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Buffett is applying the compound interest formula for 10% annual return for 86 years. The Rule of 72 tells you that at 10% return, an investment should double every 7.2 yrs. So in 86 years, the Dow should double 11.9 times.

2^12 is 4096. So the Dow should go from 15,000 to 61MM. Which seems unlikely.

Stocks tend to go in stages. Run for a while. Correction. Steady for a while. Run for a while. Plotted long term, it can look like a smooth curve, but closer inspection shows many brief up and down variations.

The implication is invest for the long term, don't worry about short term fluctuations, and hope for the best. Gains are likely, but the numbers are uncertain. You have to take the risk. But the long term trend is clearly upward.
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