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Latticework of Mental Models: Active Reading

The summer season is here and irrespective of the fluctuations in the market temperature, the real mercury is rising everyday. In this sweltering heat, one of the things that brings an instant smile on my face is when I think about how I spent my summer holidays when I was a kid.

This thought sends me down the memory lanes of all those good old days when I played with friends all day, watched favourite cartoon programs on TV, and forgot all about school and homework.

My summer holidays were jam packed with activities like playing carrom, card games, checkers, chess, monopoly, cricket, and most of all – reading comics. I loved reading comic books. By the time I reached 8th standard, I had amassed a collection of more than 300 comic books. I even ran a small library which unfortunately had to be closed down after 10 days of operation.

The lesson learnt – kids like borrowing comics but don’t like returning them. 🙂

Anyways, when I look back at my childhood days, I realize that reading comics was one of the most pleasurable activity. I am sure many of you can relate to me.

When I entered college, those 30 page comic books were replaced by 500 page novels. But one thing remained unchanged about my reading habit. Most of my reading was for pleasure. Except of course college text books which I passionately disliked. For that matter, whenever I read anything which had a potential to challenge my cognitive resources, I forgot most of it by next evening. That explains my belief about studying for exams just a day before.

However, as I started working, my interest increased in the area of personal development, investing and personal finance, I found myself picking business and investing related books every now and then. But my years of poor reading habits – reading only for pleasure – had become a serious roadblock to derive any meaningful benefit out of these new kind of books.

Let me ask you this – how many times it has happened that, after reading a book, you thought you understood the idea but found it difficult to explain it to others? The idea seemed pretty clear in your head but the moment you had to verbalise it you discovered that you didn’t have a proper grasp on the idea at the first place.

As far as I am concerned, this is the kind of reaction people gave me, “You’re telling me that you just finished reading a compelling book but can’t explain the central idea in few sentences?”


I soon learnt that reading for pleasure is one thing, but reading for thought is what separates men from the boys. Reading for pleasure is mostly a passive activity. You let the words roll down like a warm water bath. It’s fun but it shouldn’t be confused with reading for learning.

By pleasure reading, I don’t necessarily mean fiction. I am not looking down upon fiction. Many works of fiction, I am told, are of extraordinary value. By pleasure reading I am referring to any easy to read content which is meant for light entertainment.

And even with non-fiction, much of what we read regularly is about adding facts, rather than increasing understanding.

Active Reading Vs Passive Reading

So how should one read? To answer this, let’s cross over the disciplinary boundary and look at the subject of Literature and see if we can find a mental model to answer this.

The big idea to learn from Literature is called Active Reading or Reading for Thought. It’s the most effective way in which reading can increase our comprehension and understanding of what we read. The idea is to read for triggering stimulating thoughts and not just for accumulating knowledge.

So active reading is a way to read thoughtfully and it’s a skill that needs to be developed deliberately. The benefits of active reading can never be understated. It adds substantially to our working knowledge of various fields and sharpens our skill at critical reading.

You need to learn to analyze a book or any other reading material and critically evaluate its contents. This is important because you have limited time available and you can’t waste it on stuff that’s unworthy or superficial. Critical reading allows you to separate wheat from the chaff, signal from the noise, real information from the confusing (and sometimes toxic) noise.

“We need to develop the skill of discrimination”, writes Robert Hagstrom, in his book Latticework, “learning to select, from the sea of information that threatens to drown us, that which will truly add to our knowledge.”

Imagine how much time you’ll save over a lifetime if you could figure out (in 20-30 minutes) whether a book has value and it is worth your time to study it in depth.

Collecting Vs Understanding

While seeking out new information and ideas from a wide variety of sources is admirable, it doesn’t necessarily give us an advantage. New information does not always equate to new insights.

In fact one key distinction that we need to make is – am I reading for collecting information or for understanding. Here is a simple way, coming from Hagstrom, to differentiate between collecting information and gaining understanding –

Any time you read something and find you can easily ‘get it’, chances are you are just cataloging information. But when you come across a work that makes you stop, think, and reread for clarification, chances are this process is increasing your understanding. Using this as a litmus test, think about how much of the reading you have done over the past year was for information and how much was for increased understanding.

Few years back, I was failing the litmus test consistently. For many years I had been guilty of being merely a collector of new information. It created an illusion of knowledge. I thought I was a good reader. But my shallow reading habit had turned me into a superficial learner.

We need to go one step further than just being informed.

Reading, Thinking, Discovering

The way to increasing understanding of what you read is to take a pause between reading and think about what you have read. Deliberately reflect on what the author is trying to say and how does it connect with your existing knowledge.

The read-think loop leads you to make new connections and discover insights on your own. This way, you aren’t just learning from author but you’re also learning from your own discovery of new ideas. When you re-discover something on your own, it stays with you longer and in a more usable form.

Gaining real understanding is not an easy task, it requires you to work, to think.

I had written about another mental model called Journaling which captures the idea of writing to deepen your understanding about a subject. When you finish a chapter, close the book and write in simple language what you understood in that chapter. By doing that you not only read the book, but make the book your own. Ownership of the book doesn’t come merely by paying money for it. You own the book when the book takes a new form by your interpretations and marginalia.

How To Read A Book

Call it ironic but to learn to read a book effectively, you need to read another book – How To Read A Book by Mortimer J. Adler. It’s an old classic, first published in 1940 but still in print. In his book Adler teaches us how to become what he calls active reader, to move our minds and not just our eyes.

Adler argues that there are four fundamental questions an active reader needs to ask while reading –

  1. What is the book about as a whole?
  2. What is being said in detail?
  3. Is the book true, in whole or part?
  4. What of it?

I am not going to cover Adler’s ideas in detail here as Vishal has already written a wonderful post about this book. You should read that if you haven’t already.

Even though the original concept of Adler’s book is seventy five years old, the lessons it holds for us as investors are timeless.

In Investing

Critical reading is supremely important in investing because the sheer volume of reading material we come across while researching stocks is overwhelming and most of this information is of marginal value.

Thoughtfully choosing investments requires the same mental skills as thoughtfully reading a book. Hagstrom argues –

The mental skill of critical analysis is fundamental to success in investing. Perfecting that skill – developing the mind-set of thoughtful, careful analysis – is intimately connected to the skill of thoughtful, careful reading.

To become a better investor, one has to first become a better receptor of ideas i.e. a better thinker. Because thinking is a skill which invariably makes you better at whatever work you do, including investing in stock market. In fact, there’s a positive feedback loop here.

“Good readers are good thinkers;”, reasons Hagstrom, “good thinkers tend to be great readers and in the process learn to be even better thinkers.”

A better investor, by virtue of being a critical thinker, can easily separate facts from opinions. This ability can save an investor from making expensive mistakes in stock market.

If you don’t know how to think independently, the odds are stacked against you and in all probability you’ll end up losing money in stock market over longer term.


Earning a degree from a prestigious university is no guarantee that we have acquired what Charlie Munger calls worldly wisdom. So how does one cultivate the kind of depth and breadth of knowledge that leads to worldly wisdom?

The answer is simple: we must educate ourselves. The key principles, the truly big ideas, are already written down, waiting for us to discover them and make them our own.

And the way to do that is to read – books, journals, magazines, super-texts, annual reports etc. Of course you can’t read everything ever written. So you need to become a selective reader, a discriminating reader, a reader who knows what to reject and what to incorporate into his or her own latticework of mental models.

This is why the art of reading is so important and we have learnt some important ideas on how to become an effective reader by jumping over to the jurisdiction of Literature.

I would like to close this with an excerpt from the book Diaminds

The ordinary way of thinking about thinking is to ask: What do you think? The answer is usually some belief about the world. But the un-ordinary way of thinking rests with asking, rather, How do you think? The answer is not going to be a belief any more, but rather a description of some way of forming beliefs.

So what one should aim to learn is – How do successful thinkers think? What these super-thinkers know is far less relevant than is commonly assumed. But how they know what they know, and how they interact with the world through their senses is much more important.

And how one thinks is intimately connected with how one reads. I think I have said that twice before. 🙂

Take care and keep learning.

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About the Author

Anshul Khare worked for 12+ years as a Software Architect. He is an avid learner in various disciplines like psychology, philosophy, and spirituality with special interests in human behaviour and value investing. You can connect with Anshul on Twitter.


  1. Raunak Onkar says:

    Good one Anshul. Can relate to a lot that you’ve said here.
    Thanks for sharing.

  2. Really nice article Anshul. Nowadays, I make it a habit to check safalniveshak everyday to see if you have posted any article. I have become your fan. Keep writing.


  3. Hi vishal

    Could you confirm if your financial statement analysis course is active ?

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