John was an eager young investor in New York. He devoured every financial blog, subscribed to stock-picking newsletters, and kept adding more and more strategies to his portfolio—growth stocks, penny stocks, options, even crypto.
But the more he added, the more complicated his portfolio became. His performance was inconsistent, and his stress levels kept rising.
One day, John met his mentor, Michael, a seasoned investor who had built wealth steadily over decades. Michael introduced him to a mental model that changed the way John looked at investing forever: the Inversion Mental Model.
What is the Inversion Mental Model?
The inversion mental model is about solving problems by thinking backwards.
Instead of asking:
“How can I succeed?”
you ask:
“What would cause me to fail—and how do I avoid that?”
This idea was first popularized by the German mathematician Carl Gustav Jacob Jacobi, who advised: “Invert, always invert.”
In the investing world, however, it was Charlie Munger—Warren Buffett’s long-time partner at Berkshire Hathaway—who made the model famous.
Munger put it brilliantly:
“All I want to know is where I’m going to die so I’ll never go there.”
Applied to investing, that means avoiding the paths that lead to failure instead of obsessing over finding the perfect winning strategy.
Subtraction in Investing: Avoiding Mistakes
When John learned about inversion, he stopped obsessing over finding the next hot stock. Instead, he began subtracting the behaviors and decisions that almost guarantee poor results.
- Subtract overpaying: Avoid buying overpriced stocks, no matter how popular they seem.
- Subtract leverage: Debt might magnify returns in good times but can wipe you out in bad times.
- Subtract hype: Ignore fads and stick with businesses you actually understand.
- Subtract overtrading: Every unnecessary trade racks up costs and taxes that eat into long-term gains.
By focusing on subtraction, John built a simpler, stronger portfolio. He wasn’t chasing headlines—he was avoiding landmines.
Why Subtraction Works Better Than Addition in Investing
Most investors think success comes from “adding more”:
- More stocks.
- More strategies.
- More information.
But in reality, more often leads to overcomplication and poor decisions.
Subtraction, on the other hand, removes fragility. It focuses on eliminating errors, protecting capital, and allowing compounding to do its quiet magic over time.
As Warren Buffett likes to remind us with his famous rules:
- Don’t lose money.
- Don’t forget rule number one.
That’s inversion. That’s subtraction.
Final Thoughts
Success in investing doesn’t require genius-level stock picking. It requires discipline. By applying the inversion mental model—asking what to avoid instead of what to add—you make smarter, safer choices.
So the next time you’re thinking about your portfolio, pause and ask yourself:
“What should I subtract?”
Because in investing, subtraction might just be the smartest addition you’ll ever make.
SavvyGrowthPaths 