## An example of compound growth (Exponential)

Discussions about Money Management and Risk Control.
CrAcKhOuR
Senior Member
Posts: 32
Joined: Sun May 07, 2006 11:03 am
Location: uk

### An example of compound growth (Exponential)

I know you can only fold a cloth seven times equally in half..

This is therefore, a mathematical hypothetical..

If you fold a cloth napkin- (1/32 of an inch thick)- upon itself once, how thick is it?

Obviously its (1/16 of an inch).

Folded upon itself a second time, its thickness measures (1/8 of an inch).

On the third fold it equals (1/4 of an inch)

On the fourth fold (1/2 of an inch)

And by the fifth fold the thickness is (1 inch)

How many times then, would you need to fold this napkin (compound it), before it reached the moon? (237,305 miles away)

You would reach the moon on the thirty-ninth fold...

By your fiftieth fold, you would reach the moon (and back) 1,179 times...

AFJ Garner
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I think it is Ed Seykota who is fond of pointing out the advantages of having invested \$1 at a compound rate of interest at the birth date of Christ over 2000 years ago.

CrAcKhOuR
Senior Member
Posts: 32
Joined: Sun May 07, 2006 11:03 am
Location: uk

### talking of Mr Seykota..

I met Ed in a London hotel bar when I was eighteen..

He is the most amazing guy you would ever meet seriously, very nice down to earth bloke.

After making a total turkey of myself by way of flattery, we had about a five minute conversation before he had to go and give a two hour lecture.

He said I was very elequantly spoken and part of the new generation?

I never got chance to ask what he meant by this but I reckon he was just being nice.

I asked him what the one piece of advice he would give me for trading would be and he said TRADE as little as possible!!

He wished me well and left.
After the conference he was mobbed by people and I felt a bit sorry for him as you could tell he just wanted to go..

I have always since that day traded as little as possible..

Thanks ED for that very early lesson!

Kobeyashi
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Joined: Fri Oct 26, 2007 10:36 am
Location: London, UK
Hello Crackhour,
Must have been great to meet Ed Seyota.

About the 'trade less' thing, this is something I have noticed with my own trading. When I trade a lot, my performance is always bad. Perhaps it is due to insufficient analysis, or just an impulse. The less I trade the better my trades are, and thankfully my boss is supportive on that front.

Regards,
Kobeyashi

Asamat
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Location: Walldorf, Germany
AFJ Garner wrote:I think it is Ed Seykota who is fond of pointing out the advantages of having invested \$1 at a compound rate of interest at the birth date of Christ over 2000 years ago.
Even though it's clear that this is a mental picture to show the power of compound interest and therefore practical problems are ignored, I always take offence that inflation and taxes are ignored too. IMHO this is not correct, since if the two are taken into account is at least possible to argue that it would have been stupid to invest the buck rather than spend it, since nothing would be left by now.

Regards,
Asamat