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HomeInvestingGradually, Then Suddenly - The Big Picture

Gradually, Then Suddenly – The Big Picture


 

 

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Incremental changes occur at a very deliberate pace.

Winter snow melts, the runoff water follows gravity downhill, it washes away soil, then clay, and eventually, cuts into the bedrock itself. Winter, Spring, snow, melt, year after year. Hardly visible over decades or even over centuries; after a few millennia, barely the smallest of changes are noticeable. But give it 5 million years, you end up with the Grand Canyon.

Geologic timescales are very different than our usual frames of reference. It’s unlike the pace that Humans experience.

Big changes are obvious, easy to spot, unavoidable even. Fire, the wheel, the printing press, electricity. When massive change occurs, nearly everyone notices. But the intriguing changes are smaller, incremental, occurring without your awareness, beneath our collective notice.

This is how the world changes, slowly, a little bit at a time — but it adds up. In Ernest Hemingway’s “The Sun Also Rises,” a character is asked how he went bankrupt: “Gradually, then suddenly.” Name me a better 3-word phrase that can explain nearly everything. The closest I can think of is Willam Goldman’s “Nobody knows anything.”

It is quite astonishing.

I spent time behind the wheel of a 1967 Corvette last weekend. I know cars, I have been driving for half a century. But it’s easy to forget the incremental changes in automotive technologies that have occurred over time. Ergonomics get better, designs improve, minor problems are fixed, but the change from year to year is hardly noticeable. This new feature, that improved function, a new safety design, a better engineering solution. But spend some time in a car without power steering, ABS brakes, backup cameras, traction control, lane departure warnings, 3 point safety belt, and you quickly realize how spectacular new cars have become.

Gradually, then suddenly. Perhaps that helps to explain why “Nobody knows anything.”

The C2 Corvette is a gorgeous design, sleek, sexy, and surprisingly modern for a 1963-67 car. But the old drum brakes are not great, the manual steering is a beast to use, even the clutch is a bear. It has a lap belt. The car was not even made with a passenger-side mirror! It looks great and sounds fantastic, but driving a 1967 anything makes you realize just how far the technology has advanced in 54 years.

Today’s cars are safe, reliable, efficient.

The same thing happened with investing. Yesterday, I listed 20 ways finance has improved. You probably have not realized we are in a golden age of innovation for investors and financial transactions. All of these little changes over 50 years are hardly noticeable. But your grandfather at 25-years old would not recognize what a bank is today; he probably would not understand your brokerage account or portfolio. It is so futuristic as to be nearly alien.

Changes compound, just as surely as dollars do. A mathematical sleight of hand that also occurs at a near geologic pace. But miraculous all of these changes are. This is how the world changes.

Gradually, then suddenly.” Perhaps that should be the mantra of investors.

 

 

 

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