In today's email:

• 🧠The 1% Investing Habit That Rewired My Brain

• 📝Tweet of The Week: Simplify your $$$

• 👀In Case You Missed It

🧠The 1% Investing Habit That Rewired My Brain

For the longest time I have been told (we all have) to diversify your money, but what if I told you that's exactly the wrong advice for where you are right now?

The Diversification Myth

When I started learning about money, the number one concept that kept popping up was "diversification." From one investor to another, they all preached the same gospel, spread your money across different investments to reduce risk.

From their POV, diversification is risk prevention. Since your assets are split between different vehicles, if one crashes, you are still protected.

Stocks, bonds, real estate, precious metals, mutual funds, crypto – those are all different asset classes. And if crypto tanks or your rental property falls in value, that's supposedly okay because you have other assets to rely on.

This same concept applies to stock investing. Instead of purchasing individual stocks, most financial advisors suggest buying an index fund.

Their reasoning?

Putting all your money into individual stocks is risky.

What if the business goes under? What if a scandal happens?

So instead of "risking" your money on carefully selected companies, most people will tell you to invest in index funds that represent a bunch of stocks. The most common one is the S&P 500, which tracks the top 500 companies.

The Warren Buffett Wisdom Nobody Tells You

But here is what most financial advisors will not tell you.

Warren Buffett, arguably the greatest investor of all time, has a completely different philosophy on this topic.

Buffett famously said, "Diversification is protection against ignorance. It makes little sense if you know what you're doing."

And if you are a subscriber of mine, then most likely you are on your path to knowing what to do.

Why would one of the richest men in the world contradict conventional financial wisdom? Although he too supports index funds, why is he suggesting this?

Because he understands a critical distinction that most people miss.

The Wealth Building Phase vs. Wealth Preservation Phase

The truth is, there are two distinct phases in your financial journey:

1. The Wealth Building Phase - When you are starting out with little capital (broke people)

2. The Wealth Preservation Phase - When you have already accumulated significant wealth (over $100k in cash)

Most financial advice is actually designed for people in the second phase, those who already have wealth and want to protect it.

But if you are just starting out, this advice could actually slow down your progress dramatically.

I know… this sounds crazy, but stay with me here.

The Critical First $100K

Let me show you why this matters with a concrete example:

With an 8% return (typical for index funds):

• Going from $10K to $100K takes approximately 8 years with $10K annual contributions

• Going from $100K to $200K takes just 5 years

• Going from $900K to $1M takes only 1 year

The first $100K is the hardest milestone, because it takes the longest to reach but unlocks a wealth-building snowball effect.

Consider these numbers:

This explains why the ultra-wealthy can afford to diversify.

When you have $1M, an 8% return generates $80,000 annually.

That’s $80,000 without you lifting a finger!

Build Capital First, Diversify Later

When you have only $10K to start with, your focus should not be on preservation through diversification.

It should be on aggressive capital building.

The 1% did not get wealthy through diversification. They focused intensely on one thing.

One business.

One investment strategy.

One skill.

And once they made thousands, only then did they diversify.

The Real Strategy

Here's how I rewired my brain:

1. Under $100K: Focus on maximum capital growth - invest in yourself, develop high-income skills, start a side hustle, or invest in a few carefully researched individual stocks you truly understand.

2. $100K-$500K: Begin transitioning to a more balanced approach, but still prioritize growth.

3. $500K+: Start implementing preservation strategies through diversification.

The Root Concept: Focus vs. Ignorance

The fundamental principle here is about focus and knowledge. Buffett's anti-diversification stance comes with a critical caveat: "It makes little sense if you know what you are doing."

So, if you do not want to understand how money and businesses work then just stick to index funds.

However, if you spend time analyzing a business or building a business and develop strong conviction, then putting your eggs in one basket makes perfect sense.

But that requires deep knowledge and watching that basket carefully.

Diversification is not bad advice - it is just misapplied advice for people who have not built significant capital yet.

Who This Is For

This strategy is not for everyone. It is for those who are trying to build extraordinary wealth.

If you want extraordinary results, you need to adopt the extraordinary strategies of the 1% - focus intensely on building capital first, then protect it later.

Ask yourself: Are you playing defense with money you do not even have yet? Or are you ready to play offense and build your first $100K?

📝Tweet of The Week: Simplify your $$$

I dislike most personal finance apps.

Even for someone with a great attention span, I get overwhelmed by all the features they have.

I need simplicity.

At the end of the day, I do not need to optimize and track every dollar spent. I am at a point in my life where I want to make sure my money is going in the right direction.

Whether my money is going at 80 mph or 10 mph, I just care about the direction.

When it comes to analyzing my money, I think the most helpful measure is tracking your spend on a daily, weekly, and monthly basis. By analyzing this trend alone, you start to see if your spending is getting out of control.

If I look at my app and notice that one day, one week, or one month is out of the normal then I will know to adjust my spending habits.

By having a simple widget every time I open my phone, it will reinforce this idea of "you are spending too much" or “your spending is on the right path”.

A cool alternative to this would be having an app that shows you how much you earned in a day, week, month. This will force people to get their money up. Force you to find ways to increase your income.

Maybe I will start an app like that. A simple app that shows you how much money you bring in each day, week, and month. Maybe every time you open your phone, and you see the amount of money you havee made, it will motivate you to earn more.

What do you think? Reply to this email with your thoughts.

👀In Case You Missed It

Last week's market plunge due to Trump's massive tariff announcement has suddenly taken a U-turn.

Well...at least for tech companies.

After watching the stock market drop drastically on April 2nd, 2025 when he proposed tariffs as high as 145% on Chinese goods, Trump has had a change of heart. And so did those stock prices 👀.

Friday (4/11/25), his administration quietly announced major exemptions for smartphones, laptops, computer processors, memory chips, and semiconductor equipment.

The big winners?

Tech giants with political connections. Apple's Tim Cook, Nvidia's Jensen Huang, and Dell's Michael Dell can breathe easy knowing their Chinese-made products will not face the harshest penalties.

But also the stock owners are winners too! Although this is a temporary ban, two things are true:

• Stock prices and confidence in tech companies increase

• Tech companies have influence in the political arena (we already knew this though)

Why the sudden change of heart from Trump?

Well...reality.

There simply are not enough American workers (we would need millions) to screw in little screws to make iPhones. Instead their time and efforts is best spent on the design (the highest value in tech), not manufacturing.

This selective approach to tariffs exposes many contradictions and illustrates that life is not fair.

What sucks the most is the thousands of smaller businesses without political clout who still face crushing tariffs. I feel bad for them.

But, that's the way the dice rolls in a capitalistic society.

Trump’s exemptions bring tariffs on these tech products down to 20% for Chinese exports, which is still significant but far below the threatened rates that had consumers imagining $3,500 iPhones (lol 50+ comments).

In this new tariff economy, it is clear that not all industries are treated equally.

But again, when have industries ever been treated equally?

The biggest players with the most political influence get special treatment, while smaller manufacturers and everyday consumers pay the price.