Decompression and the cost of being interesting

Decompression is the part of the dive in which you have stopped doing the dive and have not yet finished it.

You are at five metres. You have been at five metres for three minutes. You will be at five metres for three more. There is nothing to look at. There is no current. There is no fish. There is, by design, no reason to be there. The body is doing the work the surface dive cannot finish. The dive ends not when the depth ends but when the time at the safety stop ends, and you cannot rush the time, and you cannot skip the time, and you cannot make the time more useful by doing anything other than waiting.

The safety stop is the boring half of every dive that mattered. It is also the part most often skipped, glossed, shortened, or done badly. It is the part that, when done well, is invisible. It is the part that, when done badly, is invisible until many dives later.

I want to write about the safety stop because it is the closest physical analogue I have found to the thing that is hardest about long-horizon investing. Both are forms of waiting in which nothing visibly happens, and in which the temptation to make something happen is exactly the failure mode.

Compounding is decompression. It is the long, dull, undramatic half of investing in which the work has already been done, and the only remaining job is to not interfere.

I have been thinking about this in the form of a question. What does it cost to be interesting.

The interesting portfolio is the one that has a story behind every position. There is the thematic position. There is the contrarian position. There is the small high-conviction position based on the conversation with the friend who told you about the company. There is the rotation out of the boring index and into the interesting names because the interesting names have been working. There is the active management of the position sizes around the news. There is, in the background, a kind of permanent enthusiasm about the portfolio.

The boring portfolio is the one that has no story behind any position other than the original sentence under which it was entered. There is no rotation. There is no rebalancing for a story reason. There is rebalancing on a calendar. There is no permanent enthusiasm. There is, ideally, almost no relationship between the portfolio and the news. The portfolio is sitting at five metres. The portfolio is decompressing.

In long-horizon results, the boring portfolio almost always wins. I am not saying this to be contrarian. I am saying it because it is the consensus result of every long-horizon study I have read, in finance, and in any other domain where compounding is the engine.

What I am working on is why the boring portfolio loses on every individual day. The boring portfolio loses every day, in attention, in social value, in the part of investing that is being a person who is in the markets. The boring portfolio gives you nothing to say to your friends. The boring portfolio gives you nothing to write about. The boring portfolio gives you no story arc. The boring portfolio has no narrative.

The interesting portfolio gives you all of this. It also takes a small toll every day. The toll is the variance you take on by managing positions for reasons that do not survive Monday morning. The toll is the lower compounding rate that the variance produces. The toll is the cost of being interesting.

Across one day, the toll is invisible. The interesting day looks fine. The interesting trade worked. The interesting position is up. The toll is in the curvature, not the slope, and you cannot see curvature across one day. You can only see curvature across years.

This is the part that connects to decompression.

A diver who skips the safety stop comes up fine on that dive. There is no acute punishment for skipping a three-minute stop at five metres after a normal recreational dive. The diver does not get bent. The diver does not even feel it. The decompression sickness produced by skipping safety stops is a long-tail event. It is rare. It is invisible at the per-dive level. It accumulates across dive profiles, across days, across decades.

The safety stop is, for the diver, exactly what the boring portfolio is for the investor. It pays in long-tail protection against an invisible cost. It produces nothing visible in exchange for the time it takes. It is psychologically unsatisfying. It is socially mute. It is, every single time it happens, the wrong moment to do something else.

The diver and the investor face the same choice, in the same form, every day. Wait. Do nothing. Let the work that has already happened finish working.

The hard part is not the rule. The rule is easy. The rule is: wait. The hard part is being the kind of person who can do nothing in public.

I have started thinking about this as the cost of being interesting, because I do not think the problem is that people do not understand compounding. They do. The problem is that compounding asks you to spend large parts of your life looking like a person with no opinion, no story, and no recent action. Compounding asks you to forfeit the part of investing that is socially rewarding.

In diving, the equivalent is the part of the dive in which the dive looks like nothing. The safety stop is the part of the dive the camera does not film. The safety stop is the part of the dive that, if you described it to a non-diver, would make the dive sound less impressive than it was. The safety stop is the part of the dive that the diver standing on the boat at the end cannot tell you anything interesting about.

But the dive included the safety stop, and the boring dive on which the safety stop went well is the dive that does not produce the long-tail event ten years later. The narrative quality of the dive is not what the dive is for. The narrative quality of the portfolio is not what the portfolio is for.

The cost of being interesting is the curvature of the compounding curve.

There is a real place where the analogy breaks, and I have to be careful about it.

The safety stop is a fixed-duration physical process. The body off-gases at a known rate. The required time at five metres is computed from the depth and the time of the dive. The whole problem is well defined and bounded. If you do the safety stop, you are fine. If you skip it across enough dives, you are not.

The boring portfolio is not bounded. There is no calendar that tells you when the compounding is done. The waiting is open-ended. There is no point at which a bell rings and the discipline ends. The diver gets to surface. The investor does not. The investor is in decompression for the duration of the portfolio's existence.

This is the part of the analogy I do not have a clean answer for. The diver gets a small social reward at the end of the dive, on the boat, with the rest of the dive group. The boring investor gets no equivalent. There is no boat. There is no group of fellow boring investors in matching wetsuits clapping each other on the back. The reward for the discipline, if there is one, is decades away, in private, in the form of a number that does not have a story.

The best I have been able to do with this is to import a piece of the dive metaphor into the language I use about the portfolio. The safety stop is not a delay before the dive ends. The safety stop is part of the dive. Compounding is not a delay before the investing pays off. Compounding is the investing. The waiting is the work.

I am writing this essay because the first half of any decision I make in markets is going to be: enter, exit, size, hold. The second half, the bigger half, the half almost nobody writes about, is decompression. It is the months and years between decisions in which nothing should happen. It is the long stretch in which I have to be a person who does not do anything visible, because doing something visible would compound at a slower rate than doing nothing.

The cost of being interesting is the cost of every day in which I cannot bear to be at five metres without something to look at.