97 - Engineering Mental Models: Why Engineers make good investors

Mental Models discussed in this podcast: Margin of Safety Backup Systems Scale Failure Points Leverage Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode97 Margin of Safety Example of building a bridge Backup Systems Example of loss of power Scale (or Economies of Scale) The volume of a sphere increases faster than the surface area. Therefore it is more efficient for vessels to be larger. Failure Points The more complicated a system is, the greater number of failure points. Leverage You can move large objects with a small amount of force with a sufficiently large lever.  "Give me a large enough lever and I can move the world." Summary: As an investor with an engineering background, I believe I bring a unique perspective to investing in businesses. The mental models: margin of safety, backup systems, scale, failure points, and leverage originate in engineering are useful for investors.