Investing: The Greatest Show On Earth

Investing: The Greatest Show On Earth

Mar 9, 2021 by Morgan Housel

Let me share two quick stories that have nothing to do with investing. I want to convince you of something important and overlooked: Investing is a broader field than it looks, and there is so much to learn about it outside of the narrow lens of finance.

The first comes from forests.

Most young tree saplings spend their early decades under the shade of their mother’s canopy. Limited sunlight means they grow slowly. Slow growth leads to dense, hard wood. But something interesting happens if you plant a tree in an open field: free from the shade of bigger trees, the sapling gorges on sunlight and grows fast. Fast growth leads to soft, airy wood that didn’t have time to densify. And soft, airy wood is a breeding ground for fungus, disease, and ultimately a short life. “A tree that grows quickly rots quickly and therefore never has a chance to grow old,” forester Peter Wohlleben writes.

Which is exactly how it works in business and investing, isn’t it?

There’s a graveyard of companies and investors who tried to grow too fast, attempting to reap a decade’s worth of rewards in a year or less, learning the hard way that capitalism doesn’t like it when you try to use a cheat code. Chamath once put it: “The faster you build it, that is the half life. It will get destroyed in the same amount of time.”

Another story, this one from medicine.

In 2013 Harold Varmus, then director of the National Cancer Institute, gave a speech describing how difficult the war on cancer had become. Eradicating cancer – the National Cancer Act’s goal when it was signed in 1971 – seems perpetually distant. Varmus said:

There’s a paradox that we must now honestly confront. Despite the extraordinary progress we’ve made in understanding the underlying defects in cancer cells, we have not succeeded in controlling cancer as a human disease to the extent that I believe is possible.

One of the missing pieces, he said, is that we focus too much on cancer treatment and not enough on cancer prevention. If you wanted to make the next big leg up in the war on cancer, you had to make prevention the top priority.

But prevention is boring, especially compared to the science and prestige of cancer treatments. So even if we know how important it is, it’s hard for smart people to take it seriously.

MIT cancer researcher Robert Weinberg once described it:

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https://www.collaborativefund.com/blog/investing-the-greatest-show-on-earth/