[bern4444]

Maybe the years and amounts were chosen this way but at 7% you double your money every 10 years (for those who don't know too, percentages are reversible so at 10% you double your money every 7 years...)

You have 15 doubles between 1884 and 2034.

So you get 2^10 * 2,000,000 or 2,048,000,000 - just over 2 trillion dollars.

I read through parts of the article - I have no idea what point is attempting to be made. It all rambles quite a bit.

[feoren]

> (for those who don't know too, percentages are reversible so at 10% you double your money every 7 years...)

That is not true at all. "Percentages are reversible" means that 30% of 50 is the same as 50% of 30, so 15. It does not mean that anywhere you see a percent related to another number, you can just switch them around.

Easy counterexamples:

At 100% annual interest, you double your money every 1 year. At 1% annual interest, you double your money every 70 years.

At 41% annual interest, you double your money every 2 years. At 2% annual interest, you double your money every 35 years.

[jessetemp]

It's not perfect, but pretty close if you compound monthly. It works with your examples too.

100% interest (compounded monthly) doubles at about 0.75 years, and 0.75 interest doubles at around 100 years.

41% interest doubles at around 1.75 years, and 1.75 interest doubles at around 41 years

[feoren]

Compounded monthly? That's rather cherry-picked. 0.75% interest compounded monthly doubles in 93 years, not 100. You're compounding the left side differently than the right side.

When talking about stock market returns, people are talking about year-over-year returns. There is no "compounded monthly"; 41% interest "compounded monthly" is actually 49.7% interest. Everyone would call that 49.7%, except credit card commercials that are trying to trick you.

The point is that GP presented the %-switching thing like a rule, but it's not. They've confused how that rule is applied.

Edit: I tried compounding every second. The rule works exactly. e is just such a magic number that continuous compounding is exactly the point at which this rule becomes true. So the more often you compound, the better this rule is. Wild. I still don't recommend using it for annual percentages.

[jodrellblank]

> "I read through parts of the article - I have no idea what point is attempting to be made. It all rambles quite a bit."

"""This brings me, at last, to the main purpose of my talk. Large educational implications exist, if my answer to Glotz’s problem is roughly right and you make one more assumption I believe true – that most Ph.D. educators, even psychology professors and business school deans, would not have given the same simple answer I did. And, if I am right in these two ways, this would indicate that our civilization now keeps in place a great many educators who can’t satisfactorily explain Coca-Cola, even in retrospect, and even after watching it closely all their lives. This is not a satisfactory state of affairs.

Moreover – and this result is even more extreme – the brilliant and effect executives who, surrounded by business school and law school graduates, have run the Coca-Cola company with glorious success in recent years, also did not understand elementary psychology well enough to predict and avoid the “New Coke” fiasco, which dangerously threatened their company. That people so talented, surrounded by professional advisers from the best universities, should thus demonstrate a huge gap in their education is also not a satisfactory state of affairs."""

[BeetleB]

7% is adjusted for inflation, BTW. So you should look at what $2M is worth in today's dollars.

[webel0]

I’m bad at reading zeros but isn’t that a bit over 2 billion with a b?