There are only two ways of clearing an exam. The first involves rigorous reading of the books and understanding the fundamental concepts which a subject is trying to teach, and develop a framework.
Once you have a framework, you then assimilate additional information (either via theory or via practical in labs) on that framework to see whether it makes sense or not.
If you are able to do it, the new information is understood and is stored in your knowledge repertoire to be recalled at ease and also to help you understand other things in future.
If you are not able to do it, you improve upon the framework.
The second way, which if not everyone, at least 90% of engineers will agree upon is as follows.
Divide the subject in few parts. Ask each person in a group of friends to study one part and then teach other people the important (from exam point of view) concepts.
All this is to be done within a week before exams (for some that may be two days before the exam!). Then, cram the important concepts in such a way that you are able to retain it till the concluding bell for the exam.
It’s very obvious: The one following the first approach will be able to recall better what he/she studied.
A similar approach works in real life. Every day in our lives, we encounter countless new events and information which is in some way affect either us directly or our investments.
If you don’t have a fundamental understanding of certain basic concepts, your ability to understand these new events and information is very limited. And due to the limited circuitry of your mind, there is no chance that you will be able to remember everything just by cramming. After all, there is no concluding bell in the exam of life.
To understand a bit more on the ‘basic concepts’ I just mentioned above, let us turn to Charlie Munger, the vice chairman of Berkshire Hathaway, and the alter ego of Warren Buffett.
Munger introduced these ‘basic concepts’ in his awe inspiring speeches – “The Psychology of Human Misjudgment” and “A Lesson on Elementary, Worldly Wisdom as It Relates to Investment Management & Business”.
In these speeches, Munger talks about the importance of remembering facts via a framework in your mind and not as isolated facts. To get that framework in place, he called those basic concepts as “mental models”.
Munger says…
Well, the first rule is that 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.
Wikipedia defines “mental models” as…
A mental model is an explanation of someone’s thought process about how something works in the real world.
Now, even to a casual observer of worldly activities, it will be obvious that there can’t be two or three models explaining everything in this world.
The models have to be many, otherwise it’s human tendency to bend the truth observed to a point where it is compatible to his world view, however limited it might be.
So it’s imperative for us to have a lot of models to avoid the man with a hammer syndrome, which suggests – “To a man with a hammer, every problem looks like a nail.”
The key is to have lot of tools and not just the hammer.
To get these models, one has to migrate to multiple disciplines like mathematics, biology, psychology etc. It certainly can be a painstaking exercise.
But as luck would have it, most of us have begun our careers after this wonderful work by Charlie Munger.
He has saved us investors a lot of time and frustration which would have been caused from the painstaking journey of finding those mental models by ourselves. The fact that no such work was done before Munger, it makes it even more accomplished for him.
But that doesn’t make it too easy for us either. After all, just knowing the mental models is of very limited use. One has to put the experiences in those mental models to develop a world view which is wide enough to be considered ‘wise’.
There is just one small problem: limited experiences.
We have a limited number of hours, days and years with us to experience the stock markets. And for those of us whose day job is not related to markets, the time spent on understanding then is even lesser.
And for this very reason, for professional and non-professionals alike, it is imperative to have both, direct and vicarious experiences.
Mark Twain once said: “History may not repeat itself but it certainly rhymes.”
The mistakes committed by us today, at a fundamental level, are not very different from the mistakes committed by a lot many super investors in the beginning of their careers.
Hence, it’s only wise to learn from not only our mistakes but the ones committed by these investors who have been generous enough to share a lot of them for the benefit of others.
After all, ‘you don’t have to pee on an electric fence to know not to do it’. You can learn it from ‘3 Idiots’. 
Thus, to learn from our experiences and to inculcate them into the latticework of mental models, I am writing a series of articles.
Every alternate Wednesday, I am going to cover one or few of the mental models given by Munger in his speeches, along with various multiple disciplines which are essential, and explain them here.
From my limited understanding and readings of various thinkers, investors, economists (Taleb, Kahneman, Munger, Soros, Buffett, Prof. Sanjay Bakshi etc.), I would try to bring their experiences and learning in the mental model framework and, if absolutely necessary, add few inputs from my limited experience in the markets so that we can excel in the art of investing.