Is compounding your friend?
Intellectual Banter: Episode #9
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What’s up folks!
Welcome to the 2 news members of our tribe. I appreciate you for coming along for the ride 🤝
Today is a simple topic - compounding. Let’s dive right in.
On my mind
99.63% of Warren Buffet’s $81 billion net worth accumulated after his 50th birthday.
Let that sink in.
I’m sure you’ve heard this countless times, but the best things in life come from compounding. And there’s a simple reason it’s repeated often - because it’s true.
Health: a fit body and a calm mind cannot be bought . They must be earned through regular activity, a good diet and a habit of reflection.
Relationships: the most meaningful are those that have been nurtured for years. When you’ve got a code language of your own, with inside jokes on your inside jokes and phrases that would be nonsense to anyone listening.
Wealth: boring ass, non-speculative investing done over decades. That’s what leads to building true, generational wealth.
But, the worst things in life also come from compounding.
Time is a natural law - it’s the greatest amplifier there is. Tirelessly working in the background.
But it doesn’t judge. It amplifies whatever you’re already doing. It’s your friend only if you do things that compound well. If you don’t, well…
Lifestyle diseases “suddenly” crop up. Diabetes, anyone?
Relationships fall apart “all of a sudden”. “What happened to us?!”
And where the fuck did all of my money go?!
Despite knowing this, our primate brains cannot imagine compounding. It lacks the ability to think that far ahead. Because we’re all glorified dopamine junkies, constantly looking for our next fix.
So here’s a picture of rice compounding, for the visually inclined. I have this pasted on my wall, right in front of my face. It acts as my daily reminder.
While there’s nothing glamorous about compounding, its results definitely are spectacular - just ask Mr. Buffet.
Something Dickie wrote
Dickie Bush is the co-creator of Ship 30 for 30, a writing course I took in Jan ‘22.
He’s one of the reasons I started exploring digital writing in the first place (with that, I’m out of “direct” writing mentors)
So how can you deal with your mind’s constant need for dopamine in today’s “1 minute delivery” world? By rewiring your brain to focus on getting dopamine from the process, rather than the outcome.
Before you raise your finger in (a well justified) objection, I agree - it’s easier said than done. But maybe these two “hacks” will help.
Un-chuckle worthy quote
“The greatest shortcoming of the human race is our inability to understand the exponential function.” - Albert Bartlett
As we’ve already seen, compounding is not intuitive. So it’s often overlooked and under-appreciated. As a species, we love to look out for “outlier” events, rather than the simplicity of chipping away at a simple task for years.
So here’s a math class refresher for you:
I thought I wouldn’t make it this week
Overthinking is a persistent pain in my ass.
I sat down to write this email and nothing came to mind. That’s incorrect - ideas came, but I judged them prematurely and harshly (“this is crap!” *furiously mashes backspace*).
But given I was writing about compounding, one (or one hundred) “crap” editions in an unending sequence make no difference. The point is to chip away relentlessly. I’m still clearing my rusty faucet of ideas by writing and sharing regularly.
So, what things are you compounding? More importantly, in which direction?
Till next time,
Adi
PS: As always, suggestions are always welcome. I love banter (duh), so hit that reply button, comment on the website or book a call if you want to chat! I’d love to hear from you.
Evergreen advice! Oftentimes, we don’t stick with endeavors long enough for the compounding effects to kick in. But those that do will handsomely reap the benefits.
A thought provoking write up. Way back even Einstein said - those who understand the power of compounding earn it and those who do not pay it. Compounding is a wonder.