The compound effect
All good things in life come from #compounding, be it knowledge, health and even wealth! The compound effect meaning is exactly what it sounds like. As you may know from finance, compound interest can lead to surprisingly large returns. A penny that doubles in value each day for 31 days ends up being worth over $10 million.
Same concept is applied to Learning. Read something like even 5 pages a day. Write something you like, it does not matter how long it is. If you are in love with photography. Enter the world of podcasts and educational stuff. Watch documentaries along with scientific movies.
“Every day, do something foolish, something creative, and something generous." - Benjamin Graham 1. And according to his most famous student, Warren Buffet, who excelled most at the last 2.
_* Changpeng Zhao_ has become one of the richest people in the world, even without his crypto holdings. The **Annualised Return** is based on the investment of 15M in 2017 and the recent report on his wealth 3. Per the Bloomberg Billionaires Index, his wealth even eclipses that of Satoshi Nakamoto, the mysterious and—to date—anonymous creator of Bitcoin.
CZ’s fortune dwarfs those of many of the crypto industry’s biggest names, including FTX CEO Sam Bankman-Fried 4 (who holds $22.5 billion according to Forbes), and Coinbase CEO Brian Armstrong 5 (who holds $9.6 billion). Reports last year indicate Satoshi’s crypto holdings amount to as many as 1.1 million Bitcoin, worth $45.8 billion at today’s prices.
Small Changes, Big Results
Consistency is the key to achieving and maintaining momentum. Similarly, in our personal life, small changes maintained consistently over time lead to unexpectedly dramatic results. Eating 100 fewer calories per day for an entire year would cause you to lose 4 kg. Spending 30 minutes reading each day could, over a year, lead to dramatic self-improvement and new ideas.
“A daily routine built on good habits and disciplines separates the most successful among us from everyone else. A routine is exceptionally powerful." Darren Hardy, The Compound Effect
James Lawrence did the impossible and conquered 50 grueling Ironmans in 50 days. In 2015, the 36-year-old athlete set out to do the unthinkable: to complete 50 triathlons, in 50 days, in 50 different states. Imagine, 3.86 km of swimming, 180.25 km of cycling and a full 42.20 km marathon run every day for 50 days straight 6.
James broke that record in 2021 during the “Conquer 100” in which he completed 100 consecutive Ironman length triathlons in 100 days. He then completed one more for a total of 101 in 101 consecutive days 7.
Investment checklist
Remember, when you buy a stock, you are buying part of an enterprise. Whether it’s 10 shares of IBM or several million shares. Consider it no different than if you were buying the company in its entirety.
Brian Feroldi (@BrianFeroldi) is the guy to follow if you want to learn how to identify winning stocks with strong competitive advantages and long-term growth potential. He also tweets about personal finance. He invests primarily in biotech, healthcare, and technology stocks. First, decide what kind of investor you want to be. Here’s the checklist Brian uses to evaluate stocks 8:
- Compounding machines?
- Disruptors?
- Dividends?
- Founder-led?
- Growth at a reasonable price?
- High-yield?
- Hypergrowth?
- Low volatility?
- Wide moats?
Determine a maximum score for the positive attributes, start with 100 for simplicity.Determine a maximum negative score for the negative attributes. For example, Brian uses -54 (to counter-balance the positive weightings). Assign the 100 points, giving more weight to the most important attributes. Repeat for attributes that you want to avoid and keep tweaking the checklist until you are happy. Ask yourself: is your system working? and are you beating the market? If not, why? Make changes to your system to make it better ask the #fintwit community.