A Lot of Money Advice is Wrong, Part II

Let’s talk about the worst wealth advice you hear repeated over and over.

Last time we touched on this topic we dismantled the nursery rhymes they sing to keep you financially docile: the nonsense about asset allocation by age, paying off all your debt, the fetishization of homeownership, the laughable 10% savings rate, investing in what you “know,” and the 50/30/20 budget that serves as a financial sedative.

Breaking those mental shackles is step one.

It gets you out of the starting blocks. But the race to real wealth, the kind that echoes through generations, is a marathon run at a sprinter’s pace. Read that again. Intensity and consistency are the only thing that will get you to your goal. Systems will help, but you need to become a nuclear reactor of action and you need to be willing to buck the “wise words” you hear around you. Carve your own path.

The track is littered with the bodies of those who followed the “common sense” fed to them by the financial media complex and their well-meaning friends.

All media is a machine designed to sell you products, not to make you rich. Financial media is no different. They want you in their funds, using their advisors, buying their insurance. They want you as a customer for life, slowly accumulating a nest egg that, by the time you retire, might just be enough to afford the good nursing home.

That’s not our game at Wealth Systems, not in my family office, and you shouldn’t play that game either.

Our game is about building engines so powerful they create their own gravity, pulling opportunity and capital into their orbit. My family office doesn’t look for 7% annual returns. We look for 10x potential in everything we do, as a baseline. We look for intelligent leverage. We look for 100x opportunities. We don’t diversify to minimize risk; we concentrate to maximize upside. We don’t just earn income; we build systems that generate, amplify, and protect cash flow across a web of interconnected entities.

If you’re still with me, it means you’ve tasted the poison of mediocrity and you’re ready for the antidote. So buckle up.

We’re about to jettison five more pieces of gilded garbage that are holding you back.

“Diversification is the Only Free Lunch in Investing.”

This is, without a doubt, one of the most insidious phrases ever uttered in finance. It’s a quote from a Nobel laureate, so it’s treated as gospel.

Diversification is the perfect recipe for permanent, irreversible mediocrity.

Let me translate what this advice really means: “Since you don’t have the conviction, insight, or guts to identify a real winner, you should sprinkle your money across hundreds of things, hoping the few that go up will cancel out the many that go down or sideways.” It is the ultimate intellectual cop-out.

It is a strategy of hope, not conviction. You can’t focus your energy. You can’t learn deeply about every inch and fiber of the industry… you just spray and pray.

When my family office looks at a deal (a seed-stage SaaS company, a biotech firm with a compelling patent, etc..) we are not diversifying. We are making a highly concentrated, high-conviction bet. We do the work. We tear apart the tech, grill the founders until they sweat, model out the market until the numbers scream truth. We are looking for asymmetric returns: the potential to lose 1x our money but make 50x or 100x. You don’t find that in the S&P 500.

The “free lunch” of diversification gives you market returns, minus fees. On a good decade, that’s maybe 8-10% a year. After inflation and taxes, you’re barely moving the needle, and if you are going anywhere.. it’s backwards.

You are locked into the fate of the herd, with layers of taxes and fees on top of fees. When the market rips, you get a piece. When it crashes, you go down with the ship, just slightly slower than the guy who was all-in on one stock. Congratulations.

Wealth isn’t built by hedging. It’s built by concentrating force on a single point until it breaks. Think of the great fortunes. Did Andrew Carnegie diversify his steel interests? Did Rockefeller sprinkle his money across a thousand different oil wildcatters? Did Gates or Bezos build their empires by owning a little bit of everything? No. They built their engine, their unfair advantage, and they poured every ounce of capital, energy, and intellect into it. They put all their eggs in one basket, and then they built a fortress of steel around that basket.

Diversification is for preserving wealth once you’ve already made it. It’s what you do when you’re 65 and your primary goal is not to die poor. It is a defensive maneuver. If you are in your 20s, 30s, or 40s, you should be on offense. All offense, all the time. Your “diversification” should be across a handful of high-conviction bets in your own multi-engine system, not across 500 public companies you know nothing about.

Find your edge. Is it in tech? Real estate? Small business operations? Find it, learn it until you know it better than anyone else, and then press your advantage with overwhelming force.

Leave the free lunch for the squirrels.

Lions eat what they kill.

“A Steady Job is the Cornerstone of Financial Security.”

This one feels safe, doesn’t it?

It’s the advice your parents gave you, the path they followed. Go to school, get a good job, climb the ladder, collect your pension. It’s also a gilded cage.

A job, even a high-paying one, is a trap for anyone who wants to build real wealth. Why? Because you are fundamentally trading your time for money. It is an active, linear income stream. You stop working, the money stops. You want to earn more? You have to work more hours, or convince someone to give you a 3% raise that doesn’t even keep up with real-world inflation. You are a cog in someone else’s machine. A well-compensated cog, perhaps. But a cog nonetheless.

The cornerstone of financial security is not a job; it is ownership. It is equity.

When you are an employee, your upside is capped. No matter how brilliant you are, how much value you create for the company, you will only ever see a tiny fraction of it. The rest flows up to the owners, the shareholders. They are the ones with leverage. They own the system that profits from your labor.

I learned this early on Wall Street. I was making great money, but the partners were making fortunes. The difference? I had a salary and a bonus. They had equity. They owned a piece of the machine.

Your “steady job” should be viewed as one of two things:

1. A temporary learning platform where you are paid to acquire skills and a network that you will later leverage in your own ventures.

2. A source of seed capital to fund your actual wealth engines.

That’s it. It is a launchpad, not a destination. Every paycheck you receive from an employer should be triaged. A portion covers your (modest) living expenses. A portion goes into a war chest for emergencies. The the lion’s share must be deployed aggressively into assets you own and control. Your side business. Your angel investments. The assets that work for you while you sleep.

The illusion of security in a job is just that: not real. You can be fired. Your company can be acquired. Your entire industry can be disrupted by a couple of kids in a garage. Your only true security comes from owning the income-producing assets yourself. It comes from building a system where you are at the top of the food chain, not a line item on someone else’s P&L statement.

Stop thinking like an employee. Start thinking like an owner.

Use your job, don’t let it use you.

“Slow and Steady Wins the Race.”

The tortoise and the hare is a wonderful fable for teaching children about perseverance. As a financial strategy, it’s a death sentence.

In the race for wealth, slow and steady gets you lapped. Repeatedly.