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Second-Level Thinking: What Smart People Use to Outperform


Stashed in: Decisions, Think!

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In his exceptional book, The Most Important Thing, Howard Marks hits on the concept of second-level thinking.

First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted.

Second-level thinkers take into account a lot of what we put into our decision journals. Things like, What is the range of possible outcomes? What’s the probability I’m right? What’s the follow-on? How could I be wrong?

The real difference for me is that first-level thinkers are the people that look for things that are simple, easy, and defendable. Second-level thinkers push harder and don’t accept the first conclusion.

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