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29 - "All Else Equal" Mental Model (Ceteris paribus)

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Release Date: 06/02/2019

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"All Else Equal" Mental Model or Ceteris Paribus - Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode29

Background of Ceteris Paribus Mental Model

  • Often a tool used in economic theory
  • Especially used for explaining concepts such as supply and demand

'All Else Equal' Mental Model applied to Personal Finance

  • Increased income is better than lower income
  • Lower expenses are better than higher expenses
  • The longer you live, the more wealth you'll build

Application to Investing

  • The All Else Equal Mental model can be applied to investing to create Investing First Principles

Next Episodes: A series on First Principles of Investing

  • Uses what learned in this episode and combines it with Episode 9 where we first introduced the concept of First Principles.