The Joys of

Compounding and
Investments

Beowulf Capital
Compounding and Albert Einstein

Compound Interest is the Eighth Wonder of the World. He who

understands it, earns it… he who doesn’t… pays it.. --- Which side of the
Boat are you On?
 The Power of Compounding --
Case Study One Mona Lisa

Francis I of France Paid Leonardo Da Vinci

$20,000 USD for the Mona Lisa in 1540; Mona
Lisa was Insured in 1962 for $100M -- $769M
in Today’s Money

If our Hammock Friend’s Ancestor Put $20,000

in a Bank with Interest of 6% (post tax) If it had
been done, it would be worth $1 Quadrillion
($1,000 Trillion). That is Three Times the
Wealth of the World…
Source: WEB Annual Letter 1962
 The Power of Compounding -- Case
Study Two Christopher Columbus

Queen Isabella paid Christopher Columbus

$30,000 for the Voyage in 1492!!!

If our Hammock Friend’s Ancestor Put $30,000

in a Bank with Interest of 4% (post tax) If it
had been done, it would be worth $4 Trillion
today… If he had earned 6% ????

Source: WEB Annual Letter 1962

The Lessons from the Case Studies

•Compounding is the Eighth Wonder of the World

•What were Key Factors that contributed to the Massive
Wealth Creation Scenario’s Above
•Long Periods at Low Rates of Compounding can Create
Massive Amount of Wealth
•Alternatively, Shorter Compounding Periods at High
Rates can Create Massive Amount of Wealth as Well
•However, a combination of Both can be very Beneficial
•We have no Expertise in Extending Human Life
•We Look for Investments that Compound at a Decent Rate
for Long Periods of Time (5 Years +)
•Look at What the Value Creating Leopards are Doing
•Be Averse of Permanent Loss of Capital
Start Early and Compound Consistently
Value of a $1 Over 25 Years at
Different Compounding Rates
40.0

35.0

30.0

25.0
Series 1

20.0 Series 2

Series 3

Series 4

15.0

10.0

5.0

0.0
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Be Averse to Permanent Loss of
Capital
•Be Averse to Permanent Loss of Capital
•Anything Multiplied by Zero is Zero
•Beware of Leverage
•Understand Risk
•LTCM was a Hedge Fund Compounding at 40% Every
Year Until it Exploded
•40% X 40% X 40% X 40% X 40% X0 %
= 0%
See what the Wealth Creators are
Doing – Example One Markel

Leopards Don’t Change Spots Overnight

See what the Wealth Creators are
Doing – Example Two Berkshire

Leopards Don’t Change Spots Overnight

 Thank You
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balajisridharan@beowulfcapital.com