Welcome back.
There's this great quote from the Chinese philosopher Laosu, who says, quote, nature is not in a hurry, yet everything is accomplished.
So think about giant Sequoias and advanced organisms and towering mountain ranges.
Nature builds the most jaw-dropping features of the universe, and it does so silently.
Without trying to get attention, where growth is almost never visible right now, but is staggering over long periods of time.
It is what I would call quiet compounding, and it's a wonder to watch it happen.
I like the idea of quietly compounding your money, and just like in nature, it's where you'll find the most impressive results.
Every few years, in the media, you'll hear the story of a country pumpkin with no education and a low-wage job who managed to save and compound sometimes literally tens of millions of dollars.
And the story is always the same. They just quietly saved and invested for decades.
That's it. That's all they end up doing. They never bragged, they never flaunted, they never compared themselves to others.
They never worried that their investments trailed their benchmark last quarter.
Their entire financial universe was just contained to the walls of their home, which allowed them to play their own game and be guided by nothing other than their own goals.
That was their own superpower. That was actually their only financial skill, but it's the most powerful one of all.
Look, think about if you, after your first date with a partner, if you had to make every phone call and every text and every conversation with that person, public on social media, or even just with a small group of friends and family.
You know what would happen in this nightmare. People would tell you that you're doing this wrong, that you're doing that too much, that you should say more of this and say less of that and on and on.
And you would be so embarrassed and nervous and influenced by other people's goals and other people's different personalities that you wouldn't be you.
You would just be trying to do what other people tell you to do.
And none of those relationships would work. I think money is very similar.
People become so nervous about what other people think of their lifestyle and their investing decisions that they end up doing one of two things.
Either performing for other people or copying a strategy that might work for somebody else, but is not right for you.
I try to keep in mind that there are two ways to use money.
One is as a tool to live a better life. The other is as a yardstick of success to measure yourself against other people.
The first one is quiet and personal. The second one is loud and performative, but it is it is so obvious which one of those will lead to a happier life.
So quiet compounding to me means four things. Number one, an emphasis on internal versus external benchmarks.
It's when you are always asking, would I be happy with this financial result?
If no one other than me and my family could see it?
And I didn't compare the result to the appearance of other people's success.
I think that's what's really important. It is impossible to win the social comparison game because there's always somebody getting richer faster than you.
And once you stop playing the game, your attention instantly shifts to what makes you and your family happy and fulfilled.
Your attention shifts internally and that makes it so much easier to enjoy your money regardless of how you choose to spend and invest it.
Number two, an acceptance of how different people are and a realization that what works for me might not work for you and vice versa.
Christopher Morley said quote, there is only one success and that's to be able to spend your life in your own way.
So many financial mistakes come from trying to copy people who are different from you.
So be careful who you seek advice from. Be careful who you admire and even be careful who you socialize with.
When you do things quietly, you're less susceptible to people with different goals and personalities in you, telling you that you're doing it.
Number three, a focus on independence over social dunking.
Once you do things quietly, you become selfish in the best way possible, which is using money to benefit your life more than you try to influence other people's perception of your life.
I would rather wake up and be able to do anything I want with whom I want for as long as I want.
Then I would try to impress you with a nice car. Number four, a focus on long-term endurance over short-term comparison.
I think a lot of people want to be long-term investors, but they struggle to actually do it.
And one of the reasons why is that they get caught up in comparison.
Comparison to their peers, to benchmarks, and wondering what other people will think of you if they find out that you lost money in the last six months.
Long-term investing is about being able to absorb manageable damage.
If you can't do that, then you are pushed into the much harder trick of attempting to avoid short-term volatility.
You are only durable when you care more about surviving volatility than you do looking dumb for getting hit by it in the first place.
And instead of trying to look smarter than everyone else, you are just making a quiet bet that things will slowly get better over time.
You are not in a hurry yet everything is accomplished.
That's it for this episode. This episode was brought to you by my friends at public.com and their podcasts The Run Down.
A short podcast about what's going on in the economy and the stock market.
It's quick and to the point just like this podcast.
