gold, page-73108

Finance is simple yet complex. It is easy to understand yet difficult to predict. It is logical yet irrational.

The wise words of Mr Munger sum up the dangerous goldbug trait of latching onto a headline and an emotive image - for example dollars falling from the sky - to reinforce their bias. Snippets, facts, words are useless, or worst still dangerous, unless one knows how to use them within a latticework of theory.

"You can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head. And you’ve got to array your experience both vicarious and direct on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head."

Who has a latticework of models in the head!