Planck’s Principle

It’s easy to underestimate change. The earth keeps rotating and we don’t even feel it. The plants keeps growing, and we almost never could see it with our naked eyes. Because any major changes happens slower, its easy for human brain to assume change hardly occurs.

Planck's Principle
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With recent COVID-19 situations, when we see the valuation of some new Tech companies like Snowflake skyrocketing, older generations find it harder to comprehend. The traditionalists respond with rebellion. It can take a generation for a great new technology to reach its potential because it takes that long for the older holdout generation to move along. This phenomenon is well formulated by Max Planck, “Planck’s principle is the view that scientific change does not occur because individual scientists change their mind, but rather that successive generations of scientists have different views”.

Science always progresses one funeral at a time. But Why does this occur? This is because success plant the seeds of its own destruction through complacency and leverage. We’re more likely to become locked into a single view, unwilling to abandon what’s worked even as the world evolves. And bad times always plants the seeds of turnaround as well. Turnaround is always planted through opportunity and panic-driven problem solving. In Business, strategies works and fails, trends comes and disappears, companies peak and fall, idea flourish and diminish. Stuff evolves, paradigm shifts.

Always changing. Stay Humble, without giving up.

Be wrong; but don’t stay wrong

In Investing, you can’t know everything. But once you understand the most important basics like a target company’s financials, moat (business’ ability to maintain competitive advantages over its competitors), product-market fit, management, risks than you have enough information to make an investing decision.

happy woman in headset sitting in cockpit during helicopter tour
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close up photo of cat s eye
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“An investment in knowledge pays the best interest.” – Benjamin Franklin

Lets dissect this:

  1. Invest in the best high-growth businesses
  2. Pay up for a compounding machine
    Quality > valuation investing
    Invest when management is top notch v. Hold onto winners
  3. Be ruthless in cutting losers
  4. Be wrong; but don’t stay wrong

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