Compounding Crazy

So how do you prepare?

If the Fed jacks up interest rates, growth assets could tank short-term. Ham-fisted crypto regulation is a legitimate concern. Markets never go straight up. Even though global equities and the Nasdaq have compounded at a roughly 10.5% CAGR and ended up and to the right, there were a lot of bumps along the way. Please don’t mortgage your house and Y... See more

Here’s the rub: just because it’s likely that things will continue to compound doesn’t mean that there’s an obvious or easy way to play it.

Get yourself thusly oriented, jump in, and enjoy. The future is going to be crazier than you can imagine. 

Our own experience makes us stubborn old men about the future. We have lived through past growth rates. We’ve never lived through future growth. Therefore, it’s a lot easier for us to intuit what the future will be like by extrapolating linearly based on what we’ve actually experienced. Yes, things will be different, we all know that, but they’ll b... See more

But what’s wild is that that’s what the current $300 billion in venture funding is investing into -- things funded today might not be public for another decade. The $2 trillion in hypothetical 2031 funding, which would need to return $4.25 trillion per year, would feed into the following decade. By 2041, at the same CAGR, the world’s public equitie... See more

When it comes to history, we think in straight lines. It’s really hard to grasp how much crazier the future is going to get, because most people extrapolate based on the past growth rate, and even the more optimistic and adventurous ones will extrapolate from the present growth rate.

Things could totally fall apart. But if history is a guide, we’ll wake up a decade from now to a market full of much higher numbers than we can reasonably wrap our minds around today. Some of the new market cap will come from today’s public companies, some will come from today’s private unicorns, some will come from existing startups that aren’t ye... See more

Zoom out. As Patrick Collison said when describing his admiration for Jeff Bezos to Ezra Klein:There’s something quite deep about the notion of using time horizons as a competitive advantage, in that you’re simply willing to wait longer than other people and you have an organization that is thusly oriented.