The decisions you make while driving to practice

Through the whole of the 1920s, a young Black man in Ohio was studying banking law that nobody had asked him to study. Norman McGee had gone to a historically Black college in the Jim Crow era. No one was cutting him breaks, no institution was waiting to reward the effort, and the material itself was dry as chalk. He learned it anyway. Then the crash came, then the Depression, and McGee understood something most people around him did not: that foreclosed houses could be bought with nothing down, rented out, and held until the world came back. He held. The money he made there is what bought him a seat in the stockbroker business, where the history books eventually noticed him.

Joseph S. Moore, a historian who spent years reading three centuries of financial advice, calls this the difference between fast time and slow time. Fast time is the crash, the mania, the year everyone remembers. It makes for good film. It is also, he points out, entertainment rather than instruction, a murder mystery where you shout at the screen because you already know who the killer is. Slow time is everything else. Who you marry. What you get addicted to. How good you decide to become at the thing you happen to do. Whether you build a reserve.

Nobody films slow time. There is no scene in it. The work that determines whether you can act when the moment arrives is done in traffic, at a desk, at an hour when it feels entirely pointless and no one is watching. Which is roughly the same reason the most consequential things in a life tend to get the thinnest acknowledgement, something I got at from a different angle in Participation Trophy for the Thing That Was the Whole Thing. The award always goes to the visible part.

McGee did not time the Depression. He was simply finished preparing before it started.

Silver that hadn't left Potosí

A Spanish commander in Flanders needs to pay his soldiers this month. The silver exists, but it is in a mine in the Andes, or on a ship, or on a ship that has not been built. So a Genoese banking family, the Spinola or the Grimaldi, advances the cash today against the fleet that arrives later. Twenty to thirty percent. Reasonable, on the face of it: short-term bridge financing against a known asset.

Arie van Gemeren, who tells long-form financial histories on The Timeless Investor Show, describes what happened next. The crown stopped borrowing against silver that had arrived and started borrowing against silver still in the ground. Then against fleets that hadn't sailed. Then against fleets that might be taken by English privateers. By the 1570s, debt service ate two-thirds of all crown revenue. The richest empire on earth, financed by people who did not own a single mine, and who were charging rent on the gap between when money is needed and when money exists.

That gap is the oldest business in finance and it has never once gone out of fashion. It just changes costume. Read Crypto Confidential: Winning and Losing Millions in the New Frontier of Finance and you will find the identical structure rebuilt by people who were certain they had invented it: capital lent against production that exists only in a projection, at rates that would make a Genoese banker blush, with everyone in the chain assuming the fleet arrives.

Spain did not go bankrupt because it was poor. It went bankrupt because it was rich enough to be lent against.

Ninety-seven years is a long time to be right

Elroy Dimson, who assembled the long-run return data across markets going back more than a century, found the worst case sitting in Austria. Ninety-seven years before equities delivered a cumulative positive return after inflation. Not ninety-seven months. An Austrian who bought stocks as a young man, held with perfect discipline, ignored every voice telling him to sell, never panicked, never traded, and did precisely what every patient investor is instructed to do, died poorer in real terms than he started. His grandson got the payoff.

Andre Perold, the investor and teacher who put this in front of a room of students, made the uncomfortable point plainly: you may get a long run of tails. Japan returned nothing for thirty years. The Anglo-American record of the last century and a half is not the base rate. It is the outlier that happens to be the one everybody studies, because it is the one written in the language most investment books are written in.

Here is what that data actually attacks. It is not an argument against patience. It is an argument against using patience as a substitute for evidence. Oliver Burkeman, writing about the finitude of a human life, notes that patience has a terrible reputation because it looks disturbingly passive. He is defending it. But the defence only holds when waiting is doing something, when the thing you are holding is compounding underneath you and you can point to the mechanism. Most of the time, in most portfolios, in most careers and most marriages, "I'm being patient" is what people say when they have run out of reasons and are unwilling to say so. It is a story told to postpone a verdict.

The Austrian was patient. The market was indifferent.

You have a working life of forty years, maybe fifty. Ninety-seven does not fit inside it. So the question is not whether you can wait, because anyone can wait. The question is whether you have any grounds for believing the thing you're waiting on will resolve inside a human lifespan, and whether you can tell the difference between conviction and the sunk cost of having already announced it.

Most people can't. They find out at the end.

My Ledger — notes on investing, books, and things I'm still figuring out. The Library is where I keep the books that shaped how I think. The Journal is where I work through ideas in public.

Mandelbrot — the private toolbox behind the thinking.

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