoy and share with your network. Let’s all build wealth together.
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🖼 Picture This…
Bitcoin climbed more than 15% over the weekend… This comes after a sharp sell-off last week. It’s not all rainbows and sunshines just yet unfortunately:
Trading volume remains low
Daily trading volume for bitcoin has remained low, particularly during the weekend. It’s been the trend for most of the month. Analysts interpret it to mean that investors are “on the sidelines licking their wounds”.
Declining hash rates
The amount of computing power dedicated to mining has declined since the China debacle. Remember: hash rate is the measuring unit of the processing power of a network. When hash rates decrease, it can mean that the profitability of processing transactions has declined due to increased overhead in the form of computing power. To view hash rates, you can use blockchain.com.
🔮 What shall we take away from this, as crypto traders and investors? In short, it will take more than some positive price action to shift the current market sentiment. We ought to be eyeing key structural levels. In other words, there are key resistance levels we need to reclaim before we can shift our bias back to bullish. We would all still be wise to proceed with caution. For our most recent bitcoin technical analysis, click here.
You’re Arrived At Mental Models: Part 1
There once was a construction company named Warner & Swasey. They offered great equipment but they also shared a certain advertisement: “The company that needs a new machine tool, and hasn’t bought it, is already paying for it.”
If you speak to Charlie Munger, the vice chairman of Berkshire Hathaway, and one of the most successful investors in the world, he will tell you that the same applies to thinking tools. In other words, if you’re in need of a new thinking tool, but haven’t yet acquired it, you’re already paying for it.
💎 So, let’s all save some costs today. Let’s discuss some of the mental models Charlie uses. These are methods which he has talked about publicly and are mainly relevant to investing. That being said, they are so diverse that they have applications within many other areas too. For example, Munger was also a successful Chairman at a large hospital… a busy man indeed!
🔪 Swiss Army Knife Approach
The first mental model is also a kind of justification as to why we need mental models in the first place. Consider 3 analogies:
Driving a car. Do you drive a car? If so, you likely (and hopefully) know that you can’t just learn how to use the accelerator. You’ll most likely hurt yourself and others. Before you become a successful driver, you’ll need to learn how to use the breaks, steering wheel and mirrors to mention a few things.
A man with a hammer. “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail” - Maslow’s Hammer (1966). Someone who only knows how to use one tool will pay for his ignorance because he will torture reality to fit the only model that he knows about!
A man with a swiss army knife. This man has different tools and is equipped and ready for applying the best tool for the given situation.
Navigating your life through mental models is like learning to drive a car. There’s a lot of things you’ll need to know in order to be successful. Munger estimates he’s got about 100 mental models in his head that he uses regularly. However, he does caveat that “a few of the really big ideas carry most of the freight”. Failure to use mental models is like going through life with only a hammer and thinking every problem is a nail. You can guarantee that the world won’t change to suit your preferences, so it’s up to you to change your mindset. You’ll need to go from the hammer to the swiss army knife through your own willpower and initiative.
This may seem obvious but actually “the man with the hammer syndrome” is extremely common. How often in corporations does the marketing department not care enough about the quality of the product? Or how often are people too afraid or ignorant to cross boundaries and pick up important ideas from other fields?
✅ The first step is to understand the importance of mental models and the necessity of a range of methods and tools to assess and respond to various situations.
🪦 Make Friends With The Eminent Dead
“I would say you are not restricted to living people when picking your mentors. Some of the very best people are dead.” - Charlie Munger
Most of the people who walked this earth are already dead. To really convey the point, consider this statistic: a total of 117 billion homo sapiens are estimated to have walked the earth. Fortunately, a few of the most intelligent ones are still with us in their written words. It therefore comes as no surprise that Charlie Munger enjoys reading a lot.
Reading is an essential part of gaining worldly wisdom. Although, we should caveat it is not the only method. Perhaps it was in the past but nowadays we have videos, podcasts and a range of other mediums. The point is just to consume a lot of information.
You should always strive to master the best things that other people have already figured out. Charlie Munger takes this one step further, he says that you should even make friends with the people that you are trying to learn from. What we mean here is don’t just read their content: figure out their background, hobbies, where they came from, their routines… It’s helpful to learn as much as possible about your mentors. One person Charlie chose to make his friend was Benjamin Franklin, who was one of America’s founding fathers. In fact, his book titled Poor Charlie’s Almanack comes from Franklin’s yearly booklet called Poor Richard’s Almanack, where he wrote under a pseudonym.
✅ Pick your mentors wisely (both alive and dead). Consume as much content from them as possible. So much so, that it is like you have befriended them!
🔥 Until Next Time
That’s all on this topic for today, meditators. Stay tuned for 3 more mental models later in the week. Slowly but surely, we will build wealth and health together. To receive Part 2, make sure you’re on our free mailing list 👇
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👾 Gamers Beware
It seems current market conditions have not stopped hackers and scammers from taking advantage of unknowing cryptocurrency holders to steal coins. From Sharedstake’s insider exploit, soft rug DeFi scams, and blatant rug pulls, this article on CNBC shares a new story of a group that is infecting video games with malware to mine cryptocurrency.
More specifically, the “Crackonosh” malware is hidden in the free or lite versions of a variety of video games such as NBA 2K19, Grand Theft Auto, and The Sims to name just a few.
After it’s installed, the malware leverages thecomputer’s processing power to mine cryptocurrencies, an endeavor that has generated close to $2 million worth of crypto and affected over 220,000 users so far, according to security firm Avast.
This is not the first time malware has infiltrated the video game world, as a report from Akamai Security Research published this week showed that “the number of cyberattacks on gamers has surged 340%” since the pandemic.
This event reinforces how important it is to level up your security if you haven’t done so already. In terms of defence software, we recommend installing a firewall and antivirus and antimalware software as well as using a VPN at all times. However this is just the start.
If you’d like to see the specific software we recommend as well as a step-by-step tutorial to create an effective security system, make sure to READ our: 👉 9 Step Essential Cryptocurrency Security Guide And LISTEN to our podcast: 🎧 Crypto Security: How to Stay Safe with Privacy Expert Jameson Lopp
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 28th June
🌍 Global USD Bank Transfer Live on Crypto.com App & Exchange
You can now transfer USD from your bank account and receive the funds in USDC (1:1). Available in 30+ countries. You can use our link to download the crypto.com app.
Tuesday, 29th June
🌐 Band Phase 2
This launch will revolve around enterprise and institutional integration to unlock virtually all the data on the open internet for blockchain and decentralized applications to securely utilize.
🎧 MM Podcast Release: #81 Ethereum’s Bull Case with David Hoffman
David is a founding father of Bankless newsletter and podcast, designed to help the community replace banking and navigate the Ethereum space.
Wednesday, 30th June
🌉 Gravity Bridge
An Ethereum-Cosmos bridge designed for the Cosmos Hub which will be able to bring ERC20 assets from Ethereum into Cosmos.
🔵 Buy, Earn Interest & Borrow Against DOT On Nexo
DOT is now available on the Nexo platform. Buy DOT on the Nexo Exchange and you can benefit from a promotional cashback until this day (30th June). Other benefits: earn up to 8% interest on DOT (paid out daily) and borrow against your DOT. You can use our link to create an account with Nexo.
Friday, 2nd July
🥞 PancakeSwap V2
Aiming to launch shortly, PancakeSwap V2 plans to transition to a community-led emissions model whereby a monthly governance vote will be held at the end of each month.
🇺🇸 U.S. Jobs Report
Biggest economic event of the week. Tells us about the labour market and whether inflation will show up in the form of higher wages.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.