Compound Growth & CAGR
Understand why example: +100% then −50% = arithmetic average of +25% but CAGR of 0% (you start at 100, double to 200, halve back to 100).
5
Lessons in this module
CAGR explained
Understand why example: +100% then −50% = arithmetic average of +25% but CAGR of 0% (you start at 100, double to 200, halve back to 100).
The J-curve
Understand why the J-curve's challenge is psychological: early returns feel insignificant, making it tempting to spend or redirect the money.
Time in market beats timing
Understand why the Efficient Market Hypothesis: liquid markets incorporate public information rapidly.
10/20/30-year projections
Understand why non-linearity of compounding: at 12% return, the 30-year result is approximately 5-7× the 10-year result despite only 3× the time.
Famous compound examples
Understand why both Buffett and Munger's core practice: buy quality businesses at reasonable prices and hold for decades.
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