Good morning.

I find this photo of a curved tunnel to be imminently perfect for today’s update to you.

From your phone calls, emails and text messages the last few months in 2020, the common anguish-filled theme is easily, “Are we near the D*%^ tunnel exit or is it there a long distance more to travel ’til we see daylight again?”

We have COVID.
We have government mandated closures.
We have another government mandated moratorium extension until March 31, 2021. We have supply chain interruptions.
We have possibly higher interest rates coming.

Even this short list is confusing as to determining where in the dark tunnel we currently are….

My answers to your questions have included data points, conclusions based on data points, and more data points.

Until now.

I rediscovered in my readings this past week a point which is even more illuminating, even more reassuring than historical data points.

It’s the investment principle of compounding. Specifically, what Charlie Munger stated long ago as the Most Important Rule of Compounding:

“Never interrupt it unnecessarily.”

Chuck knows what he’s talking about. Markets will rise and fall, new administrations will replace old administrations, new competition will arrive and old competition will die off. But the critical understanding of how to massively grow wealth is by not interrupting compounding unnecessarily.

This means not making emotional knee-jerk decisions. This means not over-reacting to the news media de jour. This means verifying that your assets are still performing….and then leaving them alone to perform.

This is possibly the most difficult activity to do right now–the activity of doing nothing.

Sometimes, it makes sense to sell the assets. But selling out of fear or anxiety will interrupt your compounding and your ability to reach your Financial Freedom.

So until next time, here’s to your sensible and thoughtful inaction.

 

Dan Baldini

Polaris Property Management