It was Valentine’s Day in 1990. The Voyager 1 spacecraft, which had completed its primary mission, was leaving the Solar System.
At the request of astronomer Carl Sagan, the US space agency NASA ordered Voyager to turn its camera around and take a final picture of Earth across a vast expanse of space. The picture that was clicked was of a distance of about 6 billion kilometers (equivalent to 240,000 round trips from Mumbai to New York).
In the photograph, against the vastness of space and amidst bands of sunlight scattered by the camera’s optics, Earth appears like a ‘light blue dot’ (which was the name of the picture) that is smaller than a pixel. .
Anyway, four years later, in 1994, during a public lecture at Cornell University, Sagan presented the picture to the audience and shared his thoughts on the deeper meaning behind it –
…If you look at it, you see a dot. he is here. That’s home. That’s us. On top of that, every person you ever heard of, every human who ever lived, lived his life. The sum of all our joys and sorrows, thousands of self-confident religions, ideologies and economic principles, every hunter and pastor, every hero and coward, every builder and destroyer of civilizations, every king and farmer, every young couple in love, every hopeful child Every mother and father, every inventor and discoverer, every teacher of morality, every corrupt politician, every superstar, every supreme leader, every saint and sinner in the history of our species, lived there on a speck of dust suspended in a ray of sunshine .
Earth is a very small state in the vast cosmic sphere. Think of the rivers of blood shed by all those generals and emperors to become momentary masters of a fraction of a point in glory and victory. Think of the endless brutality inflicted by the residents of one corner of the dot on the rarely isolated residents of another corner of the dot. How often do they have misunderstandings, how desperate they are to kill each other, how fierce their hatred is. Our postures, our imagined self-importance, the illusion that we have some privileged position in the universe, are challenged by this point of light.
Our planet is a lonely speck in the vast darkness of the universe. In our obscurity – in this vastness – there is no sign that there will be help from anywhere else to protect us from ourselves. It is up to us. It has been said that astronomy is a humbling, and I might add a character-building experience. In my view, there is perhaps no better demonstration of the folly of human conceit than this distant image of our small world. To me, it underscores our responsibility to treat each other more kindly and compassionately, and to preserve and cherish that pale blue dot we have ever known.
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The picture of Pale Blue Dot and the note above from Sagan are extremely polite. Sagan’s note reflects the reality that we often overlook as we go on with the stresses of daily life, our problems, our worries. In the larger scheme of things, as he writes, what worries us most is of relative importance.
Astronauts looking down at our pale blue dot, where we live, have commonly reported that, from space, the kind of hassles and hecticisms that once seemed important vanish into a wider context.
Let’s ask the astronauts to step aside and bring in the anthropologists. They will even tell you that our story is only a small part of the story of Earth. Just to put things into perspective, if we take the age of Earth (4.5 billion years) and compress it to one year, the first human walked on this planet only 24 minutes ago. The Agricultural Revolution happened one minute earlier and the Industrial Revolution two seconds earlier.
So how do you fit into the fight with your boss last Friday or the angry moment when someone trolled you on Twitter?
Where do you fit into that Black Monday when your biggest holdings in your stock portfolio were down 20%, and that Black October when your entire portfolio was down 20%?
Like Sagan says, we’re butterflies that flutter for a day and think it’s forever. But we are so used to zooming in on moments, especially painful ones, that worry us on a daily basis, that we lose perspective as to whether they will really matter in the long run.
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An American professional poker player, Annie Duke, wrote this cool book titled thinking in bets. In one episode she writes-
Imagine that you are standing on a narrow strip of concrete on a highway. Your car is behind you, the danger light flashing. The rear tire on the driver’s side is cracked. It is completely dark, and the drizzle has turned into cold, heavy rain. You’ve called roadside assistance twice, and both times (after a long stop) you’ve spoken to operators who have told you “they’ll be there as soon as they’ve answered your call.” You decide to replace the tire yourself, only to find that you don’t have a jack. You are skin soaked and cold.
How does it feel? This probably sounds like the worst moment of your life. You’re probably wondering how unlucky you are, wondering why these things always happen to you. You are sad, and you can’t imagine feeling any other way.
It seems like this at the moment. But if the flat tire happened a year ago, do you think it will affect your happiness today or your overall happiness over the past year? less likely. It probably won’t cause your overall happiness to tick up or down. It probably would have faded for a funny story told at cocktail parties.
This excerpt reminded me of a slide I showed in my Value Investing Workshop, where people were asked which of these three stocks looked the best in terms of performance –
The answer that stands out clearly is the third stock, which looks like a one-way ride. Anyway, I’ll reveal then that the first two charts are just short periods in the third stock’s long journey, and I hear some oh and aha in the room.
As these charts show, in the long journey of a high-quality business stock, daily short-term jumps—or volatility, as they call it in business news—are non-events that upset people. But as the Duke wrote in his book –
In our decision-making lives, we are not as good at taking this kind of approach – accessing the past and the future to get a better view of how any given moment might fit into the realm of time. It’s just how we feel in the moment and how we react to it.
…we make a long term stock investment because we want it to appreciate over years or decades. Still, we’re ticking down a few minutes, consumed by the worst imaginable. What is Volume? Is it heavier than usual? Better check the news. Better check the message boards to know what rumors are spreading.
Consider one of the best performing stocks globally over the long term – Warren Buffett’s Berkshire Hathaway. A stock’s journey over five decades provides some vivid examples of how price randomness in the short term can obscure long-term increases in value.
As Buffett wrote in his 2017 letter, for the past 53 years, the company has created value by reinvesting its earnings and letting compound interest work its magic (20.9% CAGR between 1965 and 2017; or 2,404,748%). overall benefit!). Year after year it went on and on. Yet Berkshire’s shares have actually suffered four major downtrends —
Psychologist Daniel Kahneman warns, “If owning a stock is a long-term project for you, then constantly following their changes is a very bad idea. It’s the worst possible thing you can do, because people are prone to short-term losses.” If you count your money every day, you will be sad.”
Most of the time, in life and investments, we are better off zooming out than zooming in. Rather than staring at the ticker of our own lives, and instead of zooming in and magnifying and thus worrying about the daily volatility in our stocks, it would be better to go about our lives and investments as those lighter points. Think in what are mere spots on the canvas of eternity.
Within this, if we keep doing our job well, the daily movement and instability we go through should not worry us.
The Heilbrunn Center at Graham & Dodd Investing made an amazing video in 2013 titled ‘Legacy of Ben Graham’, which includes bytes from some of his students about how Graham’s teachings changed their lives.
Marshall Weinberg, one of those students in Graham’s class, said the biggest lesson he took out of that class was on long-term thinking. Here what he said is quoted in the above video –
One sentence changed my life… Ben Graham started the course by saying: ‘If you want to make money on Wall Street you must have the proper psychological attitude. No one can express this better than the philosopher Spinoza.’
When he said so, I almost dropped out of my course. What? I suddenly look up, and he said, and I remember exactly what he said: ‘Spinoza said that you should look at things in the face of eternity.’ And this is what suddenly connected me to Ben Graham.
Here the father of value investing was teaching his students the value of long-term thinking, and that too in the context of eternity. Now, nearly seven decades later, we would be paying true tribute to Graham if we could look at investing through a wide-angle lens, zoom out, take a long-term perspective, and instead look at our stocks. May try for a long, sustained upward trend. Being concerned about the short-term volatility in their prices.
It may not help us overcome all the mistakes we can make as investors, but it can give us the tools to treat our investments and portfolios a little better.
The idea of Pale Blue Dot gives us myriad lessons in investing and especially in life, but in my view, none is greater that underscores our responsibility to treat each other more kindly and compassionately, as Sagan “Preserve and cherish that pale blue dot, it’s the only house we’ve ever known,” he said.
Happy Eternal Life, and Happy Eternal Investment!
- Carl Sagan’s 1994 “Lost” lecture: The Age of Exploration
- Ben Graham’s Legacy
- thinking in bets ~ Annie Duke
The zoom out, baby, zoom out post first appeared on Successful Investing.