During a fundamental technology shift like the current AI wave, traditional market size analysis is pointless because new markets and behaviors are being created. Investors should de-emphasize TAM and instead bet on founders who have a clear, convicted vision for how the world will change.

Allocate more capital to businesses with a highly predictable future (a narrow "cone of uncertainty"), like Costco. Less predictable, high-upside bets should be smaller positions, as their future has a wider range of possible outcomes. Conviction and certainty should drive allocation size.

Big Tech's sustained outperformance presents a portfolio anomaly. These companies are simultaneously the largest market components and among the fastest-growing, a rare combination that breaks historical patterns where size implies maturity and slower growth, forcing managers to adapt.

Instead of predicting specific companies, identify irreversible macro-trends, or "directional arrows of progress." Examples include the move towards higher energy density (carbohydrates to uranium) or more compact data storage (spinning drives to flash). Investing along these inevitable paths is a powerful strategy.

A more robust diversification strategy involves spreading exposure across assets that behave differently under various macroeconomic environments like inflation, deflation, growth, and contraction. This provides better protection against uncertainty than simply mixing asset classes.

Rather than using today's market capitalization, this novel approach builds a portfolio weighted by the expected future market cap of sectors and economies. It's an attempt to "skate to where the puck is going" based on long-term macro trends.

Technology's share of the economy will grow as it underpins every industry. Conversely, the services sector, which sells human intelligence for repetitive tasks, is fundamentally threatened by AI that can automate processes and commoditize expertise.

An average stock's return is dictated more by external forces than company performance: 40% by the market and 30% by its sector, with only 30% attributable to idiosyncratic factors. This means correctly identifying a winning sector is nearly as valuable as picking the best stock within it.

After years of piling into a few dominant mega-cap tech stocks, large asset managers have reached a point of peak centralization. To generate future growth, they will be forced to allocate capital to different, smaller pockets of the market, potentially signaling a broad market rotation.