The Digest #54

Published on December 2, 2020

“Do not revel in great luxury, lest you become impoverished by its expense. Do not become a beggar by feasting with borrowed money, when you have nothing in your purse.”

– Sirach 18:32-33

The First Year

Rational Reflections launched on New Year’s Day 2020 and this post marks the 54th issue. The subscriber count just passed 3,300 a couple of days ago which has definitely exceeded my expectations.

Due to a variety of factors, I am going to have to put the newsletter on hiatus for the next few weeks but I fully intend to resume publishing in January with the usual mix of brief commentary and links to articles and podcasts that I have found interesting.

I do not have any new content this week but I am posting an excerpt from an article I wrote four years ago which I called Getting in on the 50th Floor. It seems as applicable today as it did back in 2016 and I suspect most of you haven’t seen it before.

I hope you have found the content of Rational Reflections interesting and I look forward to sharing new content with you in a few weeks.

Getting In on the 50th Floor

Originally published on November 18, 2016

The process of compounding wealth is best characterized by an interesting paradox:  What is very exciting to observe, in retrospect, over long periods of time can appear to be relatively dreary and dull while actually living through the process.  The cumulative effect of many years of relentless progress will inevitably result in some staggering figures but many investors have trouble visualizing that eventual result when viewing business or their portfolios on a year-to-year or quarter-to-quarter basis.

It is quite common for investors to feel like they need to spot the “next big thing” and to score home runs on a frequent basis in order to compound wealth at an attractive pace but this is not necessarily the case.  We have seen multiple boom and bust cycles over the past twenty years that were driven by excitement over both very real and transformative new technologies as well as many transient fads.  We have seen massive wealth earned by the shareholders of companies such as, Google, and Facebook.  Most value investors, much to their regret, steered clear of these big winners — but also avoided many big losers in the process.

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The Digest #54