MICHEL PIREU: Keep it simple, stupid
Complex investment models are often showy and unnecessary, and run the risk of breeding complacency
“All I want to know is where I’m going to die, so I’ll never go there,” Charlie Munger is often quoted as saying. It reflects a way of thinking inspired by German mathematician Carl Gustav Jacob Jacobi, who often solved difficult problems by following a simple strategy: “man muss immer umkehren”, which can be loosely translated as “invert, always invert”.
Jacobi knew it is in the nature of things that many hard problems are best solved when they are addressed backwards. “Indeed,” says Munger, “many problems can’t be solved forward.” Inversion can be particularly useful for challenging your own beliefs; preventing you from making up your mind after your first conclusion. It is a way to counteract the gravitational pull of confirmation bias.