#6: Beat the Market Pt. 6 - FAQs, Zero to One, investing powers, motivation

We've reached the final part of A Simple Strategy to Beat the Market (if you haven't done so, read Part 1, Part 2, Part 3, Part 4 and Part 5 first), where I answer some of the Frequently Asked Questions on this strategy.

Thanks for following along so far. One realization on my part is that I started this newsletter at a fairly high level with a systematic investing strategy ("Beat the Market"), but might need to cover some of the basics of wealth creation and investing as well.

In my next few newsletters I'll share my thoughts on how most people can build their wealth (concepts like how to maximize the earn->save->invest cycle, and the levels from financial security to independence to freedom).

Beat the Market (Part 6) - Frequently Asked Questions

In this final part of the series we'll look at some commonly asked questions about the strategy, like transactions costs, when you execute the strategy, outperformance over the S&P 500, and the direction of long term interest rates.

NOTE: This is not financial advice. Results are hypothetical, do not indicate future results, and do not represent returns any investor actually attained. Please read the Disclaimer page for more information.

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel and Blake Masters (Wealth Creation Book Review)

Zero to One is a condensed and updated version of the notes taken by one of his students and co-author, Blake Masters. It covers topics ranging from technology in the age of globalization, monopolies versus competition (hint: monopolies are better), and where true innovation comes from.

Zero to One is chock full of helpful contrarian insights for your life, career and/or startup. It will provoke you, and that’s its aim – to get you to think for yourself. A short but challenging book that needs to be read multiple times to be fully understood.

Key Takeaways

  1. Truly innovative businesses create something new (go from “zero to one”), rather than improve something incrementally (go from “one to n”).
  2. There is no formula for entrepreneurship because every innovation is new and unique. Successful entrepreneurs think about business from first principles instead of formulas.
  3. Monopolists can afford to think about the long-term thanks to monopoly profits. Creative monopolies give customers more choices and add abundance to the world. Avoid competition at all costs.
  4. You can build a monopoly by coming up with a 10x better offering in a niche market and then scaling up from there.
  5. The key in business is generating cash flows in the future, so it’s better to be the last mover rather than the first mover if that means you get to dominate the market and enjoy a long period of monopoly profits.
  6. To create change it’s best to be a “definite optimist”, someone who believes the future will be better if he or she plans and works to make it happen.

Intrigued? Read the full review and top highlights.

Worthwhile reads

Five Investing Powers

"Two things are true: 1) every asset goes through temporary out-of-favor periods, and 2) the world changes, and some things fall permanently out of favor. Industries go through normal cycles, then they die. Investing strategies work for decades, then they stop. Realizing that patience plays the most important role in investing, but it shouldn’t be used blindly in every situation, is so hard." - Morgan Housel

Motivation Is A Myth: How To Be Disciplined By Design

"When striving to be disciplined, the common pitfall is to assume that cultivating discipline means training our willpower. However, calling on insights from psychology and behavioural economics, the best approach lies in subtracting the enemy of discipline: distraction." - Jamie Miles