The Joys of Compounding Quotes

“What many people see as a three-hundred-page book is often the accumulation of thousands of hours and decades of work. Where else can you get the entire life’s work of someone in the space of a few hours?”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Researchers published a study in 2014 that revealed that approximately a quarter of women and two-thirds of men chose electric shocks over spending time alone with their own thoughts.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“The reading of all good books is like a conversation with the finest minds of past centuries. —René Descartes”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Rich people have small TVs and big libraries. Poor people have small libraries and big TVs. —Zig Ziglar”
― Gautam Baid, Joys Of Compounding: The Passionate Pursuit of Lifelong Learning

“And in the words of Nassim Taleb, “Curiosity is antifragile, like an addiction; magnified by attempts to satisfy it.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see. —Morgan Housel”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead—through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I’m going to die, that is, so I don’t go there.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“One should not blindly chase “buzzing stocks” or get swayed by exciting “stories,” “narratives,” or “futuristic” concepts, because these kinds of businesses usually have unproven track records or they lack profitability and cash flow.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“And if people are yelling, ‘Swing, you bum!’ ignore them.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Doubt is not a pleasant condition, but certainty is absurd. —Voltaire”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“People couldn’t believe that I suddenly made myself a subordinate partner to Warren. But there are people that it’s okay to be a subordinate partner to. I didn’t have the kind of ego that prevented it. There always are people who will be better at something than you are. You have to learn to be a follower before you become a leader. People should learn to play all roles. —Charlie Munger”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Ralph Waldo Emerson said, “Every man I meet is my master in some point, and in that I learn of him.” Learning and accepting help from others creates value far beyond our individual capabilities.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“A lesser-known (and one of my all-time favorite) equation from Albert Einstein rings true: “Ego = 1 / Knowledge. More the knowledge lesser the ego, lesser the knowledge more the ego.” The deeper one dives into any field, the more humble one generally becomes (also known as the Dunning-Kruger effect). By demonstrating intellectual humility and acknowledging what we don’t know, we place ourselves into a beneficial position to learn more—thus, the dawning of wisdom.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“While most of us don’t have the time to read a whole book in one sitting, we do have the time to read 25 pages a day. Reading the right books, even if it’s a few pages a day, is one of the best ways to ensure that you go to bed a little smarter than you woke up.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“In theory, there is no difference between practice and theory. In practice, there is.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“The aim of an argument, or of a discussion, should not be victory, but progress.” Focus on understanding, not on agreement or disagreement. Judgment follows understanding, not vice versa.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Capital discipline. CEOs who are good capital allocators typically offer commentary about returns on investment, on invested capital, and on assets. The strength or weakness of a CEO’s capital discipline is expressed in the commentary about book value or market value.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“As Charlie Munger so beautifully puts it, “The best thing a human being can do is to help another human being know more.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Albert Einstein rings true: “Ego = 1 / Knowledge. More the knowledge lesser the ego, lesser the knowledge more the ego.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Nassim Taleb calls this “subtractive epistemology.” He argues that the greatest contribution to knowledge consists of removing what we think is wrong.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“where a = accumulated future value, p = principal or present value, r = rate of return in percentage terms, and n = number of compounding periods. All too often, management teams focus on the r variable in this equation. They seek instant gratification, with high profit margins and high growth in reported earnings per share (EPS) in the near term, as opposed to initiatives that would lead to a much more valuable business many years down the line. This causes many management teams to pass on investments that would create long-term value but would cause “accounting numbers” to look bad in the short term. Pressure from analysts can inadvertently incentivize companies to make as much money as possible off their present customers to report good quarterly numbers, instead of offering a fair price that creates enduring goodwill and a long-term win–win relationship for all stakeholders. The businesses that buy commodities and sell brands and have strong pricing power (typically depicted by high gross margins) should always remember that possessing pricing power is like having access to a large amount of credit. You may have it in abundance, but you must use it sparingly. Having pricing power doesn’t mean you exercise it right away. Consumer surplus is a great strategy, especially for subscription-based business models in which management should primarily focus on habit formation and making renewals a no-brainer. Most businesses fail to appreciate this delicate trade-off between high short-term profitability and the longevity accorded to the business through disciplined pricing and offering great customer value. The few businesses that do understand this trade-off always display “pain today, gain tomorrow” thinking in their daily decisions.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Look at stocks as part ownership of a business. 2. Look at Mr. Market—volatile stock price fluctuations—as your friend rather than your enemy. View risk as the possibility of permanent loss of purchasing power, and uncertainty as the unpredictability regarding the degree of variability in the possible range of outcomes. 3. Remember the three most important words in investing: “margin of safety.” 4. Evaluate any news item or event only in terms of its impact on (a) future interest rates and (b) the intrinsic value of the business, which is the discounted value of the cash that can be taken out during its remaining life, adjusted for the uncertainty around receiving those cash flows. 5. Think in terms of opportunity costs when evaluating new ideas and keep a very high hurdle rate for incoming investments. Be unreasonable. When you look at a business and get a strong desire from within saying, “I wish I owned this business,” that is the kind of business in which you should be investing. A great investment idea doesn’t need hours to analyze. More often than not, it is love at first sight. 6. Think probabilistically rather than deterministically, because the future is never certain and it is really a set of branching probability streams. At the same time, avoid the risk of ruin, when making decisions, by focusing on consequences rather than just on raw probabilities in isolation. Some risks are just not worth taking, whatever the potential upside may be. 7. Never underestimate the power of incentives in any given situation. 8. When making decisions, involve both the left side of your brain (logic, analysis, and math) and the right side (intuition, creativity, and emotions). 9. Engage in visual thinking, which helps us to better understand complex information, organize our thoughts, and improve our ability to think and communicate. 10. Invert, always invert. You can avoid a lot of pain by visualizing your life after you have lost a lot of money trading or speculating using derivatives or leverage. If the visuals unnerve you, don’t do anything that could get you remotely close to reaching such a situation. 11. Vicariously learn from others throughout life. Embrace everlasting humility to succeed in this endeavor. 12. Embrace the power of long-term compounding. All the great things in life come from compound interest.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Only free people can be honest. Only honest people can be free.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Peter Kaufman summarized Munger’s investing principles (risk, independence, preparation, intellectual humility, analytic rigor, allocation, patience, decisiveness, change, and focus) in a checklist form. This is a must-read for all investors. It’s”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“The best things in life are not things. They are experiences.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“What differentiates successful investors from mediocre ones is passion.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Robert Hagstrom wrote a wonderful book on worldly wisdom entitled Investing: The Last Liberal Art, in”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“To apply first principles thinking to the field of value investing, consider several fundamental truths. Understand and practice the following if you want to become a good investor: 1. Look at stocks as part ownership of a business. 2. Look at Mr. Market—volatile stock price fluctuations—as your friend rather than your enemy. View risk as the possibility of permanent loss of purchasing power, and uncertainty as the unpredictability regarding the degree of variability in the possible range of outcomes. 3. Remember the three most important words in investing: “margin of safety.” 4. Evaluate any news item or event only in terms of its impact on (a) future interest rates and (b) the intrinsic value of the business, which is the discounted value of the cash that can be taken out during its remaining life, adjusted for the uncertainty around receiving those cash flows. 5. Think in terms of opportunity costs when evaluating new ideas and keep a very high hurdle rate for incoming investments. Be unreasonable. When you look at a business and get a strong desire from within saying, “I wish I owned this business,” that is the kind of business in which you should be investing. A great investment idea doesn’t need hours to analyze. More often than not, it is love at first sight. 6. Think probabilistically rather than deterministically, because the future is never certain and it is really a set of branching probability streams. At the same time, avoid the risk of ruin, when making decisions, by focusing on consequences rather than just on raw probabilities in isolation. Some risks are just not worth taking, whatever the potential upside may be. 7. Never underestimate the power of incentives in any given situation. 8. When making decisions, involve both the left side of your brain (logic, analysis, and math) and the right side (intuition, creativity, and emotions). 9. Engage in visual thinking, which helps us to better understand complex information, organize our thoughts, and improve our ability to think and communicate. 10. Invert, always invert. You can avoid a lot of pain by visualizing your life after you have lost a lot of money trading or speculating using derivatives or leverage. If the visuals unnerve you, don’t do anything that could get you remotely close to reaching such a situation. 11. Vicariously learn from others throughout life. Embrace everlasting humility to succeed in this endeavor. 12. Embrace the power of long-term compounding. All the great things in life come from compound interest.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“Knowing the limits of your knowledge is the dawning of wisdom.”
― Gautam Baid, The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated

“It is not that we have a short time to live, but that we waste a lot of it. Life is long enough, and a sufficiently generous amount has been given to us for the highest achievements if it were all well invested. But when it is wasted in heedless luxury and spent on no good activity, we are forced at last by death’s final constraint to realize that it has passed away before we knew it was passing. So it is: we are not given a short life but we make it short, and we are not ill-supplied but wasteful of it. … Life is long if you know how to use it. —Seneca”
― Gautam Baid, Joys Of Compounding: The Passionate Pursuit of Lifelong Learning