Compounding is amazing, isn’t it? Just look at the graph below. It shows the nominal growth of the S&P 500, a prominent US stock market barometer, in the last 150 years. Source: Line chart using Robert Shiller’s S&P 500 data What’s interesting about the chart is that the S&P 500’s growth accelerated over time. That’s exactly how compounding works. Nominal growth starts off slow but increases over time. The chart below of the S&P500 over the last 150 years shows the same thing as above, but in logarithmic form. It gives a clearer picture of the percentage returns of the stock market over the same time frame. Source: Line chart using Robert Shiller’s S&P 500 data The log-chart of the S&P 500 over the past 150 years is a fairly straight line up. What this tells us is that even though the return of US stocks have...