The first rule of compounding: never interrupt it unnecessarily.”
― Charlie Munger
As part of his philosophy Munger lived in the same relatively modest California home for 70 years. When asked about living in more luxurious homes, Munger was quoted as stating: “in practically every case, they make the person less happy, not happier.” Munger appreciated the utility of a “basic house” with few advantages over living in an ostentatious home. Munger appreciated modesty stating, “don’t have a lot of envy” and “don’t overspend your income”. In Munger’s last 2023 interview with CNBC he credited his success and longevity to a long-held sense of caution and ability “to avoid all standard ways of failing”.
After 3/4 a century I have yet to learn that compounding isn’t only combination and amalgamation; it is also intensification and magnification. The challenge within this fertile domain is that one mandate (the seeds) grows from within, the other (expansion) grows from without; and, one has equal governance of the other. It is however the latter (intensification) which predominates the customary objective of compounding; that is, the strictly business feature of accumulation for profit. The former (combination) is nothing but the equivalent of a shiny object to a magpie. Nonetheless in spite of the contrary motives of compounding (ultimately the division between acquisition and disposition), the two are inter-dependent; you cannot have one without the other. The trick apparently is knowing when to begin one and to stop the other.
During the Christmas season my late father was preoccupied with financial affairs. I suspect my late mother’s ritual tendency to spend lavishly at Christmastime was to him a moderate disquietude. Under my mother’s profligate domestic governance the household became a resort of undisguised superlatives ranging from ribboned Christmas cards to decorated pine wreaths to boughs of holly and ivy to brilliant ornaments to stunning dinnerware and candelabra to linen embroidered with reindeer and endless accessories which invariably were shiny, red and green and amusing. In short, a collection of ostentation. And while it did not repel or confine my father’s similarly ceremonial ambition of restrained and calculated behaviour (he continued to devote long hours to composition of his Christmas Message on both sides of the foolscap and along the edges if necessary), nor did it diminish my mother’s on-going objectives. After all, she had her own private fortune which she curiously always preserved in her own name and avoided the option of entitlement upon survivorship. Though in fairness my father likewise persisted to maintain his New Brunswick properties in his sole name (and in fact was known subsequently to object to the alternative when offered as an estate planning device to avoid probate fees and the necessity to prove one’s will through the Surrogate Court).
Is it any wonder therefore that, surrounded throughout my lifetime by these competing directions and preferences, I was slow to absorb the meaning of compounding. One parent was disposing; the other, composing. And although they resisted working together – or complained when they did – I confess to having been taken (though maybe not overtaken) by the avoidance of “all standard ways of failing”.
The debilitating feature of Munger’s succinct adage is the term “unnecessarily”. This is especially true for one such as I who is driven by necessity, that amorphous and unfortunate design of essential and ineluctable. In brief, some things are unavoidable, the urgency of which is exaggerated by the ultimate inescapability of death. And if that were not enough there is the further competing paramountcy of the inexorability of fortune (chance) and privilege (serendipity). The argument is laden with controversy.
It is thus – by this circuitous route – that I have at last come to the conclusion of compounding. Albeit a demonstrably tardy acquaintance with the full nutrition of the subject – and while I certainly would not for a moment expropriate to myself any particular talent for doing so – I believe by repeated exercise of the credentials of compounding I have at last come to the point of fruition. I can now gaze upon the future – or indeed the next twenty minutes if the need should arise – with indisputable foresight and constraint. I snap my figures at the temporary allure of my own imagination. I now speedily contradict the disjointed features of logic so lately abused. Instead I have settled upon that fragrant port of familiarity and knowledge, the seat of my past, the lasting connection to my limited future. Gone is the peril of a Ship’s Bell from the Chelsea Clock Company in Massachusetts.
The Chelsea Clock Company is an American clock manufacturing company founded in 1897. Clocks produced by Chelsea Clock Company have been found in the White House, on US Naval Ships, and in homes and offices around the world. The company continues to build and repair clocks at their corporate headquarters in Chelsea, Massachusetts.
I now sound the alarm not merely of time but of purpose. Both are ephemeral, like the chime of a grandfather clock at one o’clock, a simple recognition of fact without disturbing the whole. What remains within my sight and grasp is the West German cabinet of performance, the cherry wood beauty to which I am accustomed, the inheritance from my family. And all this while peering into the increasingly driven particles of snow upon the brave denuded plants in the field, mystifying the river as well.