The Fundamental Things Apply, As Time Goes By

Here is your weekly Saturday newsletter, where I share the latest updates from the site, a new idea worth thinking about, few stories you shouldn’t miss, a question from my mailbox, and a question for you. Let’s get started.

On SN This Week

• Be Water, My Friend
• Investing and the Art of Wait
• How Fortunes are Made in Stock Market

A New Idea: The Fundamental Things Apply, As Time Goes By

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In the 1942 American romantic drama film Casablanca, the hero Rick Blaine is faced with many decisions. The film is set at the beginning of the Second World War. People wishing to travel beyond Europe to the Americas to find freedom find themselves in Casablanca in French Morocco, the transit point. Those with money, influence or good fortune to gain the exit visas are able to escape to their new world from here.

The film focuses on Rick, an American expatriate who owns an upscale nightclub and gambling den in Casablanca. He must choose between his love for a woman and helping her and her husband, a Czech leader, escape from Casablanca to continue his fight against the Germans.

The film carries a song titled “As Time Goes By,” which was originally written by Herman Hupfeld in 1931, and sung by Dooley Wilson in this film.

Wilson does not sing the prelude to the original song, which referred to Albert Einstein, and went like this –

This day and age we’re living in
gives cause for apprehension,
With speed and new invention,
and things like third dimension.

Yet, we get a trifle weary,
with Mr. Einstein’s the’ry,
So we must get down to earth,
at times, relax relieve the tension.

No matter what the progress,
or what may yet be proved,
The simple facts of life are such
they cannot be removed…

And then, the first part of the song goes thus –

You must remember this
A kiss is just a kiss, a sigh is just a sigh.
The fundamental things apply
As time goes by.

And when two lovers woo
They still say “I love you”
On that you can rely
No matter what the future brings
As time goes by…

Hear this part again –

The fundamental things apply, as time goes by.

We live in a world that is changing at a rapid pace. But as the song from Casablanca goes “…the fundamental things apply, as time goes by.”

We are faced with many decisions, in our professional, personal, and investing lives. Sometimes, it’s hard to know what to do and how to make the decision that can shape our future. Of course, we can do nothing and simply see what happens or we can decide to take action and follow our own path, and believe that as time goes by, the fundamental things will apply.

Take saving and investing. When time is on your side, the idea of being frugal, saving money and investing it sensibly and with discipline month after month (rupee/dollar cost averaging), year after year, is fundamental to wealth creation. This way, you may not get to invest at the cheapest points, but you won’t be committing your whole savings at the top either.

By investing a fixed sum each month, the number of shares or mutual fund units you acquire depends on the level of the market from month to month. If the market rises, the price of shares or units go up and each investment buys fewer of them. But if the market falls, the price goes down and each of your investment buys more of them. It’s as simple as that.

Now, if you regularly invest a fixed amount over a number of market cycles, the larger number of low cost shares or mutual fund units in your portfolio will lower the average cost. This is how time acts as your friend.

Patience is the key here. Investors almost invariably come out winners if they are patient. Obviously, many individual shares or mutual fund schemes lose money in the long run. But a diversified portfolio will rise on the back of improved economic environment and consequently the performance of underlying stocks of companies.

Now, though sometimes you may get unlucky, most investors get most of the benefits of time diversification within ten years.

Because, as the prelude to the Casablanca song goes, no matter what the progress, or what may yet be proved, the simple facts of life are such they cannot be removed.

And then, as the song itself goes, the fundamental things apply, as time goes by.

You just need to trust the time and not the timing, and then please do not give up too soon.

A Few Stories You Shouldn’t Miss

• The Stock Market is a Fun Casino (Matt Levine)
• The Story of Robinhood (Bona Fide Wealth)
• How to Persuade People to Change Their Behavior (HBR)
• Joe Rogan interviews Naval Ravikant (YouTube)
• As Old as the Hills (Ben Carlson)
• How to Avoid FOMO When Investing (Passive Income)

Thought I’m Meditating On

When nothing seems to help, I go 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 that last blow that did it—but all that had gone before.

~ James Clear, Atomic Habits

A Question for You
Like Martin Luther King Jr. asked, ask yourself today life’s most persistent and urgent question – What are you doing for others?

* * *
That’s about it from me for today.

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Have a great weekend. Stay safe.

With respect,
— Vishal