The first rule of compounding is to never interrupt it unnecessarily. — Charlie Munger
Compounding is a fundamental principle of the universe. It’s not just about finance.
Compounding is most effective when you focus on what won’t change — information or things with a long half-life.
Compounding is Lindy, which makes it a real moat. Hard, but not impossible, to copy high year-over-year growth for one year.
Growth is valued at a premium in all environments.
Consistently undervalued. Not intuitive, no matter how much you understand the power of compounding. We remember losses more than gains (Loss aversion, Tversky and Kahneman).
A result of this is that we overestimate what we can achieve in the short run and underestimate what we can achieve in the long run (Amara’s law)
Happens slowly, then all at once.
On Compounding
Gradually, then suddenly.