For the coming year, my goal isn’t to post more. It’s to post better.
I’m not trying to sell you anything here. I just want to be transparent. My best work happens when I have time to go deep. That means real research, sometimes travel, and a lot of verification before I hit publish. If you want to support the work, the offer is right below. And if not, that’s perfectly okay too. I’m still grateful you’re here and taking the time to read.
How Compounding Really Works
Compound interest is the eighth wonder of the world. - Albert Einstein
To show you its true power, I will tell you an old, but true story.
The story is about the inventor of chess. When he presented the game to the King of Persia, in the territory of modern-day Iran, the King was so fascinated that he decided to reward the inventor. He told him he could wish for anything. Gold, land, even a kingdom.
But the man had one modest request.
Just give me rice, he said. One grain on the first square of the chessboard, two on the second, four on the third, and so on. Keep doubling the number of grains on every square, all the way to the last one, the sixty-fourth.
The King was stunned. Rice? Just rice? A bit insulted, he ordered his treasurer to calculate it and pay the man.
Days went by, and the treasurer didn’t return. After seven days, the King called him in and asked why it was taking so long.
The treasurer, pale and shaken, replied that the calculation was a big problem. But the even bigger problem was supply. Neither the whole kingdom, nor the entire world, had enough rice to fulfill that request. Across the entire chessboard, the total number of grains would be more than 18 quintillion.
The first rule of compounding: Never interrupt it unnecessarily - Charlie Munger
Investing is not Squid Game
If you look back at everything Buffett has done since the beginning, it’s not just the magnitude of the returns that is impressive; what is truly impressive is the fact that he has had almost no losing years and very few individual investments that resulted in a permanent loss of capital.
In Squid Game, 456 people enter and only one survives. That’s exactly the kind of game you never want to play with your money. Protect the downside first. Survive. Your job is to stay in the game long enough for compounding to do its work. In the end, the upside will take care of itself — as long as you don’t interrupt compounding.
I learned that the hard way. A few years ago, I went all-in on Carvana, bought the stock at $20, sold at $40… and today it’s at $400. Don’t be like me. Be smart.
And honestly, for everyone’s safety, this should be my last video. If I do another one, Substack will create a new feature: “Auto-unsubscribe after 3 seconds (recommended).” 😄
Happy New Year.
Cheers, Sandro
