Weekly Summary
Quote, Mental Model, Twitter thread, Thoughts, Question
Hey,
Quote
“Ideas come and go, stories stay.”~ Nassim Taleb
Mental Model
Compounding: Charlie Munger and Warren Buffet keep talking about compounding right? Even Einstein said that it is the 8th wonder of the world. Why? This mental model is one of the most powerful ones that come from Math. Let’s look into what it does for us. Let’s say Ramu the local chai wala decides to invest money in an index fund which gets him 11% yearly at the age of 22. His friend sees him make money and decides to join in when he is 35. Ramu stops investing money at 50 but his friend continues investing until he is 65. Who do you think has more money?
Ramu will end up having more money. By the time both of them are 80. Ramu will have more than three times what his friend has. (Ramu has 4,81,56,382 and his friend has 1,25,22,100 this is if they invest 10k initially and keep adding 1k every year.). This is the power of compounding and the importance of starting early with it. Ramu’s friend will never be able to catch up with Ramu.
Compounding doesn’t apply only to money. It applies to sports, health, relationships, knowledge, etc. If you want to read more about compounding read my blog on it.
Twitter Thread
Thoughts
Reading Charlie Munger’s article got me thinking about the importance of all mental models again. The reason I write about them and why it is important for you is that we look at problems through one lens only. We should be looking at it from different perspectives and disciplines. Another thing is that whatever we learn we do not understand. So I guess the importance of applying knowledge to our life is super important. We are going to get nowhere in life if we keep reading without applying it or understanding it. The confidence that we will get from doing this will hurt us and lead us to a misconception that we are knowledgeable. Luke Burgis wrote a good newsletter this week on anti-mimetic ideas. One which stood out for me is reading two interconnected books from disciplines at once as the ideas they’re trying to convey can be learnt together. Another good one is the part where when you go to travel pick things based on sight and not reviews or ratings. This can be done by seeing google earth, etc. I’m sure Luke Burgis does a better job of explaining this so please read his newsletter. Also, Brazil just got knocked out and the favourites of the world cup are now out opening it up for other countries. I have to say my thoughts are very random and disconnected but looking back and reading this is fun for me and I hope you get something out of it even if you don’t I am selfish so I’m happy with what I have learnt in writing down my thoughts.
Question
Yes, this is back. Most of the time we know what we have to do but we don’t do it so the question is:
What do you have to do and why are you not doing it?
Hopefully, you can DO it now and not waste a lot of time thinking. Sometimes action is the only thing missing in your ideas.
That is it for this week if you made it to the end thank you!