Consistency
Don't let the lack of immediate results deceive you
A very natural way of navigating our lives is to rely on a feedback loop. We act, and the outcome tells us whether it’s productive. This outcome will serve as the cue for whether we’ll continue in the same way or not.
It’s usually very helpful - in producing ordinary results. But extraordinary results are often found outside of this loop.
This essay is about sometimes avoiding the feedback loop altogether, especially when it comes to dealing with investments.
In order to frame this idea, let’s look at the work of a stonecutter.
Jacob Riis, the great Danish-American journalist once reflected:
“When nothing seems to help, I go back and look at a stonecutter hammering away at his rock perhaps a hundred times without as much as a crack showing in it. Yet at the hundred-and-first blow, it will split in two, and I know it was not the last blow that did it, but all that had gone before.”
The stonecutter teaches us two lessons, at least:
1) It implies that a lack of immediate results is a bad forecast for success down the road.
After a hundred blows, you’ve still received absolutely zero feedback indicating that this is a good idea.
Yes, the graph’s not perfect, but pick a spot anywhere on the blue line between 0-100. It’s not looking good for your output.
"The road to success is dotted with many tempting parking spaces" as Will Rogers would say. That’s every single repetition up until one hundred.
2) When you get results, it’s massive
In a stonecutting process, it may seem like zero progress is being made with each blow. But the invisible accumulation of repetitions is building up somewhere, we just cannot clearly see it. For a long time, there’s no immediate connection between the increase in input and output, which is why grasping the concept of exponential growth is so hard.
But then, after 101 attempts, like a bolt from the blue…
In exponential growth, the initial growth rate is often so small that it's barely noticeable, but once it accelerates, it's like the force of a spring being released.
It directly connects to other investing principles that this newsletter will surely touch upon repeatedly.
Patience.
Deferred gratification.
Power law
Another closely connected concept is the power law, which operates on the same premise of a nonlinear relationship. Small inputs applied over a long time horizon can result in disproportionately large outputs down the line.
This has been the model of Silicon Valley’s success over the last 50 years.
Leverage the time factor to supercharge inputs, and there’s power in the making.
But not only can we leverage time. We can leverage wisdom.
Study and experience
The stonecutter goes on repeatedly, totally absent from the guide of a feedback loop. His persistence, despite the absence of immediate results, demonstrates endurance. He can’t be 100% certain about his work, but he knows a few things about this endurance thing - both from experience and from stonecutters before him.
It’s the same with us - as we go, we gather experience. But we also learn from the best.
We read history. We study people in similar situations. We understand the power of consistency. We learn to trust in the process and believe in the cumulative effect of efforts over time.
An investment can go sideways for years. If we applied a feedback loop with the price in the market as our guide to determine whether it was a good investment or not, we would’ve sold a long time ago, only to see it take off, out of nowhere, without us.
But.
When to redirect
Consistency should not be pursued blindly. If it happens at the expense of necessary adaptation or improvement, one should be highly alert.
Sometimes situations change and it’s necessary to adjust strategies, approaches, or beliefs accordingly. The ability to recognize when flexibility is warranted is such a valuable trait, and this is really important, but it has to be due to something more significant than just a lack of immediate feedback from our actions. Examples would be new crucial information, a trigger to our risk tolerance, essential life changes or new opportunities, etc.
Fail, just not like this
We all have an idea of what failing is like, and I’m usually well positioned in camp ‘keep failing’. But a slightly uncommon way of looking at failing is this: ceasing our efforts, entirely, too soon.
Thomas Edison, who famously made thousands of attempts to create a successful light bulb, said: "Many of life's failures are people who did not realize how close they were to success when they gave up."
Just as we could’ve parked our effort at hit number 100, with no apparent reason other than lack of results, and missed what’s behind number 101, we could also have similarly given up on an investment.