It was Valentine’s Day in 1990. The Voyager 1 space probe, which had completed its primary mission, was leaving the Solar System.
At the request of astronomer Carl Sagan, the American space agency NASA commanded Voyager to turn its camera around and take one last photograph of Earth, across a great expanse of space. The photograph that got clicked was from a distance of about 6 billion kilometers (same as 240,000 round trips from Mumbai to New York).
In the photograph, against the vastness of space and among bands of sunlight scattered by the camera’s optics, Earth appears like a ‘pale blue dot’ (that’s what the photograph was named) that is smaller than a pixel.
Anyways, four years later, in 1994, during a public lecture at Cornell University, Sagan presented the photograph to the audience and shared his reflections on the deeper meaning behind it –
…if you look at it, you see a dot. That’s here. That’s home. That’s us. On it, everyone you ever heard of, every human being who ever lived, lived out their lives. The aggregate of all our joys and sufferings, thousands of confident religions, ideologies and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilizations, every king and peasant, every young couple in love, every hopeful child, every mother and father, every inventor and explorer, every teacher of morals, every corrupt politician, every superstar, every supreme leader, every saint and sinner in the history of our species, lived there on a mote of dust, suspended in a sunbeam.
The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that in glory and in triumph they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of the dot on scarcely distinguishable inhabitants of some other corner of the dot. How frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds. Our posturings, our imagined self-importance, the delusion that we have some privileged position in the universe, are challenged by this point of pale light.
Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity – in all this vastness – there is no hint that help will come from elsewhere to save us from ourselves. It is up to us. It’s been said that astronomy is a humbling, and I might add, a character-building experience. To my mind, there is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly and compassionately with one another and to preserve and cherish that pale blue dot, the only home we’ve ever known.
The photograph of the Pale Blue Dot and the above note from Sagan are deeply humbling. Sagan’s note captures the reality that we often neglect as we go about with the stress of daily life, our problems, our concerns. In the larger scheme of things, as he writes, most of what worries us is of relative insignificance.
Astronauts looking down on our Pale Blue Dot where we live have commonly reported that, from space, the sort of troubles and preoccupations that once seemed important evaporate in a wider context.
Let’s ask the astronauts to step aside and bring in the anthropologists. Even they would tell you that our story is but a tiny part of the Earth’s story. Just to put things in perspective, if we take the age of Earth (4.5 billion years) and compress it into one year, the first human walked on this planet just 24 minutes back. Agriculture Revolution happened a minute back, and the Industrial Revolution happened just two seconds ago.
In such a timeline, how do you fit in the fight you had with your boss last Friday, or that angry moment when someone trolled you on Twitter?
Where do you fit in that Black Monday when the biggest holding in your stock portfolio was down 20%, and that Black October when your entire portfolio was down 20%?
Like Sagan says, we are butterflies who flutter for a day and think it is forever. But we have such a habit of zooming in to moments, especially the painful ones, which concern us on a daily basis, that we lose perspective of whether those would really matter in the long run.
Annie Duke, an American professional poker player, has written this nice book titled Thinking in Bets. In one of the passages, she writes –
Imagine you are standing on a narrow strip of concrete on a highway. Behind you is your car, hazard lights flashing. The rear tire on the driver’s side is shredded. It is fully dark, and the drizzle has turned into a cold, heavy downpour. You’ve called roadside assistance, twice, and both times (after long hold times) spoken with operators who’ve told you someone will arrive “as soon as they get there after responding to your call.” You decide to change the tire yourself, only to discover you have no jack. You’re soaked to the skin and cold.
How does it feel? It likely feels like the worst moment of your life. You are likely bemoaning how unlucky you are, wondering why these things always happen to you. You are miserable, and you can’t imagine feeling any other way.
That’s how it feels in the moment. But if the flat tire had happened a year ago, do you think it would have an effect on your happiness today, or your overall happiness over the past year? Not likely. It likely wouldn’t cause your overall happiness to tick up or down. It would probably have faded to a funny story told at cocktail parties.
This passage reminded me of the slide I show at my Value Investing Workshops, asking people which of these three stocks look like the best one in terms of performance –
The answer that comes out obvious is the third stock, which looks like a one-way ride up. Anyways, I then reveal that the first two charts are just small periods in the third stock’s long journey, and I hear a few oho’s and aha’s in the room.
As these charts show, in the long journey of the stock of a high-quality business, the daily short-term jumps – or volatility as they call it in business news – that makes people nervous are non-events. But as Duke writes in her book –
In our decision-making lives, we aren’t that good at taking this kind of perspective – at accessing the past and future to get a better view of how any given moment might fit into the scope of time. It just feels how it feels in the moment and we react to it.
…We make a long-term stock investment because we want it to appreciate over years or decades. Yet there we are, watching a downward tick over a few minutes, consumed by imagining the worst. What’s the volume? Is it heavier than usual? Better check the news stories. Better check the message boards to find out what rumors are circulating.
Consider one of the best-performing stocks globally over a long period of time – Warren Buffett’s Berkshire Hathaway. The stock’s journey over five decades provides some vivid examples of how price randomness in the short term can obscure long-term growth in value.
As Buffett wrote in his 2017 letter, for the last 53 years, the company has built value by reinvesting its earnings and letting compound interest work its magic (20.9% CAGR between 1965 to 2017; or overall gain of 2,404,748%!). Year by year, it has moved forward. Yet Berkshire shares have suffered four truly major dips –
“If owning stocks is a long-term project for you,” warns psychologist Daniel Kahneman, “following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.”
Much of the time, in life and in investing, we would be better off zooming out than zooming in. Rather than being ticker watchers of our own lives, and rather than zooming in and magnifying and thus worrying about the daily volatility in our stocks, we would be better off thinking about our lives and investments as pale dots that are just specks on the canvas of eternity.
Within this, if we keep doing our work well, the daily motions and volatility that we pass by must not worry us therefore.
The Heilbrunn Center for Graham and Dodd Investing created a wonderful video in 2013 titled ‘Legacy of Ben Graham,’ which contains bytes from some of his students on how Graham’s teachings changed their lives.
Marshall Weinberg, one of those students from Graham’s class said that the biggest lesson he drew out of that class was on long-term thinking. Here’s what he said that’s quoted in the above video –
One sentence changed my life…Ben Graham opened the course by saying: ‘If you want to make money in Wall Street you must have the proper psychological attitude. No one expresses it better than Spinoza the philosopher.’
When he said that, I nearly jumped out of my course. What? I suddenly look up, and he said, and I remember exactly what he said: ‘Spinoza said you must look at things in the aspect of eternity.’ And that’s what suddenly hooked me on Ben Graham.
Here was the father of value investing teaching his students about the value of long-term thinking, and that too in terms of eternity. Now, almost seven decades later, we would be paying true homage to Graham if we could view investing through a wide-angle lens, zooming out, taking a long-term perspective, and striving for a long, sustained upward trend in our stocks instead of getting worried about the short-term volatility in their prices.
This may not help us eliminate all mistakes we may make as investors, but it can give us the tool to treat our investments and portfolios just a little bit better.
The idea of the Pale Blue Dot leaves us with innumerable lessons in investing and especially in life, but in my view, none is higher than that which underscores our responsibility to deal more kindly and compassionately with one another and, as Sagan said, “to preserve and cherish that Pale Blue Dot, the only home we’ve ever known.”
Happy eternal living, and happy eternal investing!