The Joys of Compounding

Recently, I had the privileged to complete the above mentioned book. The author narrates beautifully about investing. At the outset he discusses the important of investing in oneself. Berkshire Hathaway is considered the best long term investment in the history of civilization. What do you think kept Berkshire keep growing over such a long time? Primarily because Buffet and Charlie are learning machines, a continuous learning machine over a long period of time. The learning keeps on getting compounded too.

Later in the book, the author explains the importance of being humble. In the present world, where there is so much of uncertainty, people don’t like to be proven wrong. We don’t even consider that our analysis can go the other way. We need to think like a scientist who doesn’t assume anything. Like Darwin, we need to look for objection to our present theory. This eventually helps us to know the loopholes that we missed in our research.

Investing is simple but not easy. Simplicity is the ultimate sophistication. Reminds me of the quote from Albert Einstein, ” Everything should be made as simple as possible, but not simpler.”

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The key to success is delayed gratification. Warren was very skeptical of spending as he used to think a thousand dollar today can be worth of tens of thousands of dollars in ten years down the line. The digital world pushes us more towards the instant gratification. Getting things done in clicks.

Someone is sitting in a shade today because someone planted a tree a long time ago.

Warren Buffet

I used to ignore history during my school days. I learnt from this book the importance of history. The same instances from the past will not be repeated again. However, by reading the past we can understand how people behaved in some scenarios. The behavior of mass rarely change. People are likely to behave the same if the scenarios happens ever again.

Towards the end, he describes the power of compounding in habits. By doing exercise regularly over the long period of time, one can get the compounded result of good healthy. Developing the processes over a long time is the key.

You never know how strong you are until being strong is the only choice you have. – Gautam Baid, author of Joy of Compounding.

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If you are looking to buy the book, you can buy here