Wealth Is a Birthright

When people enter the temple of the capital market, most of them rush to seek out technical analysis, forecasting models, or elaborate allocation formulas, yet they overlook the most fundamental logic that decides success or failure in investing: mindset. Investing is not merely the accumulation of assets; it is a revolution of the mind, an awakening from the laboring class into the capitalist class.

Wealth Is a Talent You Are Born With

That deeply rooted mindset of scarcity leads most people, in their subconscious, to reject wealth. Wealth is a birthright. To turn this “birthright” into an executable path: start at age 20, invest NT$10,000 a month into 00662, and after 40 years you will hold NT$100 million; and if you stop contributing after retirement and let the remaining funds keep compounding, by age 90 it will balloon to more than NT$2.9 billion! This is the equal gift of compounding that heaven bestows upon every person.

Three hundred US dollars, then 40 years later, figured at 18%, 40 years later he arrives at… NT$547 million, about NT$550 million. So as long as you invest NT$10,000 a month, you have NT$547 million. Is wealth a talent? It is a talent you are born with! But why has no one become wealthy? Because they were never told, or when they were told they did not believe it and did nothing. So you retire with NT$540 million, and keep investing, and after retirement you take out 2% each year to use, so you become a 16% return, not 18%. And your 16% return by the time you are 100 years old is how much? … NT$200 billion, it will reach NT$200 billion. (Video 00536)

If we pull the annualized figure from the 12% baseline up to QQQ’s long-term optimistic scenario of 18%, and extend the span from 40 years to 80, the numbers grow even more staggering: invest NT$10,000 (about US$300) a month at an 18% annualized return, and after 40 years the assets stand at NT$547 million; then, if after retirement you draw out 2% each year by pledging your assets (bringing the net annualized rate down to 16%) and keep compounding for another 40 years until age 100, the assets swell to about NT$200 billion. This is not a guarantee of returns; it is a demonstration, using extremely optimistic parameters, of the power of time multiplied by compounding. Most people do not have NT$200 billion, and usually it is not because they started with too little, but because they interrupted the compounding midway. (This 18% is the optimistic figure from the video; this book’s forward projections are uniformly based on 12%.)

To accelerate compounding, the speed at which your principal gets into position decides victory or defeat. Suppose two people each have NT$300,000 in principal, invest it in an index ETF yielding 12% annualized, and hold for 40 years. The one who takes a personal loan borrows the full NT$300,000 at once and gets it into position in a single lump sum, so the principal is fully in the market from day one, and after 40 years it rolls up to about NT$27.92 million (NT$300,000 × 1.12⁴⁰). The one who does not borrow, and instead squeezes about NT$43,000 a year out of his salary and takes 7 years to invest the same NT$300,000, gets only about NT$20.4 million after 40 years, because on average his principal entered the market several years later. The same NT$300,000 in principal, the same 40 years, the same 12%, and yet, purely because of a difference in “time of entry,” the final values differ by about NT$7.5 million! This is the mathematical power of getting your principal into position first. As long as you have a stable job, repay the principal and interest out of your salary (not out of dividends or by selling stock), and have already kept a cash defensive line, a personal loan is simply an accelerator that brings forward, into a single lump sum, principal that would otherwise only trickle in slowly in the future.

▲ Figure 6-1 A lump sum from a personal loan versus dollar-cost averaging, where getting the principal into position at once means an earlier entry, and the entry time alone opens up a sizable gap in final value

Wealth is a birthright; happiness is a human right. Every single day you must live happily. Do not let one word from someone else, or one event, or a fall in the stock market make you unhappy. (Video 00166)

The vast chasm between rich and poor lies not so much in the degree of effort as in whether one has been “told” the truth. The education system is designed to cultivate stable laborers to serve capitalists. The map handed to the laborer points toward lifelong debt and toil, while what the capitalist holds in his hand is the navigation system called “index investing.” When you recognize, from the bottom of your heart, that you deserve to be wealthy, you gain the ability to break out of the maze and flip your class.

This conviction of “deserving to be wealthy” springs from a scene that brought tears to Teacher James’s eyes.

In 1998 I went to Shaanxi, and on the highway I saw people plowing a field. At first I thought it was oxen plowing, but it turned out to be two brothers pulling the plow — my tears fell. Because in Taiwan we were already mechanized by then, yet in the Chinese countryside they were still plowing with human labor… No matter how hard you work with your muscles, you can never turn your fate around, and studying cannot turn your fate around either. But if you buy QQQ, you immediately, instantly found the 100 most successful companies in the world; the moment you buy in, your venture instantly succeeds. Why walk that other road, the one that may not succeed? (Video 00569)

When Teacher James reached this point his eyes reddened, not out of sentimentality, but because he had seen with his own eyes the reality at the bottom, of “men pulling a plow like oxen,” and had also done the arithmetic on the unfairness of Taiwan’s top engineers drawing less than a third of others’ salaries. CLEC makes its lifetime of teaching completely free and open, and its stated mission is “to eliminate poverty”; the root of it lies in this compassion, to let even those with the fewest resources stand at the capitalist end by means of a single index ETF. Wealth is a birthright means that this right to turn one’s fate around ought to belong to every person; it is only that most people were never told, or, having been told, did not dare to believe it.

Many people cannot hold on for the long haul, because their mathematical grasp of compounding is too linear; they imagine that wealth accumulates on an even keel. But the true nature of compounding is that “it only erupts in the final ten years” — of the total wealth over 40 years, more than 80% is concentrated in the last ten years, surging up all at once, which also explains why 99% of Warren Buffett’s wealth appeared only after he turned 50. If, in the 30th year, an investor sells out of assets because of panic or short-sightedness, he has actively abandoned the enormous dividend, more than 80% of the total, that comes afterward. “Never, ever sell” is not a slogan; it is absolute submission to the steep curve of compounding.

The Seven Levels of Wealth

Teacher James breaks the process of getting rich into seven levels that build upon one another, and every level crossed lifts the scale of assets by one order (Teacher James uses “NT$10 billion” as a vivid unit, but in essence each level magnifies by roughly 2×):

1. You must understand investing — the gulf from not understanding to understanding is the gulf between 90% and 10%.
2. The right target — the index fund QQQ has a long-term return an order of magnitude higher than VOO or VT.
3. Han Xin marshaling his troops (concentrating assets) — pool the funds scattered across insurance, annuities, and time deposits, and concentrate the firepower into the core asset.
4. You must know how to pledge — activate your equity to generate cash flow, avoiding the need to sell stock.
5. Borrow and do not repay — paying off debt is equivalent to giving up low-interest leverage; the rich borrow and do not repay.
6. Understand taxes — Roth Conversion, overseas exemption thresholds, and the tax-free inheritance of Buy, Borrow, Die (never sell — borrow against assets, pass on at stepped-up basis).
7. You must be able to live long — if assets double every 5 years, living 5 years longer directly multiplies the assets by 2.

The seven levels multiplied together are 2 to the 7th power, which equals 128 times. Why does the gap between the small-account saver at the bottom and the great family tree at the top pull apart “exponentially”? It is not luck; it is the mathematical accumulation of this multiplier. Miss any single level, and the final scale of assets shrinks noticeably (each level missed cuts roughly half away); do all seven levels right, and only then are you qualified to enter the highest realm of perpetual family succession.

▲ Figure 6-2 The seven levels of getting rich, where every level is a multiplier, and only by doing each one right in turn do you qualify for perpetual family succession

The Extreme Optimism a Capitalist Must Possess

A successful investor must be an extreme optimist. Looking back over the period since 1929, the US stock market has been through 15 major bear markets, yet the average return in the 5 years following each crash has been above 60%. This kind of optimism is a faith built upon data. To invest in the NASDAQ-100 index is, in essence, to invest in “the Avengers of the tech world.” Once an investor sinks into pessimism, he will want to sell off assets or will not dare to buy in, and so he will miss the explosive surge that follows. Remember, the market’s fluctuations are in fact the investor’s salary, and the bottom only keeps getting propped higher and higher. Stretched over a long enough span of time, the long-term trend of high-quality productive assets always points upward.

This “faith built upon data” is distilled by CLEC into five maxims that appear in every briefing:

Investors are forever extreme optimists!

Investors forever turn toward the sunlight!

The market will ultimately rise!

Investing demands patience!

Wealth is worth the wait!

And Teacher James pushes this optimism to its very extreme:

Do you know how high QQQ will go? It is now over 700, 00662 has already climbed past 120, and I tell you all, add two more zeros to what comes next… QQQ will soon hit 1,000, will soon hit 10,000, and in your lifetime you will see QQQ reach 1 million. Those 100 companies, from the board of directors to the janitor sweeping the floor, are all your employees, and every day they work hard for you, striving on your behalf — this is why our QQQ can grow to 10,000, to 100,000, to 1 million. (Video 00567)

This passage sounds like a wild fantasy, but underneath it lies a plain fact: when you hold the NASDAQ-100, what you have bought is ownership of these 100 strongest enterprises on the planet — from the board of directors to the cleaners, all of them are employees working for you. You need do nothing at all; every day they strive for the sake of their own salaries, bonuses, and share prices, and in the process they push your assets upward along with them. This is precisely why Buffett is Buffett: he simply buys the best productive assets and then lets time and this crowd of employees work for him. So “QQQ will ultimately reach a thousand, ten thousand, a million” is not a precise prophecy about price, but extreme optimism about the fact that “humanity’s top enterprises will keep growing” — you do not need to guess which year it arrives, you need only believe in the direction and hold on without letting go.

The First Principle of Investing

Returning to the “First Principle,” the essence of investing is not a numbers game, but “sharing in the growth of humanity.” One cannot regard modern technology enterprises through the traditional linear logic of “selling toothpaste.” What the tech giants do is a business of computing power and software with “zero marginal cost” — once a product is developed, it can be sold to billions of people worldwide at almost no cost.

Back to the First Principle: Investment is the trajectory of humanity’s growth, it is that simple. And the acceleration of humanity’s growth trajectory relies on technology. (Video 00409)

This terrifying capacity to harvest profit, along with its pricing power, is precisely the source of the driving force behind the long-term rise of share prices. As long as humanity still wants to pursue a more comfortable and more intelligent life, investing in the tech index is the choice most in line with the laws of nature.

Once he understands this point, the investor can cast aside Buffett’s traditional “value investing” mindset. The capitalist is not a “value investor” but a “Progress Investor.” The value investor has to spend enormous amounts of time meticulously calculating a company’s financial statements, discounting cash flows, and computing so-called “intrinsic value,” and once a business model is disrupted, he will cut the position without hesitation. The awakened capitalist, by contrast, never cares what the price-to-earnings ratio of these 100 companies is today, but bets on a grander proposition: human technology will forever keep pushing civilization forward. As long as you believe humanity still wants to live a better life, you buy in and hold on for dear life. What the value investor needs is an extremely difficult ability to analyze financial statements; what the investor needs is merely the absolute conviction to refuse to let go when the market panics.

Breaking the essential difference between Buffett and CLEC down to its very foundation, it can be distilled into a single sentence — “Buffett is a long-term ‘value’ investor; CLEC has only the long term, no value.” The two words “long term” and “value” are each indispensable: Buffett buys when the share price is below a company’s intrinsic value and holds for the long term; but when a company’s business model undergoes a fundamental change (not that the price is too high, but that the fundamentals have gone bad), he decisively sells. His selling of PetroChina and of airline stocks was based on the value-side judgment that “the business environment had changed,” not because the price had risen too much. CLEC is entirely different: what the investor buys is not an individual stock, not a particular industry, but “the sum total of all human technology.” No analyzing financial statements, no computing intrinsic value, no assessing industry prospects — because what you buy is the very thing that is “America and human technology” itself. The only scenario that would trigger CLEC to sell is one: the extinction of human civilization.

The more brutal fact is that Buffett is actually “the world’s wealthiest stock-market laborer” — every day he reads vast quantities of corporate annual reports, industry research, and macroeconomic data, deploying tremendous time and intellect to grow capital. If an ordinary person tries to imitate this path, without his intellect, discipline, information channels, and team support, he will in the end veer into the opposite of frequent trading: picking the wrong individual stocks, mistiming his sells, and getting punished by the market.

Even imitating his lifestyle cannot replicate his achievement. An anecdote circulates in investing circles: a certain fund manager, in order to replicate the “Oracle’s” path to success, insisted on drinking 5 cans of cola and eating hamburgers every day, and over several years not only did his investment performance turn dismal, he first paid the price with his health.

This story points to a cruel fact — Buffett’s ability to withstand this diet rests on atypical longevity genes, decades of high-intensity brain activity (the brain is the body’s most sugar-hungry organ), and a psychological state of working with passion every day; these are all personal conditions that cannot be obtained by copying external behavior. The design intent of the CLEC system is precisely that “you do not need to be Buffett” — outsource the selection of targets to the market-cap-weighted mechanism that automatically weeds out the weak and keeps the strong, free your time from researching individual stocks back to family, your main career, and life, and let compounding run quietly in the background for decades. “We are not Buffett, nor do we need to become Buffett” is the underlying premise that lets this system carry an ordinary person out of the laborer’s identity.

An even sharper fact is that the real secret to Buffett’s ability to beat the index over the long run is not “value investing,” but “disaster fortunes”:

Buffett, rather than calling him a value investor, you would do better to call him a disaster-fortune investor. Today, if there were no market bubbles, if the market did not get cut in half, he would have no chance to beat the index. He would have no bargains to pick up, and he would have no way to beat the index. But every 10 years, every 20 years, one comes along (a crash), and he doubles and doubles and doubles again, and you lose to him… He just waits with cash until everyone has slaughtered their positions on the floor, and he goes in and picks them up, and he beats you. (Video 00564)

Break this operating logic apart, and you find that Buffett’s playbook is entirely impossible for the ordinary person to replicate:

• He must have the ability to “hold a large amount of cash and lose to the broad market for 10 or 20 years” without being forced out by shareholders.
• He must have insurance-company float as an endless stream of low-cost chips.
• He must have the courage and the resources to buy heavily at the bottom of each crash.

No ordinary investor can meet these three premises — an ordinary person who holds cash for 5 years without entering the market would long since have had it eaten away by inflation, and psychologically could not withstand the pressure of FOMO either. The retail investor who tries to imitate Buffett’s “hands full of cash, waiting to bottom-fish a crash” almost always ends up: “waited 10 years, the crash never came, could not resist entering at the high, and then got hit by a crash the moment he entered.” The CLEC system’s iron rule of “buy whenever you have money, always be in the market” is, in essence, a way of walling off this “impossible-to-replicate path” entirely — since the ordinary person cannot become Buffett, then by “always being in the market” he can at least capture the long-term return of the index itself.

Viewed from a longer time dimension, this is no slogan. Research on asset returns spanning two hundred years shows that the real annualized return on stocks is significantly higher than that of cash over the long run; holding cash may look safe, but it often keeps bleeding purchasing power under inflation. Optimism is not an emotion; it is submission to long-term statistical regularities.

In “Capital in the Twenty-First Century,” Thomas Piketty uses a cruel mathematical formula to explain this structure: the rate of return on capital (r) tends over the long run to be higher than the rate of economic growth (g). Take a country whose capital is six times its income: if the average rate of return on capital reaches 5%, then the capitalist class can quietly take away 30% of the nation’s total income distribution. The remaining seventy-percent share is left for tens of millions of laborers to fight over. The growth rate of labor income (g) tends over the long run to fail to catch up with the appreciation rate of capital (r). This is not accidental; it is a structural phenomenon that recurs throughout the history of capitalism. The only solution is to move yourself from the laborer’s position to the capital end, and to hold a top-tier technology index that can compound and grow over the long run; this is the choice that accords with the law of natural gravity.

The Art of Getting Rich by Boarding the Train and Going to Sleep

Many people place blind faith in “timing,” but the data tells the investor: across 25 years of backtesting, whether you buy at the highest point of the month or the lowest point every single time, the annualized return differs by a mere 0.47%! Rather than agonizing over this gap of less than 0.5%, it is better to enter complete “meditative stillness.” If you spend 4.5 hours a day watching the market, the time cost over a year runs as high as NT$210,000. True wisdom is to “loaf around on the road of the index,” to put your money in and then board the train and go to sleep. When the market meets a stock crash, the awakened capitalist regards it as a gift for overtaking on the bend. As long as you stay in the market, time is the most powerful weapon.

To sleep soundly, the investor must have an adequate cash position ready. This cash must be able to cover potential borrowing costs and market turbulence, ensuring that under any extreme conditions he will not be forced to leave the market. It is not ammunition for bottom-fishing, but the survival line that lets a person always stay in the market — as long as the reserve is large enough, he can weather even a harsh market winter and wait for compounding to lift things back up.

The Ultimate Mission of Financial Freedom

The intelligent investor must stay highly vigilant toward grand narratives of the “collective good” kind. In financial history, when a system attempts to legally erode individual wealth, the excuse most often used is “sharing the hardship together” or “the greater picture comes first.” Yet true freedom and prosperity are built upon absolute respect for individual property rights. Any argument that demands an investor sacrifice his lawful individual rights to achieve some illusory collective is, in essence, a form of moral coercion. Remember, the growth of wealth is for the sake of realizing individual independence and freedom; it is never an ATM that any system may draw from at will.

The most substantive definition of freedom is possessing the security of “not having to worry that your property will be confiscated.” If, when you go to sleep at night, you are still worrying that your account will be frozen or that the trading rules will be changed without warning, then no matter how large your assets, they cannot be called freedom.

This is precisely the underlying logic of insisting on allocating the core assets to America’s top technology index: what you invest in is not only the profit-making ability of enterprises, but the solid, transparent legal system behind them that protects private property rights. Rather than relying on the goodwill of some leader, it is better to place your wealth in a market where the rule of law is mature and power is held in check — letting the institution itself become the strongest safe.

When the accumulation of assets reaches its endpoint, a deeper question arises: what, in the end, is a person wealthy for? The true meaning of financial freedom is possessing “the right to walk away from an environment you dislike at any time.” A person worth US$5 million who endures a painful environment for the sake of a little bonus is like someone driving a Ferrari yet taking a muddy road with a blown tire in order to save a few dollars in tolls. Money is a tool, not a goal. When you no longer bow down for a bowl of rice, what matters next is to put your time back into the places that matter most: health, family, continuous learning, and the long-term execution of discipline.

As medical technology advances, living to 150 is no longer a distant fantasy. When both lifespan and the compounding period are stretched out at the same time, a 60-year investment plan is no longer a far-off piece of planning, but a basic piece of survival equipment.

Hidden here is a fatal crisis: the mismatch between wealth and the mind. When tens of millions, or even over a hundred million, in funds suddenly pour into an account, if one’s cognition and vision cannot keep up, this wealth will not bring freedom, but will instead crush its holder, who in the end often burns through it rapidly by squandering or by mistaken investments. You must cultivate the mind across a span of 60 years to be able to hold this wealth. The hardest thing to pass on in any succession has never been the money, but the state of mind that can calmly command a large fortune.

In summary, reshaping your view of money is the key to being promoted from laborer to capitalist. Through extreme optimism about technological progress, supplemented by the composure to wait patiently in the market, the growth of wealth becomes inevitable. When you truly take back control of your time, the investor will discover: wealth is not merely a number on a ledger, but the calm of the heart and the freedom of the soul.