10 Of The Best Books On Mental Models (Investing) (2023)

Johnny HopkinsInvesting BooksLeave a Comment

Mental models are important for investors because they can help them to make better decisions. For example, an investor who understands the probability and statistics of investing is less likely to make impulsive or emotional decisions. An investor who understands the concept of risk and reward is more likely to choose investments that are appropriate for their risk tolerance. And an investor who understands human behavior is less likely to be fooled by market manipulation or other unethical practices.

This week we’ve provided ten of the best books on mental models that will assist investors. This list is by no means complete and is certainly not in any particular order. If you’re an investor take some time to check out the books on this list, they’ll provide you with an awesome starting point for your investing education. Feel feed to add your favorites in the comment section below.

  1. Poor Charlie’s Almanack by Charles Munger. Discover the wit and wisdom of a successful businessman and investor with this book. It features talks, lectures, and public commentary from Charlie Munger, compiled with the encouragement and cooperation of Warren Buffett. Enjoy Munger’s unique humor and insight as you learn about business, investing, and life.
  2. The Great Mental Models Volume 1: General Thinking Concepts by Shane Parrish. **Wall Street Journal National Best Seller**The old saying goes, “To the man with a hammer, everything looks like a nail.” But anyone who has done any kind of project knows a hammer often isn’t enough. The more tools you have at your disposal, the more likely you’ll use the right tool for the job — and get it done right.The same is true when it comes to your thinking. The quality of your outcomes depends on the mental models in your head. 
  3. Thinking, Fast and Slow by Daniel Kahneman. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation–each of these can be understood only by knowing how the two systems shape our judgments and decisions.
  4. Super Thinking: The Big Book of Mental Models by Gabriel Weinberg. The world’s greatest problem-solvers, forecasters, and decision-makers all rely on a set of frameworks and shortcuts that help them cut through complexity and separate good ideas from bad ones. They’re called mental models, and you can find them in dense textbooks on psychology, physics, economics, and more.
  5. Principles Life and Work by Ray Dalio. Review Winner of the Axiom Business Book Award for 2018 “Mr Dalio has long been an object of fascination His new book is more significant than the original list of principles: It is part memoir, part how-to guide It is a deeply personal story, with Mr Dalio wading into how he started his firm in 1975, internal conflicts inside the company, and strife early on in his career.
  6. Seeking Wisdom: From Darwin to Munger, 3rd Edition by Peter Bevelin. Peter Bevelin begins his fascinating book with Confucius’ great wisdom: “A man who has committed a mistake and doesn’t correct it, is committing another mistake.” Seeking Wisdom is the result of Bevelin’s learning about attaining wisdom. His quest for wisdom originated partly from making mistakes himself and observing those of others but also from the philosophy of super-investor and Berkshire Hathaway Vice Chairman Charles Munger. 
  7. Influence: The Psychology of Persuasion, Revised Edition by Robert Cialdini. The widely adopted, now classic book on influence and persuasion—a major national and international bestseller with more than four million copies sold! In this highly acclaimed New York Times bestseller, Dr. Robert B. Cialdini—the seminal expert in the field of influence and persuasion—explains the psychology of why people say yes and how to apply these principles ethically in business and everyday situations.
  8. The Great Mental Models, Volume 2: Physics, Chemistry and Biology by Shane ParrishThis second volume of the Great Mental Models series shows you how to make those connections. It explores the core ideas from the hard sciences and offers nearly two dozen models to add to your mental toolbox. You’ll not only get a better understanding of the forces that influence the world around you, but you’ll learn how to direct those forces to create outsized advantages in the areas of your life that matter most to you.
  9. More Than You Know: Finding Financial Wisdom in Unconventional Places by Michael Mauboussin. Since its first publication, Michael J. Mauboussin’s popular guide to wise investing has been translated into eight languages and has been named best business book by BusinessWeek and best economics book by Strategy+Business. Now updated to reflect current research and expanded to include new chapters on investment philosophy, psychology, and strategy and science as they pertain to money management, this volume is more than ever the best chance to know more than the average investor. 
  10. The Decision Book – 50 Models for Strategic Thinking by Mikael Krogerus. Whether you’re a newly minted MBA, a chronic second-guesser, or just someone eager for a new vantage point, The Decision Book presents fifty models for better structuring, and subsequently understanding, life’s steady challenges. Interactive and thought-provoking, this illustrated workbook offers succinct summaries of popular strategies, including the Rubber Band Model for dilemmas with many directions, the Personal Performance Model to test whether to change jobs, and the Black Swan Model to illustrate why experience doesn’t guarantee wisdom.

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