Public companies and some regulated businesses are required to issue quarterly financial statements. The challenge in a technological world in which change occurs at an increasingly rapid pace is that our ability to reflect on historical trends becomes overshadowed by the events of the most recent calendar quarter.  To borrow a concept employed by Alan Jacobs, our “temporal bandwidth” (a term originally coined by novelist Thomas Pynchon) becomes compressed (see . 

How do we account for the future potential of a business, when its current expenses result in losses in quarterly financial statements but also represent operational investments in future outcomes?  

The question is especially relevant for investors in new businesses and new technologies.  It is certainly one that is faced by investors in Tesla (full disclosure: I own a small number of Tesla shares) that has reported large losses quarter after quarter. 

At the same time, however, I see more and more Tesla vehicles on the road every day – and so I am left to wonder whether the quarterly losses are representative of a bleak future or whether those losses reflect the cost of building a business with brilliant prospects to define a future trend that is establishing a firm hold in the present.  

Financial reports present past results which may or may not have predictive value for the future. Until we can figure out a means of enhancing the future value of past results, we can look to the innovative potential and trend-defining capabilities of business management. 

Does Tesla founder Elon Musk have those qualities? Looking elsewhere, I was struck by the “Thoughts – Past and Future” of Berkshare Hathaway Vice Chairman Charlie Munger, who described the successful qualities of the company’s CEO Warren Buffett in a shareholder letter (see  Particularly noteworthy are Munger’s descriptions of Buffett as someone who dedicates extensive time to reading and research, who for all time periods “wanted decisions that maximized long-term results, seeking these from decision makers who usually stayed long enough in place to bear the consequences of decisions”, and “who wants to personally contribute…to the spread of wisdom attained.”

If the numbers can’t tell the full story of the future, knowing the people behind the numbers can add some comfort.