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1 % Matters

MJG
edited March 2017 in Off-Topic
Hi Guys,

Compounding modest changes not only matters, it matters greatly. Give this article on the enormous impact of frequent compounding a few moments of your valuable time; it is an eye opener:

http://www.wilowallstreet.com/richer/the-eighth-wonder/

As usual, Einstein had it right: "Compounding is a very powerful idea, don’t limit it. Find as many areas of your life to apply it to, and let it show you why Einstein called it the Eight Wonder."

Best Regards

Comments

  • VintageFreakVintageFreak
    How about someone publishes an article about compounding losses?
  • MJG
    Hi VintageFreak,

    Thank you for reading and replying to the article I referenced.

    Someone has published an article showing compound losses. It.'s the same article with exactly the same percentage loss and same timeframe as the positive side of compounding.

    Note the dramatic asymmetry that both considerations generate.

    The positive aspects of compounding are unlimited whereas the negative aspects are definitely bounded assuming no leverage was deployed. Losses are limited to 100% for those investors who choose to not acknowledge a bad investment decision and fail to abandon a sinking ship.

    Indeed, compounding operates in both directions,but not equally. The outcomes are influenced by an increasing or a decreasing impact that is directionally dependent. As the compounding number greatly increases, positive incremental changes approach infinity while negative changes approach zero.

    Best Wishes
  • LewisBraham
    I am generally distrusting of quotes from Einstein or the founding fathers on the Internet(s): skeptics.stackexchange.com/questions/25330/did-einstein-ever-remark-on-compound-interest
  • MJG
    Hi LewisBraham,

    Thanks for reading and responding to my post.

    I couldn't agree more that quotes and more importantly credit attributions are often misinformed. They too frequently go to the more famous member of any team or group.

    Before retiring I was often the embarrassd beneficiary of such misdirected attributions. As team leader I was given credit that rightfully belonged to the inventive, imaginative, and inspired members of my excellent teams. I consistently and diligently tried to correct those misconceptions but often failed. Truthful disclosure doesn't always win the day.

    For reasons that escape me, I can't explain this troublesome tendency. In the financial fields, many faulty investment axioms have the nasty habit of persisting over time with wealth robbing impacts.

    In terms of priority, I consider what is said as much more significant over who said it.

    Best Wishes
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