Page 58 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

Put that all together: From 1950 to 1990 we gained 296 megabytes. From
1990 through today we gained 100 million megabytes.
COBACOBA

If you were a technology optimist in the 1950s you may have predicted that
practical storage would become 1,000 times larger. Maybe 10,000 times

larger, if you were swinging for the fences. Few would have said “30
million times larger within my lifetime.” But that’s what happened.

The counterintuitive nature of compounding leads even the smartest of us to
overlook its power. In 2004 Bill Gates criticized the new Gmail, wondering
why anyone would need a gigabyte of storage. Author Steven Levy wrote,
“Despite his currency with cutting-edge technologies, his mentality was
anchored in the old paradigm of storage being a commodity that must be
conserved.” You never get accustomed to how quickly things can grow.

The danger here is that when compounding isn’t intuitive we often ignore

its potential and focus on solving problems through other means. Not
because we’re overthinking, but because we rarely stop to consider
compounding potential.

None of the 2,000 books picking apart Buffett’s success are titled This Guy
Has Been Investing Consistently for Three-Quarters of a Century. But we
know that’s the key to the majority of his success. It’s just hard to wrap

your head around that math because it’s not intuitive.

There are books on economic cycles, trading strategies, and sector bets. But
the most powerful and important book should be called Shut Up And Wait.
It’s just one page with a long-term chart of economic growth.

The practical takeaway is that the counterintuitiveness of compounding may
be responsible for the majority of disappointing trades, bad strategies, and
successful investing attempts.

You can’t blame people for devoting all their effort—effort in what they
learn and what they do—to trying to earn the highest investment returns. It
intuitively seems like the best way to get rich.