Vierordt’s Law

We underestimate long periods of time and overestimate short periods of time.

Nineteenth-century physiologist Karl von Vierordt spent most of his career studying how people perceive time. His biggest finding is the opposite of what you’d assume.

Make someone wait in a room for one minute. After a minute, ask them how long they think they’ve been waiting. They’ll likely tell you something like “three minutes.” Now put them in the room for an hour, and ask them again. They’ll likely tell you something like “40 minutes.”

The longer something drags on the easier it is to forget the earlier moments of your experience. Five minutes can feel long because you remember everything you’ve thought about over those five minutes. An hour can feel short because your mind might have contemplated 17 different topics during that period, 15 of which you don’t recall anymore.

Vierordt had no interest in business, as far as I know. But let me propose the investing version of his law: Compounding is hard because a bad month can feel longer than a good decade.

Words:  Morgan Housel
Original Source: Collaborative Fund