The Principles of Compounding Wealth
A clear, long-term philosophy for building lasting financial prosperity—rooted in discipline, behavior, and rational decision-making.
1. Think in Decades, Not Days
Time is the engine of compounding.
Compounding works only with time. The crowd obsesses over weeks and quarters. We focus on decades—because enduring wealth is built on patience, not prediction.
Key Practices: Long horizons, ignore noise, fundamentals over narratives.
2. Temperament Beats Tactics
Your behavior determines your returns.
Your edge isn’t finding the right stock. Your edge is behaving rationally while others don’t. Discipline outperforms complexity.
Key Practices: Emotional control, consistent process, avoiding reactive decisions.
3. Own Durable, Resilient Businesses
Resilience compounds quietly.
We focus on companies that survive storms—not companies that win headlines. Durability beats excitement over long horizons.
Key Practices: Strong balance sheets, moats, rational management.
4. Avoid the Irreversible Error
Do no harm—financial edition.
The first rule of compounding is not going backward. We emphasize margin of safety, prudent risk, and avoiding permanent loss of capital.
Key Practices: Downside analysis, low leverage, resilience focus.
5. Simplicity Over Complexity
Clarity outperforms complexity.
Most complexity is noise disguised as insight. Simple ideas, rigorously applied, outperform sophisticated shortcuts.
Key Practices: Clear frameworks, low activity, slow thoughtful decisions.
Supporting Frameworks
These principles are supported by a library of tools designed to improve clarity and reduce error:
- Mental Models — clearer thinking
- Frameworks — repeatable decision structures
- Checklists — protecting against avoidable mistakes
- Definitions — key investing and compounding concepts