Most of the high earners I know have done everything the personal finance internet told them to. The 401(k) is maxed, the investing is automated, the savings rate is high. They’re doing better than almost everyone they grew up with, and yet they’re starting to suspect the milestone they always assumed they’d hit is out of reach.
Most of the time, the honest answer is they are comfortable but not wealthy. Finance, at its core, is the practice of optimizing returns for a chosen level of risk. Many people have unknowingly made risk/return tradeoffs that don’t fit their goals.
I worked for two years as an equity research analyst on Wall Street. I focused on diagnostics, lab services, and genomics. Wall Street analysts spend their days becoming experts on a small set of companies. They set price targets and ratings (buy/sell/hold). Professional investors completely ignore these ratings and price targets. The only thing they value is getting information no one else has. That’s what had me doing things like cold calling clinics across the country to estimate testing volumes, crawling under a DNA sequencer in a lab to read the serial number, and getting blood drawn three times in one day at competing labs to compare the technology.
After that, I spent a decade in corporate strategy at a Fortune 10 company. The people around me were smart and well-paid. They were also living at their income or exceeding it. Corporate professionals are risk-averse, both in their careers and in their financial lives. High income, high spending, and low risk tolerance create a clear result: comfortable yet trapped. Earning enough to feel successful, not enough to leave.
When I left Wall Street, I believed index funds were the best choice for 99% of individual investors. I saw professionals with every advantage struggle to beat their benchmarks. The math was clear on paper. After ten years and several multi-baggers, my opinion has changed. I’ve started to suspect the 99% number is too high, and that I might be one of the exceptions.
Professional investors have blind spots. Individual investors, with the right training, can exploit these gaps. Analysts silo themselves by sector, so they miss cross-sector trades. Funds have limits, so they often miss small and mid-cap opportunities. They have to manage to a benchmark, which forces them to sell at exactly the wrong times. They must report to investors every quarter. If performance is poor, investors may withdraw funds. This shortens their effective time horizon, regardless of their stated goals. An individual investor with the right training has none of these constraints.
Three things you’ll find here.
How Wall Street Works is the inside view. The difference between theory and practice that I learned during my years working on Wall Street. How I apply that professional training to managing my own portfolio today.
Asymmetric Bets is the analytical framework I now use for almost every decision. Where is the downside limited and the upside open, and how do you position yourself for more of those situations and fewer of the symmetric ones? This is the framework that underlies the difference between financial security vs. wealth.
The AI Edge is the newest and least settled. I’ve been testing AI for nearly a year to see if it can handle real investment research. I’ve learned a lot, often the hard way, about how to make it work for me. I’ll keep writing about it as the tools change and as I figure out what holds up.
