Meditations On The 100 Year View


Something was very different this Spring. A once-in-a-century type of event.

Did you notice it? Many centuries ago, the Mayans could have told us.

The vernal equinox came early – March 19th. The earliest in more than a century. Don’t blame carbon emitters or the COVID-19 virus. The earth’s natural rotation means that an equal amount of night and day hit all US time zones earlier in the year than at any time since 1896. 

Sunlight animation

I understand: the early vernal equinox was not on the top of your mind. But I’m trying to zoom out our short-term focus to ponder a bit on the big picture here. The one-hundred-year view. 

Can we talk a little bit about stock market gyrations? And then meditate on interest rates as well? 

In the spirit of meditation, the Judeo-Christian tradition provides a metaphor for stock performance. By contrast, the path of interest rates and bonds, metaphorically, follows the Hindu-Buddhist tradition. I’ll explain what I mean by those metaphors later on, as I understand I’m saying something that sounds a little kooky.

What’s happening in the stock market these past two months is not new. It’s a hundred-year flood that periodically recurs, well, about every ten years. Let’s try to see the larger pattern. 

What’s happening in interest rates, by contrast, is totally wild. Uncharted territory. There is no past precedent for these moves. 

In an interview with the BBC in 2009, Charlie Munger – the Vice Chairman of Berkshire Hathaway and famously Robin to Warren Buffett’s Batman – laid out a concise version of the correct hundred-year view of stocks.

“I think it’s in the nature of long-term shareholding, of the normal vicissitudes of world outcomes, of markets, that the long-term holder has his quoted value of his stocks go down by say 50%,”

Even beyond the utter normalcy of this kind of volatility, Munger says the periodic 50% drops determine who will be rewarded. 

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