Most of an index's returns come from a tiny fraction of its component stocks (e.g., 7% of the Russell 3000). The goal of indexing isn't just diversification; it's a strategy to ensure you own the unpredictable "tail-event" winners, like the next Amazon, that are nearly impossible to identify in advance.

The key to long-term wealth isn't picking the single best investment, but building a portfolio that can survive a wide range of possible futures. Avoiding catastrophic losses is the most critical element for allowing wealth to compound over time, making risk management paramount.

The top 0.1% focus on their primary operating company as the main wealth generator. They view stocks, real estate, and index funds as tools to preserve wealth after it's been made, making it the final stage of investing, not the first.

When a legendary stock picker like Warren Buffett advises a simple 90% S&P 500 index and 10% bonds for his own estate, it's a powerful endorsement. This strategy works for almost everyone, regardless of their financial background, by providing broad market exposure at a low cost.

Data over the last decade shows that 97% of professional stock pickers, despite their resources, fail to beat a basic market index. Ambitious individuals often fall into the trap of thinking they're the exception. The most reliable path to market wealth is patient, consistent investing in low-cost index funds.

During a severe market downturn like 2008, being an index investor can be oddly reassuring. The feeling of alignment—rising and falling with the entire market—can reduce the panic and second-guessing that often accompanies holding concentrated positions, leading to better long-term behavior.

Research by Bessenbinder shows that a tiny fraction of "superstar" companies drive all market gains. Since identifying these winners in advance is nearly impossible, indexing ensures you own them by default, capturing the market's overall growth without the risk of picking the wrong stocks.

While passive market investing is wise, the highest potential returns often come from actively investing capital back into your own business. It is the one asset over which an entrepreneur has the most control and which offers the greatest potential for asymmetrical upside.

Unlike older Western wealth, recent Asian wealth is often highly concentrated in the business that created it. This creates significant correlation risk. A primary role for financial advisors in this market is to act as a trusted counterweight, pushing founder-clients to diversify into different sectors and currencies.