Read "latticework" by Hagstorm after reading that lecture on Wordly Wisdom by Munger. I think, there are some problems in applying the mental models as easily as he mentions it- or perhaps its just me. Think about the concept of "surfing"- its almost akin to actually knowing how the future trends will evolve.
One of my own most powerful mental model is that of "non-linear effects"- and I consistently (or atleast try to) conduct thought experiments about companies with this.
To have an idea, consider an amplifier which amplifies a simple wave 100 times... so you apply an electrical signal of 5milli-units ( I am not using any scientific formula or units), the output is 500milli units. You say, wow! I love that
So you ramp up the input, you apply a signal of strngth 500milli units, it ramps up to 5 units and so on...Will it continue ad infinitum?
At one point, the "non-linear effects" of the amplifier will kick in, and say when you apply a 100 unit signal to it, it wont burn itself, the non linearity of the amplifier will make itself far more prominent- you wont get a proper output at the other end.
So this explains in a huge way, or rather puts into perspective , human propensity to draw "linear conclusions" ...
500milli unit -> 5units => 100units -> ?
How does it apply in real life investing, think NOKIA. 5 years back nobody could think NOKIA can be removed from its dominant position in cellphone industry in India, but a search engine developing company released something so totally different that a cellphone company in Finland lost an important share. Thats non linear effect!
Think about competition as the simplest of the non-linear effect- its a kind of a business war, and in business war economic incentives and psychological disincentives interact in strange ways(meaning NOKIA should have realized right at the beginning that Android is a much "sweeter" mobile OS than the existing ones, though it might have its own shortcomings, yet it didnt look twice at it. Or understand that as PC has become a commodity, so will mobile handsets be one day, and being purely handset making company is inviting commoditification. But the management didnt think about it- was it ostrich mentality? I guess we will never know)
So coming back to surfing, we dont know where the next tidal "wave" is going to come from.