The Need To Think Generationally
Voya Corporate leaders trust fund is probably the ultimate example of doing nothing with an active example of almost century of doing nothing. This fund was set up in 1935 with an objective to never adjust the portfolio. Overtime, stocks went in and out of the portfolio due to mergers, acquisitions, or bankruptcy. The fund was initially set up with a mandate of 80 years but has now been extended upto 2100. This portfolio was set up during the great depression, a time when people were just focused on figuring how to put the next meal on the table. You might be wondering "What about the returns"? The fund is so old that nobody knows the returns since 1935. However, from 1970 till today, the fund has average an annualised return of approximately 11%, almost similar to the S&P 500.
Come to think of it, the fund beats the index handsomely because even the index changes its constituitents periodically. The fund does not hold any technology stock even today.
Human attention span has been on a constant decline. You might have heard that our attention span today is less than that of a gold fish.
Average holding period of stocks has been constantly declining. There is an explosion in options trading.
We are consuming the highest amounts of sugar in human history.
We live in a time where a normal person's life is better than that of a king 500 years back yet we are the unhappiest.
There is only one single thing that can fix all our problems - generational thinking.
Great things can be done when one can extend time horizons.
Buffet did not get wealthy because he bought a dying textile company. He got wealthy because he continued compounding for more than 90 years now and counting. The construction of the Bascilica De La Sagrada Familia was started in 1882 and its not yet complete. Despite still being under construction, its probably one of the best man made monunets I have seen in my life. The Yazd temple, in the city of Yazd, south-east of Tehran, houses a 1500 year old zorostrian fire. There are 8 other such flames in the world, one of them being in India in the village of Udvada.
The benefits of such generational thinking is multifold.
First, it helps in rejecting everything that will cause us harm in the long run. It helps us prioritize survival.
Second, you eliminate competition. There is only one Buffet, 8 zorostrian fires, and one Sagrada Familia.
Third, it reduces decision fatigue. The Voya fund didn't have to make any decision at all since 1935. I wrote about this mental model in detail in "Rules can change our lives".
Fourth, when you continue pounding at something for decades, you create a freakishly strong base. Ice age is a result of a summer that does not get warm enough to melt the previous winter's snow which creates a vicious cycle of accumulation of snow that covers the entire earth in thick ice in a few thousand years.
Fifth, you can pass on sacred responsibilities and rituals like the fire thats burning from 1500 years or Coca Cola thats selling the same drink for more than 135 years now.
