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By Alex Gavrish, founder of Etalon Capital Ltd, a global value equity investment firm, and author of the book "Investing: From Science To Art".
Many of you heard Charlie Munger's expression "the latticework of mental models".
What does it mean? What is this latticework? Why do investors need it?
To understand it, one must first understand the idea of reductionism.
Scientists reduce complex processes and problems to smaller, simpler components. They do it because it makes it much easier to do the research.
Being a wise person, Charlie Munger understood that the reductionist approach is not enough to succeed in the markets. And here we come to the difference between science and art.
Consider modern art. Modern artists implement the same principles but approach the problem from an opposite direction. They start with simple and reduced elements of visual representation and force us to move towards more complex ideas.
Picasso destroyed the form. Rothko reduced everything to colour. Pollock integrated chance and accident into painting.
Because of these "techniques" and the biological mechanisms underlying our visual perception, abstract modern art enacts a powerful influence on us: we become more creative, and our imagination starts to f...................... To view our full article Click here
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