Here’s a question that sounds like history and is actually about your portfolio:

Why does one country collapse under pressure while another reinvents itself and comes out stronger?

Finland got invaded by the Soviet Union in 1939 and kept its independence. Japan got a fleet of American warships parked in its harbour in 1853 and, instead of being carved up like China, rebuilt itself into a modern power in a single generation. Chile tore its own democracy apart. Germany spent decades reckoning with its darkest chapter and became the anchor of a continent.

Same species. Wildly different outcomes.

Jared Diamond — the Pulitzer winner behind Guns, Germs and Steel — spent a career on that question, and Upheaval (2019) is his answer. It’s ostensibly a history book. I’d argue it’s one of the most useful books an investor can read, because it teaches the single hardest skill in markets: telling structural change apart from cyclical noise.

And this week, one chapter of it is landing with unusual force. More on that in a second.

The Big Idea

Diamond’s move is deceptively simple. He takes the framework therapists use to understand how individuals survive personal crises — a death, a divorce, a collapse — and asks whether the same framework explains how nations survive theirs.

His answer is yes. And the parallel is uncanny.

A person in crisis has to do certain things to come out the other side. So, Diamond argues, does a country:

• Admit you’re actually in a crisis. Denial is where most collapses begin.

• Take responsibility instead of blaming outside forces.

• Assess yourself honestly — real strengths, real weaknesses, no flattery.

• Change selectively — fix what’s broken, keep what’s core. This is the whole game.

• Learn from others who’ve solved the problem already.

• Have patience — the first attempt usually fails.

• Know who you are — a strong identity is what lets you change everything else without falling apart.

That fourth one — selective change — is the heart of the book:

“Neither a person nor a nation can change everything. The art lies in knowing what to keep and what to let go.”

If that sounds like a description of a great turnaround company, hold that thought.

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Seven Countries, Seven Outcomes

Diamond builds the argument through seven nations he knows personally, several observed over decades:

• Finland — pragmatic survival against an overwhelming neighbour, identity intact

• Japan — the Meiji Restoration, the greatest voluntary reinvention in modern history

• Chile — a democracy that broke, and the long climb back

• Indonesia — a national identity born in violence

• Germany — a country metabolising its own history

• Australia — slowly deciding it was no longer just an outpost of Britain

• USA — Diamond’s uneasy diagnosis of present-day America

It’s worth reading all seven. But one of them is the reason I’m writing about this book this week.

The Chapter That Matters Right Now: Japan

Chapter 3 is called “The Origins of Modern Japan,” and if you’ve been anywhere near my writing lately you already know why I can’t stop thinking about it.

The story Diamond tells: in 1853, Commodore Perry’s “Black Ships” sail into Japanese waters and end more than two centuries of deliberate isolation overnight. The threat is existential. Modernise or be colonised. There is no third option.

What Japan does next is one of the most remarkable acts of national will ever recorded — the Meiji Restoration. The country goes shopping around the world for the best of everything and builds a modern state from imported parts: Prussian army, British navy, American schools, German medicine. But — and this is the part that matters — every piece is examined, adapted, and made Japanese. The shell is transformed. The core is preserved.

“Japan proved that a nation can fundamentally transform without ceasing to be itself.”

Here’s why I find this electric right now.

Japan has done this before. It has a documented, historical capacity to sit in stasis — or in crisis — and then, when the moment comes, execute a sudden, coordinated, top-to-bottom transformation. That’s not a personality trait I’m projecting onto a country. It’s a pattern Diamond traces across centuries.

And I think we may be watching the next iteration of that pattern happen in real time.

The Investing Bridge

I will write about this in depth in this week’s Friday Weekly (14 August 2026), so I’ll keep it tight here — but the short version:

Japan’s stock market took 34 years to reclaim its 1990 high. Thirty-four years. An entire career of “don’t touch Japan,” and for most of it, that was the correct call.

Then something changed. Not cyclically — structurally:

• The Tokyo Stock Exchange started forcing companies trading below book value to explain themselves or face consequences

• Corporate management began — genuinely, measurably — acting in shareholders’ interest, with record buybacks and rising dividends

• The Bank of Japan raised rates for the first time in 17 years, and kept going

• Wages started rising, inflation returned, and people began believing in tomorrow again

Run that against Diamond’s checklist. Acknowledging the problem? The TSE reform is a national admission that the old model failed. Selective change? Keep the manufacturing excellence and social cohesion, fix the capital allocation. Learning from others? The governance reforms are lifted straight from Western shareholder capitalism — then adapted, Meiji-style, into something Japanese.

This is the exact dance Diamond describes in Chapter 3. Which is why reading the history makes the present so much easier to judge.

The Weekly names three companies I think express the shift in three different ways. I won’t repeat them here — that’s what the Weekly is for — but the point of pairing it with Diamond is this: the story is more convincing when you can see the country has run this playbook before.

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Why This Is Really an Investing Book in Disguise

Most of what happens in markets is cycle. Fear, greed, up, down, repeat. If you react to all of it, you’ll trade yourself to death.

But every so often — rarely — a whole country genuinely changes. The structure shifts under the noise. And the investors who do well over decades are the ones who can tell the difference: who can sit through a thousand cyclical head-fakes and then recognise the one structural turn that actually matters.

That’s the skill Upheaval trains. Diamond’s twelve factors are, whether he intended it or not, a due-diligence checklist for national change. Does the country admit the problem? Take responsibility? Change selectively? Keep its core? Learn from others? Persist through setbacks?

Ask those questions about Japan today and the answers are, unnervingly, mostly yes.

And there’s a humility lesson threaded through all of it, too. Nations move on decade timescales, not quarters. The crowd that said “never” about Japan was right for 34 years — long enough to feel like a permanent truth. That’s the trap. The most dangerous ideas in investing aren’t the ones that are wrong immediately. They’re the ones that are right for so long you stop questioning them — right up until the ground moves.

Templeton warned that “this time it’s different” are the four most dangerous words in investing. He was right. But Upheaval is a 500-page argument that there’s a fifth word just as expensive: never.

Three Sentences to Remember

1. Nations survive crises using the same tools people do — acknowledge, take responsibility, change selectively, keep your core.

2. Japan has reinvented itself from a standing start before, which is exactly why its current transformation deserves a serious look.

3. The investor’s edge isn’t reacting to cycles — it’s recognising the rare structural change while everyone else calls it impossible.

If this was useful, subscribe — it’s free, one essay a week, on the books and ideas that actually sharpen how you think about money and the world.

And if you want the companion piece — the live version of this Japan story, with the charts, the numbers, and the three businesses I think express it — it’s in this week’s Friday Weekly (14 August 2026). Read Diamond’s Chapter 3 first. It makes the whole thing click.

Until next week, Thierry and team arvy

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You found what you were looking for.

In 1940, a 63-year-old man walked into the cloakroom of the Sherry-Netherland Hotel in Manhattan, sat down, and wrote a note that ended with the words: my life has been a failure.

Eleven years earlier, that same man had made an estimated $100 million in a matter of weeks — over $1.5 billion in today’s money — by shorting the Great Crash of 1929. The press called him The Great Bear of Wall Street. He owned a yacht, a private railcar, and an apartment on Fifth Avenue.

His name was Jesse Livermore.

And the book about his life, Reminiscences of a Stock Operator (1923), is the single best thing ever written about what markets do to the human mind.

Chart 1 — Jesse Lauriston Livermore (1877–1940). Known in his day as “The Boy Plunger” and later “The Great Bear of Wall Street.” He made and lost four fortunes. Source: historical press photograph.

I’ve read a lot of investing books. Most tell you what to buy. This one tells you why you won’t be able to hold it.

It is a hundred and three years old. It reads like a novel. And it will explain your own behaviour in the last crash more accurately than anything published this decade.

Let me show you why — and let me show you the actual charts he traded through, because the market Livermore faced was more violent than anything most of us have ever lived through.

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First: What This Book Actually Is

Edwin Lefèvre was a financial journalist. In 1922 he interviewed Livermore extensively and turned the material into a serial for the Saturday Evening Post, published as a book in 1923.

The narrator is a fictional “Larry Livingston.” Nobody was fooled. The events — the bucket shops, the Panic of 1907, the cotton catastrophe — are Livermore’s, documented and verifiable.

So you get three books in one:

• An adventure story about a teenage runaway who became the most feared speculator alive

• A history of the early stock market — bucket shops, ticker tape, the raw mechanics of a market before regulation

• A psychology manual disguised as a memoir, more honest than anything a modern fund manager would dare publish

That third one is why it’s still in print.

The Life, in Ten Moments

• 1891 — The chalkboard. At 14, he runs away from his family’s farm and takes a job at Paine Webber in Boston as a “board boy,” chalking quotes onto the big board. He starts writing price movements in a notebook, looking for repetition. He finds it.

• The bucket shops. Semi-legal betting parlours where you wagered on price moves without owning anything. Livermore is so good that shop after shop bans him. He earns his nickname: “The Boy Plunger.” By 20 he has made his first serious money.

• The real exchange — and his first wipeout. He moves to New York and loses nearly everything. Why? In bucket shops he got the price on the board. On a real exchange there is delay and slippage — his edge evaporates. A brutal, expensive education in the difference between a model and reality.

• 1906 — The earthquake short. Covered in detail below.

• 1907 — The Panic. Covered in detail below.

• 1908 — Percy Thomas. The most expensive lesson in the book. A charismatic “cotton king” convinces him to take a position against his own read. Livermore abandons his own analysis and follows another man’s conviction. He loses nearly everything. He never forgets it.

• 1915 — The comeback. Bankrupt, he rebuilds — slowly, systematically, starting with a single disciplined position in Bethlehem Steel.

• 1929–1932 — The masterpiece and the abyss. Covered in detail below.

• 1934 — Broke again. He loses the entire fortune within five years. He never publicly explained how.

• 1940 — The end. He takes his own life. His final note describes his life as a failure.

Here is the thing to sit with: the greatest tape reader who ever lived, who correctly called two of the biggest collapses of his era, ended with nothing. He mastered the market. He never mastered himself.

That gap is the entire book.

The Three Trades That Made Him

1906: The Earthquake Short — When “Gut Feeling” Isn’t What You Think

Livermore is sitting in Palm Beach. The market is quiet, drifting, unremarkable. And for reasons he cannot fully articulate, he starts shorting Union Pacific.

He describes it as a hunch. Something about the tape felt wrong. He puts on the position and takes heat — the stock initially moves against him.

Then, on 18 April 1906, the San Francisco earthquake levels the city. Union Pacific, whose rail network runs directly into the disaster zone, gets destroyed. Livermore clears roughly $250,000.

Here is the part most retellings get wrong. Livermore himself is honest about this trade: he got lucky. He had no knowledge of a coming earthquake. What he had was a vague read on weak tape action, and then a catastrophe happened to validate it.

And he says something remarkable about it — that this kind of unearned win is dangerous, because it teaches you to trust an instinct that did not actually earn the result. The overconfidence that followed set up losses to come.

The lesson buried in the story: being right for the wrong reason is worse than being wrong. It builds false confidence that the market will collect on later.

1907: The Panic — And the Day J.P. Morgan Sent for Him

October 1907. The American banking system is seizing up. A failed attempt to corner the copper market triggers runs on trust companies. There is no Federal Reserve — it does not exist yet. The entire financial system is held together by private capital and nerve.

Livermore reads it correctly and early. He builds an enormous short position into the collapse.

On the worst day of the panic, the market goes into free fall. Money for margin loans becomes essentially unavailable at any rate. Livermore’s shorts print. He makes roughly $1 million in a single session — an almost incomprehensible sum in 1907.

And then the moment that made him legendary: J.P. Morgan, personally organising the rescue of the American financial system, sends word asking Livermore to stop shorting. The most powerful banker in the world essentially asking a 30-year-old speculator to please stop, for the good of the country.

Livermore agrees. He covers his shorts — and flips to the long side, buying into the wreckage.

That day made him. It also, in his own telling, inflated his sense of invincibility to a level that would cost him dearly within a year.

Chart 2 — The market Livermore actually traded. Note the −42% collapse into 1903, the -43% violence of 1907, the 1920s melt-up, and then the four-year sequence that destroyed a generation of investors: −17% (1929), −34% (1930), −53% (1931), −23% (1932). Source: TradingView, Dow Jones Industrial Average, monthly.

1929–1932: The Great Bear — and What the Numbers Actually Look Like

Everyone knows Livermore made a fortune in 1929. Very few people understand the shape of what came after — and that shape is the real story.

The popular image is a single dramatic day in October 1929 and then it is over. The reality was a four-year grinding annihilation:

• 1929: −17%. The crash everyone remembers. Brutal, headline-grabbing, and — in hindsight — only the opening act.

• 1930: −34%. The year of the false dawn. The market rallied strongly into spring 1930, and a huge number of investors concluded the worst was over and bought back in. Then it resumed falling. This is the year that ruined the people who thought they had been clever.

• 1931: −53%. The worst year in the index’s history. More than half the remaining value, gone in twelve months.

• 1932: −23%. The final capitulation. From the 1929 peak to the 1932 trough, the Dow lost roughly 89% of its value.

Sit with that sequence for a second. An investor who bought “the dip” in 1930 — after a 17% decline, which felt like a lot — then endured −34%, −53%, and −23% in succession. It took the Dow until 1954 to regain its 1929 peak. Twenty-five years.

Livermore was short into the initial collapse and made his estimated $100 million. He had read the tape correctly at the single most important inflection point of the century.

And within five years, it was all gone.

This is the central irony of his life. He was right about the biggest market event in modern history — the most spectacular “being right” in the annals of speculation — and it did not save him. Because the skill that makes you right and the temperament that lets you keep the money are two entirely different things.

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How He Actually Traded: The Charts

Livermore left behind his own hand-drawn diagrams — first in his 1940 book How to Trade in Stocks, and in the notebook material that survived him. They are startlingly modern.

Chart 3 — Livermore’s own diagram of the full lifecycle of “Stock A” — the accumulation base with a widening mouth (points 1–7), the advance (8–10), the test before selling short (10–12), and the collapse (13–15). Note the volume notations (+/−) beneath every phase. Source: Jesse Livermore’s original chart material.

Look at what is happening in that chart. He is marking:

• An accumulation base with higher lows and a “widening mouth” — the coil before the move

• Volume confirmation at every single stage (+ and − beneath each phase), because he understood that price without volume is a rumour

• The advance running from the breakout at point 7 through the peak at 10

• A “test before selling short” — the failed retest at 11–12 that confirms distribution before he flips to the short side

• The collapse into 13–15

If that structure feels familiar, it should. This is Stage Analysis, drawn by hand, decades before Stan Weinstein (see Book Club) formalised it. Base, advance, distribution, decline. Livermore got there through raw tape reading and repetition.

Chart 4 — Livermore’s Pivotal Point method. He bought at each successive breakout through a round-number resistance level (42, 45, 50), sold when the level failed at 48, and re-entered at 43 and 46 on the way back up. Source: Jesse Livermore’s original chart material.

This is his signature concept: the Pivotal Point.

The idea is that stocks encounter psychologically loaded price levels — often round numbers — where supply and demand genuinely resolve. Livermore did not try to predict which way. He waited for the stock to prove which way, then acted.

The mechanics visible in his diagram:

• He buys on the breakout through the level, not before it. Note the “?” at 40 — that is him waiting, not guessing.

• He adds on each successive breakout at 42, 45, and toward 50. This is pyramiding into strength, not averaging down into weakness.

• He sells when the pivotal level fails at 48 — the move is over, the thesis is broken, get out.

• He re-enters at 43 and 46 as the stock rebuilds and breaks out again.

Which produces the quote that is probably his most misunderstood:

“A stock is never too high to begin buying, and never too low to begin selling.”

Every instinct you have says the opposite. High price means expensive, low price means cheap, buy low sell high. Livermore is telling you that price level is not information. Direction and behaviour are information. A stock at an all-time high breaking out on volume is a better buy than a “cheap” stock making new lows.

This is the same insight William O’Neil would build CAN SLIM around fifty years later, and the same thing Weinstein’s Stage 2 describes. Livermore got there first, with a pencil.

Chart 5 — Livermore’s own book, published in 1940, months before his death. Where “Reminiscences” is the story, this is the system: timing, money management, and emotional control, including his “Livermore Market Key.” Source: publisher edition with commentary by Richard Smitten.

Worth knowing the distinction: Reminiscences of a Stock Operator (1923) is Lefèvre’s book about Livermore. How to Trade in Stocks (1940) is Livermore’s own attempt to write down the method. Read the first for the story and the psychology. Read the second if you want the mechanics.

“It Was Always My Sitting” — The Line Everyone Quotes and Almost Nobody Unpacks

“It was never my thinking that made the big money for me. It was always my sitting.”

This is the most famous sentence in trading literature. It is also the one most often flattened into a fortune-cookie version of itself — “be patient,” “don’t overtrade,” and on to the next page.

But read Livermore carefully and you find he is describing two entirely different disciplines, both of which he called sitting, and both of which almost nobody can actually do. They happen at opposite ends of a trade, and they fail for opposite reasons.

Sitting, Part One: Waiting Out of the Market

The first kind of sitting happens before you own anything.

Livermore spent enormous stretches of his career doing nothing at all. Not analysing, not hedging, not “keeping a toe in” — flat, in cash, waiting for a setup that met his standard. The pivotal point either arrived or it did not. If it did not, he did not trade.

This is far harder than it sounds, because sitting in cash produces no feedback. Nobody congratulates you for the loss you did not take. There is no dopamine in a position you did not open. The market is open every day and every day it invites you to have an opinion, and the industry around it is built to make you feel that inactivity is negligence.

Livermore’s counter-position is blunt: not trading is a trade. A flat book is an active expression of the view that nothing on offer is good enough. He put it best in the line that deserves to be as famous as the first:

“There is a time to go long, a time to go short, and a time to go fishing.”

Three options, given equal weight. Notice that fishing is not the consolation prize — it is a third of the strategy.

The failure mode here is boredom. Most investors do not lose money on bad analysis. They lose it by acting in conditions that offered nothing, because sitting still felt like doing nothing, and doing nothing felt like failing.

Sitting, Part Two: Holding the Position Once You Have It

The second kind of sitting is the mirror image. You have the position. It is working. And now the job is to leave it alone.

This is where Livermore says the big money is actually made — not in the entry, not in the analysis, but in the stretch of time between being right and taking the money. He watched traders identify a genuine winner and then clip it for a small profit at the first sign of a wobble, over and over, while the move they had correctly predicted ran on without them.

Holding is uncomfortable in a way entering never is. Every day the position exists, it offers you a reason to close it: a bad session, a headline, a number that is now large enough to feel like it might disappear. Unrealised profit generates a specific anxiety that unrealised opportunity never does — the fear of giving something back.

And so people sell their winners early and hold their losers long, which is precisely inverted, and which Livermore identified as the defining error of the amateur a hundred years before behavioural finance gave it a name.

“Men who can both be right and sit tight are uncommon.”

Read that again with both meanings loaded in. Being right is common. Plenty of people identify the correct stock. Sitting tight — first out of the market until the setup is real, then in the position until the move is genuinely over — is where the population thins out to almost nobody.

The failure mode here is fear. Specifically, the fear of watching a gain shrink, which is a far more powerful motivator than the desire to see it grow.

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Why Both Halves Matter

The two disciplines are not the same skill, and they are not interchangeable.

• Sitting out protects you from your appetite. It is defence against boredom, overtrading, and the compulsion to have a view.

• Sitting tight protects your upside. It is defence against fear, against clipping a tenbagger for eleven percent, against confusing motion with management.

Master only the first and you never lose much, but you never make much either — you are permanently early and permanently out. Master only the second and you will hold beautifully through every position, including the many you should never have opened.

Livermore’s claim is that the entire edge lives in doing both. Wait with total patience for the pivotal point. Then, once you are in and the move is real, do nothing at all for as long as the move lasts. Two forms of stillness bookending one decisive act.

And here is what makes the line land so hard in his mouth specifically: Livermore articulated this better than anyone in history and could not sustain either half of it. He traded when he should have fished. He held losers and cut winners in exactly the years he lost everything. He wrote the instruction manual for a temperament he did not have.

The Other Quotes That Matter

“Markets are never wrong — opinions often are.”

Possibly the most useful sentence in the entire book for a modern investor.

Your thesis is not the market. Your model is not the market. Your price target, your conviction, the fifty hours of research you did — none of that is the market. If the tape disagrees with you, you are the one who is wrong, and the only question is how expensively you plan to find out.

This is what killed him in the Percy Thomas episode: he substituted a persuasive opinion for the evidence in front of him.

“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills.”

Written in 1923. Applies in 2026 without a single edit. The tickers change. The technology changes. The greed is a constant.

“The human side of every person is the greatest enemy of the average investor or speculator.”

The thesis of the whole book in one line. The market does not beat you. You beat yourself.

“Losing money is the least of my troubles. A loss never bothers me after I take it. But being wrong — not taking the loss — that is what does the damage to the pocketbook and to the soul.”

The clearest description of loss-cutting ever written, and note the second half: and to the soul.

The financial cost of a held loser is bad. The psychological cost — the daily low-grade shame, the checking, the hoping, the way it distorts every other decision you make — is worse.

What the Book Actually Teaches

Strip out the era and the leverage, and the lessons are timeless:

• Cut losses fast. Livermore went broke multiple times, and every single time it was because he broke his own rules. A small loss is a cost of business. A large one ends the game.

• Markets are never wrong; opinions often are. Including — especially — the opinion of the very persuasive person in the room.

• Listen to no one but the market. The Percy Thomas episode cost him a fortune. Other people’s conviction is seductive precisely because it is delivered with a confidence you do not feel about your own work.

• Price level is not information. Never too high to buy, never too low to sell. What matters is what the stock is doing.

• Wait for the pivotal point. Do not predict the break. Let the market prove it, then act. The “?” on his chart is the most disciplined mark on it.

• Sit out, then sit tight. Patience before the trade and patience inside the trade are two different skills. You need both.

• There is a time to go fishing. Not every market offers an opportunity. Cash is a position.

• Success is more dangerous than failure. Every one of his catastrophic losses came after a huge win. The ego inflation that follows a big score is the setup for the next disaster.

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My Take

I am not a speculator. At arvy I buy quality companies and hold them for years — roughly the opposite of everything Livermore did. He was leveraged, short-term, and in constant motion. I am none of those things.

So why is this in my top five?

Because the deepest thing in the book has nothing to do with trading technique. It is about being a person in front of a market.

And here is the part that gets me every time: Livermore wrote the single best summary of buy-and-hold investing ever produced — “it was always my sitting” — and then spent his life unable to do it. He knew. He articulated it better than anyone before or since. He was right about the largest market event of the century. And he still blew up, twice, catastrophically.

That is not a story about a bad trader. That is a story about the distance between knowing and doing.

Which is the uncomfortable truth for every one of us. Knowledge is not the bottleneck. Execution is. You already know you should not sell in a crash. You know time in the market beats timing. You have read the studies. And then March 2020 happens, or October 2008, and your hands move anyway.

Look at that Dow chart again — the −17%, −34%, −53%, −23% sequence. Ask yourself honestly what you would have done in the spring of 1930, after the first decline, when the market rallied and every voice around you said the worst was over. That was the moment that ruined people. Not the crash. The recovery that was not one.

The honest conclusion I draw from Livermore is not “be more disciplined.” It is: build a system that does not require you to be. A process that keeps buying when you are panicking. An automation that sits — both kinds of sitting — when you cannot.

The most Livermore-proof portfolio is one where the sitting is not up to you.

Who Should Read This

Read it if you:

• Have ever sold at the bottom and could not explain why afterwards

• Love market history and want the texture of the pre-regulation era

• Want a book that reads like fiction and teaches better than a textbook

• Are building your own discipline and want to see what happens without it

Do not read it as a manual. Livermore traded on enormous leverage and died broke. The tactics are not the lesson. If you take the aggression and skip the psychology, you are just re-running his experiment with a worse sample size.

Three Sentences to Remember

1. Finding the right stock is easy — sitting out until it appears, and sitting tight once you own it, is the entire game.

2. Markets are never wrong; opinions often are — including the very persuasive ones.

3. Livermore mastered the market and never mastered himself, which is why the book is a warning and not a recipe.

If this was useful, subscribe — I write about market cycles, quality compounders, investor psychology, my beloved books and ideas that actually change how you handle money.

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And if the lesson you take from Livermore is the same one I did — that the sitting should not depend on your mood on a bad Tuesday — that is most of what I think about over at arvy.ch.

Until next week,

Thierry and Team arvy

Nick and Zak’s Adventures in Capitalism: Words of Wisdom from the Nomad Partnership Letters is exactly what the subtitle promises — a curated distillation of the shareholder letters that Nick Sleep and Qais Zakaria wrote to the partners of the Nomad Investment Partnership between 2001 and 2014. If you read this week’s flagship essay, The Man Who Solved Investing — and Walked Away, you know the headline facts: roughly 20.8% compounded annually net of fees for thirteen years against about 6.5% for the world index, 921% cumulative versus 117%, achieved with zero leverage, zero shorting, zero derivatives — and then a voluntary closure at the peak, with the partners advised to hold a concentrated handful of great businesses indefinitely.

The letters behind that record run to some 218 pages and 110,000 words, published free on Sleep’s I.G.Y. Foundation website. So the first honest question about this book is the one a Costco member would ask: why pay for what is free?

Sleep would approve of the question. His entire framework is about noticing who captures the surplus.

Because curation is a service, and in this case a genuinely valuable one. The free archive is chronological, dense, and — by design — meandering; the ideas develop across years, resurface, contradict their earlier versions, and mature. That is its greatest quality and its highest barrier. The book solves the barrier: it organizes the wisdom thematically, trims the period-specific portfolio housekeeping, and gives you the intellectual spine of the letters in a form you can read on a flight to Lisbon and annotate in the margins. Think of it as the difference between a wine region’s vineyards and a well-assembled tasting: the vineyards are the truth, but the tasting is how most people fall in love.

Here is what you will actually find inside — and the five ideas that earned the most ink in my copy.

What the Book Is (and Isn’t)

It is not a biography. Sleep is famously private — few interviews, few photographs, almost no personal detail beyond what the letters volunteer — and the book respects that. It is not a how-to manual either; nobody hands you a screening checklist. What it is: the letters’ best thinking, extracted and arranged, with the repetitions working for you instead of against you. The great Nomad themes — the destination, the shared scale, the psychology, the patience — appear here the way they appeared to Nomad’s actual partners: gradually, from multiple angles, until they stop being ideas you’ve heard and become lenses you use.

One structural note that first-time readers should know: because the material is drawn from real letters written into real uncertainty, the book carries the texture of live decision-making. You get the Costco thesis while Wall Street still hated it. You get Amazon defended while the consensus measured its lifespan in quarters. You get mistakes — Conseco above all — dissected without cosmetics. That texture is the difference between this book and the ordinary quotation compilations of the genre: these words were expensive when they were written. Money was riding on every one of them.

The Story Behind the Giveaway

It matters that the letters are free, and it matters why. When Sleep and Zakaria closed Nomad in 2014 — voluntarily, at the peak, with the portfolio distilled to a concentrated handful of holdings that no longer required two professionals to babysit — they did not license the archive, gate it, or spin it into a paid masterclass. Sleep published it on the website of his I.G.Y. Foundation, named after the International Geophysical Year of 1957–58: the collaborative scientific push whose results — from early satellite science to the Antarctic Treaty — were handed to all of humanity rather than patented, with a sideways nod to the Donald Fagen song of the same name. The name is the philosophy: knowledge, like scale, compounds fastest when it is shared.

The published collection opens with a reflective prologue in which Sleep circles the question every financially successful person eventually faces and few answer honestly: what then? His answer has been philanthropy and quiet service — including years as a governor of a struggling school in Southeast London — rather than a second act in markets. Read the book with that ending in mind and the material changes register: these are not the words of someone selling you a system. They are the field notes of someone who finished the game, gave back the ball, and left the playbook open on the bench.

The Five Ideas We Marked Up

1. The whiteboard: scale economies shared

The center of gravity. Sleep and Zakaria kept a whiteboard listing the very few business models that reliably work and that they could understand — and the greatest of them was scale efficiencies shared with customers: companies that convert the gains of size into lower prices and better service, setting off a loop of trust, volume, and further gains. Costco is the canonical case, with its self-imposed 14% markup ceiling and its 86% membership renewal rate; Amazon is the same organism at internet speed. Their habit of asking executives what they would do with windfall profits — and almost never hearing «give it back to customers» — explains in one anecdote why the model is simultaneously public knowledge and impossible to copy. I have written a full framework essay on this idea (The Best Idea in Modern Investing: Scale Economies Shared); the book gives you Sleep’s own words, which are better.

2. The destination, not the journey

The single reframing that reorganizes everything else: the only real long-term risk is mis-analysing where a business is going — its destination — because for genuinely great assets, the destination dominates the entry price, while for mediocre ones no entry price is cheap enough. The book’s passages on this theme, including the story of a rare Ferrari bought at a «foolish» price that decades rendered irrelevant, are the best antidote I know to the industry’s obsession with the comfort of the ride. Growth versus value dissolves on contact: growth is simply a component of value.

3. Inactivity as a policy, not a lapse

SOYA — sit on your assets. The half-joking acronym carries the letters’ most counterintuitive conviction: once the deep work is done, doing nothing is the value-adding behavior, and the costliest errors in investing are not the losers you buy but the compounders you sell early. A mistake can cost you 100% of a position; selling greatness early can cost you thousands of percent, invisibly. The book’s treatment of this asymmetry should be mandatory reading before anyone is allowed to take a profit.

4. The bias field guide

Herding. Availability. Anchoring. Denial. Probability blindness. The letters treat behavioral psychology not as garnish but as the terrain itself — the conviction, absorbed from Charlie Munger, that informational and analytical edges are commoditized while the psychological edge never gets arbitraged away, because it is protected by human nature. What elevates the material is that Sleep engineered against his own biases rather than trusting willpower: the inconveniently placed Bloomberg terminal, the semi-annual letter, the deliberately patient investor base. Temperament, on this evidence, is a system you build, not a trait you have.

5. The vehicle as the edge

The quietest theme and, for professional readers, the most radical: Nomad’s structure — fees designed to cover costs, performance compensation only above a hurdle, with deferral and clawback; a tiny team; a curated partner base — was itself a competitive advantage. «One of Nomad’s key advantages will be the aggregate patience of its investor base» is a sentence that should be read twice by everyone who manages money and everyone who allocates it. Whoever controls your liquidity controls your strategy. The partnership did not merely invest in scale-economies-shared businesses; it was one.

How to Read It — a Four-Step Program

If Sleep’s thinking is new to you, here is the sequence I would recommend, in ascending order of commitment:

• Chapter six of William Green’s Richer, Wiser, Happier — the definitive short profile of Sleep and Zakaria, including the closure of the fund and the three-stock personal portfolio that followed. One evening.

• This book, read thematically, pencil in hand. It will give you the complete intellectual architecture in a few sittings.

• The February 2005 Value Investor Insight interview on Costco («Perpetual Growth Machine») and Quartr’s retrospective on the investment — Sleep’s masterclass applied to a single live position, with the numbers attached.

• Then, and only then, the full letters on the I.G.Y. Foundation site, in chronological order, a few per sitting. With the architecture already in your head, you will read them the way they deserve: watching a mind change honestly, in public, with money on the line.

Total investment: perhaps three weeks of evenings. I struggle to name three weeks with a higher expected return.

What It Changed at arvy

We do not review books here as a cultural exercise; we review the ones that altered how we invest. Three concrete traces of the Nomad material in our process. First, the robustness-ratio question — when this company wins, who gets the money? — now sits in every research memo we write, and it has vetoed more superficially attractive ideas than any valuation screen we run. Second, our written sell rules and post-mortems (regular readers know them from When Should You Sell?) are pre-commitment devices in exactly Sleep’s spirit: decisions made calmly in advance because we do not trust ourselves to reason well inside a drawdown — and neither, on his own account, did he. Third, and most fundamentally: we think about the composition of our client base the way he did, as a load-bearing part of the strategy. A concentrated portfolio of quality compounders only works with capital that can genuinely wait. That is a sentence we took from these letters, and we mean it structurally, not rhetorically.

And of course, the book sharpened the thesis behind one of our core holdings — the company we believe is running the Costco-Amazon program in Latin America today. That argument, with the full Sleep test applied and current numbers attached, is the paid section of this week’s deep dive.

For the Desk Drawer

If you take nothing else from the book, take three questions and tape them where you make decisions. When this company wins, who gets the money? — the robustness-ratio test that separates covenants from harvests. What is this business’s destination, and what protects the path? — the only question with compounding attached to it. And the uncomfortable one, for anyone managing money including their own: who controls my liquidity, and have I chosen them as carefully as my stocks? Every blow-up we have ever studied failed at least one of the three. Every great record we admire — Nomad’s above all — is an answer to all of them.

Verdict

Buy it if: you want the essential Nomad thinking in its most readable form, you annotate books, or you have tried the 218-page PDF and bounced off its density. Skip it if: you are the completist type who will happily read the free archive front to back anyway — in which case the book becomes a luxury rather than a necessity, though a pleasant one to have on the shelf when you need to find that passage again. You will need to find that passage again.

The deeper reason to spend time with this material — in whichever container — is the one I keep returning to. Most investment writing tells you what to think about markets. The Nomad letters teach you how to think about businesses, incentives, and yourself, and they do it with a track record attached that removes the usual academic escape hatch. In an industry that manufactures noise for a living, Sleep and Zakaria built a machine for ignoring it, wrote down the blueprints, and gave them away. The least we can do is read them.

The flagship essay — The Man Who Solved Investing — and Walked Away — takes these ideas from the page into a live position, with our own capital committed. If you have not read it yet, it is the natural companion to this one; free subscribers get the complete Sleep analysis, and the full MercadoLibre application is behind the paywall with a seven-day trial available.

Best, Thierry

Since 1989, one man has kept asking the same question:

What separates the world’s best traders from everyone else?

His name is Jack Schwager. Over 37 years, he’s interviewed hundreds of the most successful traders and investors alive — from Paul Tudor Jones to unknown geniuses who turned five-figure accounts into nine-figure fortunes from their bedrooms.

The result is the “Market Wizards” series. Six books. The closest thing the trading world has to a bible.

This week, the sixth and final volume arrived. And it might be the best one.

Here’s the complete series — what each book taught me, and the one lesson that runs through all of them.

A confession before we start: I’m not a trader. At arvy, I’m a long-term quality investor — I buy great companies and hold them for years. On paper, that’s the opposite of what these books are about. So why have I read all six?

Because the deepest lessons in these books have nothing to do with trading. They’re about risk, discipline, psychology, and failure. And those apply to every investor alive — including the buy-and-hold kind.

Let’s go.

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Who is Jack Schwager?

Before he became the chronicler of the best traders, Schwager spent 22 years as Director of Futures Research at Wall Street firms, and 10 years as a hedge-fund advisory partner. Today he co-founds FundSeeder, a platform that hunts for undiscovered trading talent.

But he didn’t get famous through his own career. He got famous through one brilliant idea: instead of inventing his own theories, he asked the best how they actually do it.

His interviews are so honest, so detailed, and so human that they’ve shaped entire generations. Barry Ritholtz put it best: “I devour everything Schwager writes.” Same.

The Series, in Order

You don’t have to read them in order — each book stands alone. But here’s the full arc:

1. Market Wizards (1989)

2. The New Market Wizards (1992)

3. Stock Market Wizards (2001)

4. Hedge Fund Market Wizards (2012)

5. Unknown Market Wizards (2020)

6. Market Wizards: The Next Generation (2026) — brand new

   

1. Market Wizards (1989)

The book that started it all.

Schwager interviews the trading legends of the 1980s — Paul Tudor Jones, Ed Seykota, Bruce Kovner, Richard Dennis, Marty Schwartz. Men who turned small accounts into double-digit millions.

The lesson: There is no single method. Completely opposite styles — trend-following vs. contrarian, fundamental vs. technical — can all work. What every winner shares is one thing: ruthless risk management.

My take: The value here isn’t the trading tactics. It’s the timeless principles. Cut your losses. Stay true to your strategy. Master your own psychology. These apply just as much to someone holding an index fund for 30 years as to a futures trader.

One line to remember: The best traders aren’t right more often — they just manage their risk better than everyone else.

2. The New Market Wizards (1992)

The sequel, three years later. New interviews, broader range — options traders, systematic traders, early quants. Bill Lipschutz, Linda Raschke, Monroe Trout.

The lesson: Consistency beats brilliance. Most of these traders aren’t spectacular home-run hitters. They post solid gains year after year, through iron discipline and a clear rulebook.

My take: This is where Schwager becomes a behavioural researcher. He realises the trader’s biggest enemy isn’t the market — it’s their own ego. If you’ve ever panic-sold in a crash, this book is about you.

One line to remember: A good trade that loses is still a good trade — if the process was right. Outcome and decision are two different things.

3. Stock Market Wizards (2001)

Focus on stock traders, published right at the peak of the dotcom bubble. (The timing is almost painfully ironic in hindsight.)

The lesson: Adaptability is survival. The traders who lasted were the ones who changed their methods when the markets changed. Those who clung to what used to work got wiped out.

My take: Read this as a time capsule. It captures the exact moment of maximum euphoria — and shows how even the best get swept up in market sentiment. The humility lesson lands harder knowing what came next.

One line to remember: What worked yesterday guarantees nothing for tomorrow.

4. Hedge Fund Market Wizards (2012)

After the 2008 crisis. Schwager interviews managers who didn’t just survive the crash — some profited from it. Ray Dalio, Joel Greenblatt, Jamie Mai, Colm O’Shea.

The lesson: The best think about risk first, return second. Dalio’s famous line — “diversification is the holy grail of investing” — becomes tangible here. It’s not the highest return that wins. It’s the best risk-adjusted return over decades.

My take: This is the most relevant book in the series for long-term investors. These managers don’t talk about quick trades — they talk about portfolio construction, asymmetry, and capital preservation. Greenblatt’s chapter on quality investing could’ve come straight out of my own playbook.

One line to remember: Don’t ask “how much can I gain?” Ask “how much can I lose?” — and build your portfolio around that answer.

5. Unknown Market Wizards (2020)

A brilliant twist. Instead of famous hedge-fund managers, Schwager interviews complete unknowns — people who achieved staggering returns from home, with their own capital, who the financial world had never heard of.

The lesson: You don’t need a Wall Street office, a Bloomberg terminal, or a team. The traders here prove that discipline, self-knowledge, and a clear process matter more than resources and access.

My take: My favourite volume after the original. The democratisation of excellence is a powerful idea — and it’s why I do what I do. Great investing shouldn’t be locked behind institutional walls. These traders are living proof the small player can win.

One line to remember: Extraordinary results don’t come from extraordinary resources — they come from extraordinary discipline.

6. Market Wizards: The Next Generation (2026)

The new one. And maybe the best.

37 years after the original, Schwager returns — this time with co-author George F. Coyle, a hedge-fund veteran with 21 years of experience. The twist: this is the youngest group of traders in the entire series. A new generation raised on smartphones, social media, and zero-commission trading.

The stories are genuinely jaw-dropping:

• A musician who dropped out of school to trade — now sitting on nearly $500 million in cumulative profits.

• A security guard who turned $5,000 into over $100 million in under 12 years.

• A volunteer firefighter with no losing month in over 10 years of trading.

The lesson: Success is rarely a straight line. The recurring theme — across all six books, but loudest here — is that many of the best traders failed first. Sometimes repeatedly. Sometimes with total loss. Before they ever achieved anything extraordinary. It’s about resilience, discipline, and the ability to adapt when everything goes wrong.

My take: A worthy, maybe even the best, conclusion to the series. Chris Camillo calls it “possibly the most compelling yet” — and he’s right. While the trading world drowns in hype, meme stocks, and get-rich-quick promises, this book quietly insists on the uncomfortable truth: behind every overnight success are years of discipline and usually a season of failure. For a generation that thinks TikTok trading is a career, that’s the most important lesson there is.

One line to remember: The next generation of the best is young — but their principles are as old as the markets: manage risk, survive losses, stay the course.

What All Six Books Have in Common

Across 37 years and hundreds of interviews, Schwager keeps distilling the same four truths — whether the year is 1989 or 2026:

1. Risk management is everything. Every single Wizard, without exception, has rules to limit losses. They aren’t the ones who win the most. They’re the ones who lose the least when they’re wrong.

2. There is no universal method. Trend-followers, contrarians, fundamentalists, quants — all can win. The key is finding a strategy that fits your personality, and staying loyal to it.

3. Psychology beats technique. The biggest hurdle is never the market. It’s your own ego, fear, and greed. Self-knowledge is the ultimate edge.

4. Failure is part of the path. Almost every Wizard lost first — often everything. What sets them apart isn’t that they never fell. It’s that they got back up, learned, and kept going.

Why a Buy-and-Hold Investor Should Read Trading Books

Here’s the thing I keep coming back to.

I don’t trade. I buy quality companies and hold them for years. The Market Wizards do the opposite — and yet their deepest lessons are exactly the ones I rely on.

Risk before return. Discipline before brilliance. Process before outcome. Psychology before technique.

These are universal. Whether you trade by the second or hold for decades, the same human truths apply. The Wizards don’t lose their heads when everyone else loses theirs — and that single trait is also the entire foundation of long-term investing.

In fact, the most “Wizard-like” thing most people can do isn’t to trade at all. It’s to set up a system that keeps running through every crash, every panic, every euphoria — and then get out of its own way.

Three Sentences to Remember

1. The world’s best traders aren’t right more often — they lose less when they’re wrong.

2. There is no universal method. Only the strategy that fits your personality, and the discipline to stay with it.

3. Trader or investor: risk before return, process before outcome, psychology before technique.

If this was useful: subscribe. I write one essay like this every week — on investing, behaviour, and the books that actually change how you think about money.

And if you want to put the Wizards’ core lesson into practice without becoming a trader — manage risk, stay disciplined, survive every crash — that’s the entire idea behind what I’m building at arvy.

But that’s a story for another essay.

Until next week!

Thierry

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Every stock you will ever own is somewhere on the same journey.

It builds a base. It breaks out and advances. It tops and churns. It declines. Then — if it survives — it builds a base again, and the cycle repeats.

Stan Weinstein gave this cycle a name and a map: Stage Analysis. Four stages, one moving average, and a simple discipline that has guided traders for nearly four decades. It’s one of the most elegant frameworks in all of technical analysis — and once you see it, you can’t un-see it. Every chart you look at, you’ll start asking: which stage is this?

I wrote about William O’Neil’s CAN SLIM — the what and why of winning stocks. Stage Analysis is the perfect companion: it’s the when. Where CAN SLIM tells you which stock deserves your attention, Weinstein tells you where in its lifecycle that stock currently sits — and therefore whether to buy, hold, or run.

This one is a full deep dive, free to read. Let’s map the cycle.

The Origin: A Crash, and a Better Way

Stan Weinstein developed Stage Analysis after living through a brutal market crash in 1962, while still in college. Like most investors then, he relied on fundamental analysis — and watched many of his investments lose serious value in the downturn.

Instead of giving up, he turned to technical analysis and studied thousands of charts. Over time, a consistent pattern emerged: stocks formed bases, broke out into uptrends, lost momentum, and eventually declined — then repeated the cycle. Inspired by Edwards and Magee’s Technical Analysis of Stock Trends, he refined these observations into a four-stage system.

He shared it through his newsletter, The Professional Tape Reader, and then in his 1988 classic, Secrets for Profiting in Bull and Bear Markets — still one of the best technical analysis books ever written. Decades later, the framework holds up remarkably well, because it’s built on something that doesn’t change: human behaviour in markets.

📘 The book: Secrets for Profiting in Bull and Bear Markets by Stan Weinstein (1988)

If you read only one technical analysis book in your life, make it this one. It’s clear, practical, and — unlike most trading books — it has aged almost perfectly. Everything in this deep dive comes from it. Roughly 350 pages, no fluff, and the four-stage framework alone is worth ten times the cover price.

The One Tool You Need: The 30-Week Moving Average

Before the stages, understand the single most important line on a Weinstein chart: the 30-week moving average (roughly the 150-day MA).

This line is your trend referee. Its slope and the stock’s position relative to it define everything:

• Stock below a falling 30-week MA → trouble.

• Stock whipsawing around a flattening 30-week MA → basing.

• Stock above a rising 30-week MA → strength.

Almost every stage call comes back to this one relationship. Keep it in mind as we walk through the four stages.

Stage 1 — The Base

What it is: The recovery ward. Stage 1 happens after a stock has finished a long decline (Stage 4). The downtrend has stopped, and the stock begins moving sideways as supply and demand reach equilibrium.

How to spot it:

• Sideways price action. The stock oscillates in a range between support and resistance. This can last weeks, months, or even years.

• A flattening 30-week moving average. This is the critical signal. While the stock was crashing, the MA sloped sharply down. Now it flattens out — the worst is likely over. The stock whipsaws above and below it without strong momentum either way.

• Balance between buyers and sellers. Neither side is in control, which is exactly why the price goes sideways.

• Declining volume early, then rising. Volume drops off as the aggressive Stage 4 selling exhausts itself. But as the base matures, volume starts to pick up — especially on up days. That returning volume is the tell that buyers are coming back and a Stage 2 breakout may be near.

What to do: Watch, don’t buy. A stock can sit in Stage 1 far longer than your patience would like. The temptation is to buy “before the breakout” to get a better price. Resist it. You want confirmation, not a head start that turns into dead money for two years.

Stage 2 — The Advance

What it is: The money stage. This is where the strong uptrend lives and where the vast majority of gains are made. The stock breaks out of its Stage 1 base and begins a sustained climb.

How to spot it:

• A breakout on high volume. The stock breaks through resistance on 2–3× its average daily volume. That volume surge is institutions stepping in — and their demand is what fuels the move. A breakout without volume is suspect.

• Price above rising moving averages. The stock trades above its 30-week (and 200-day) moving averages, and crucially, those averages are now sloping upward. The most powerful moves also hold above a rising 50-day MA.

• Higher highs and higher lows. The signature of a healthy uptrend. Each pullback finds support at a higher level than the last.

• Respecting the 50-day MA. Pullbacks are normal, but the stock should stay above a rising 50-day average. A sharp close below it is a warning the trend may be weakening.

The ideal buy point: The Stage 2 breakout itself — the moment the stock clears resistance on heavy volume. This is the highest-probability entry in the entire system.

The alternate buy point — the pullback / retest: Sometimes after breaking out, a stock pulls back to retest its old resistance level (now acting as support). If that retest happens on lighter volume and holds at or just above the breakout point, it’s a second-chance entry — often lower-risk than the initial breakout, because you’ve now seen the level hold. This is the buy point for those who missed the initial move or want tighter risk.

This maps directly to Weinstein’s own distinction between the “Ideal Buy for Investor” (the clean breakout from a long base, near the 30-week MA) and the “Ideal Buy for Trader” (the continuation breakout from a tight consolidation higher up in an established uptrend). Same framework, two entry styles, depending on whether you’re early or adding to strength.

Stage 3 — The Top

What it is: The distribution phase. Stage 2 can’t last forever. Eventually demand fades, supply increases, and the uptrend loses its strength. The stock stops advancing and starts churning sideways — but this sideways looks very different from Stage 1.

How to spot it:

• Slicing below the 10-week (50-day) MA on heavy volume. One of the first red flags that the uptrend is breaking down.

• Erratic, volatile price action. Wild swings up and down. These aren’t signs of strength — they’re instability. The upward spikes are often late buyers rushing in just as long-term holders quietly sell. That’s the “churn.”

• Churning on heavy volume. The stock moves sideways but with heavy volume on both up and down days — a sign sellers are distributing stock into the hands of latecomers without the price making real progress.

• Failed breakout attempts. The stock tries to make new highs, but the breakouts come on weak volume and fail quickly, falling back into the range.

• Flattening 30-week and 200-day MAs. The long-term averages that were rising in Stage 2 now flatten and roll over. The stock whips above and below them.

What to do: Reduce or exit. Stage 3 is where you protect the gains you made in Stage 2. The distinction between Stage 1 (basing) and Stage 3 (topping) is subtle but vital: same sideways shape, opposite meaning. The clue is what came before (an advance, not a decline) and the heavy two-sided volume.

Stage 4 — The Decline

What it is: The mirror image of Stage 2 — a sustained downtrend. The stock breaks below the support it built in Stage 3, and the slide begins.

How to spot it:

• A break below Stage 3 support. This confirms the downtrend. Sell immediately when this happens, even if the moving averages are still flat.

• Lower highs and lower lows. The signature of a downtrend, the inverse of Stage 2.

• Trading below falling long-term MAs. The 30-week and 200-day averages slope downward, and price stays beneath them.

• Weak rallies on light volume. Bounces happen, but they fail quickly. Each failed rally is a short-selling opportunity for aggressive traders.

• Declines don’t need heavy volume. Unlike Stage 2 breakouts, stocks can “fall under their own weight” — a simple lack of buyers is enough. Heavy selling volume just signals stronger downside.

What to do: Be out. Weinstein’s advice is to “take the oath” — never hold a stock in Stage 4. It often begins while the news is still good, trapping investors who believe in the fundamentals. Don’t try to catch the bottom; stocks fall further than anyone expects. Wait for a genuine Stage 1 base before even thinking about buying again.

The Whole Cycle, in One Breath

A stock declines hard (Stage 4), exhausts its sellers, and goes sideways as the 30-week MA flattens (Stage 1). Volume returns, it breaks out on heavy buying above rising averages (Stage 2 — buy here), advances in higher highs and higher lows, then loses momentum and churns on heavy two-sided volume as the averages flatten (Stage 3 — sell here), and finally breaks support into a new decline (Stage 4 — be gone). Then it bases again. Forever.

How to Find the Ideal Buy Point

Putting it together, the highest-probability buy is the Stage 2 breakout — but not all breakouts are equal. Weinstein’s filters:

Volume confirmation. Demand at least 2× average volume, ideally 3×. That surge is institutional money confirming the move. No volume, no trust.

Sector strength. Stocks rarely move alone — they follow their sector. A breakout in a leading sector has far better odds than the same setup in a lagging one. Check whether the stock’s industry group is leading or lagging the broad market before you commit.

The two entry styles again:

• Investor’s buy: the clean breakout from a long Stage 1 base, close to the 30-week MA — maximum upside, requires patience for the base to complete.

  

• Trader’s buy: the continuation breakout from a tight flag or consolidation, higher up in an established Stage 2 uptrend, above a rising 30-week MA — lower base, but you’re buying confirmed strength.

  

Both are valid. Which you use depends on your temperament and timeframe.

My Take: Why a Long-Term Investor Studies Stage Analysis

I’ll say the same thing I said about CAN SLIM this week: I’m not primarily a trader. At arvy I’m a long-term quality investor.

So why does Stage Analysis matter to me?

Because it’s the cleanest mental model for trend that exists, and trend awareness helps every investor — even buy-and-hold ones. Knowing the difference between a Stage 1 base and a Stage 4 decline is the difference between buying a stock that’s bottoming and “catching a falling knife” that has years left to fall. The “take the oath — never hold Stage 4” discipline has saved more capital than any clever entry ever made.

Stage Analysis and CAN SLIM pair beautifully. CAN SLIM tells you which stocks have the fundamental and institutional firepower to be big winners. Stage Analysis tells you when in their lifecycle to act — and, just as importantly, when to step aside. One is the engine, the other is the map.

Where I’d add the honest caveat: like all technical timing systems, Stage Analysis demands discipline and consistent screen time. The signals only work if you act on them — every time, without the “this one’s different” exceptions we all love to make. For most people juggling a career and a family, a disciplined long-term approach will outperform a half-applied stage system. But even if you never trade a single breakout, learning to read the four stages will make you a calmer, sharper investor. You’ll know where you are on the map.

Three Sentences to Remember

1. Every stock cycles through four stages — base, advance, top, decline — and the 30-week moving average is your map.

2. The ideal buy is the Stage 2 breakout on 2–3× volume; the alternate is the lower-risk pullback that retests and holds the breakout level.

3. Take the oath: never hold a stock in Stage 4, no matter how good the story sounds.

If this was useful: subscribe. I write free deep dives like this one on investing, trading systems, and the frameworks that actually sharpen how you read a market.

For the full system, the source is Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets — one of the few technical analysis books genuinely worth your time. And if you want to put the cleaner, more disciplined version of “buy strength, respect the trend, never hold the decline” to work without staring at charts all day, that’s a lot of what I think about at arvy.

Best,

Thierry

Every year around this time, the four of us at arvy do something slightly unusual for an asset manager: we argue about books.

Not about markets, not about positioning, not about the Fed. About books. Each of us picks one title we genuinely loved over the past year, and together they become our Summer Reading List. It has become one of my favourite traditions — partly because the picks say a lot about how each of us thinks, and partly because reading is, quietly, one of the highest-return activities an investor can do.

So here it is: the arvy Summer Reading List 2026. Four books, four readers, one common thread you’ll spot by the end.

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1. The Book of Elon — Eric Jorgenson

Florian’s pick

You probably know Eric Jorgenson from The Almanack of Naval Ravikant. Now he has done the same thing for Elon Musk: not a biography, but a curated guide to the mental models behind one of the most ambitious entrepreneurs of our era. First-principles reasoning. Goals set on a civilisational timescale. Persistence through repeated, public failure.

You don’t have to admire Musk to get value out of this. The principles stand on their own.

Florian put it best: what stays with him is the discipline of stripping a problem down to what is actually true and reasoning upward from there. It’s the same discipline we try to apply every day — looking past the market’s noise to the fundamentals of a business.

Deep dive here.

2. Think and Grow Rich — Napoleon Hill

My pick

Yes, the 1937 one. Never out of print since.

Hill spent two decades studying the most successful industrialists of his age — Carnegie, Ford, Edison — and distilled what they had in common. His central claim sounds almost too simple: wealth begins in the mind, with a definite purpose, a burning desire and unshakeable persistence, long before it ever shows up in a bank account.

Strip away the 1930s language and the message is timeless. Nearly thirty years of markets have taught me the same thing Hill found a century ago: the hardest part of building wealth was never the maths. It’s the mindset. Clarity of purpose and the persistence to stay the course matter far more than any single clever move.

If you only read one chapter, read the one on persistence. Then go check how long you’ve actually held your longest position.

3. The Thursday Murder Club — Richard Osman

Patrick’s pick

And now for something completely different.

Four sharp-witted residents of a peaceful English retirement village meet every Thursday to investigate cold cases — until a real murder lands on their doorstep. Osman’s novel is warm, funny and cleverly plotted, and underneath the humour sits a surprisingly tender story about friendship, ageing and the value of a sharp mind at any age.

The timing is perfect too: it’s now a Netflix film directed by Chris Columbus, with Pierce Brosnan, Helen Mirren and Ben Kingsley. Book first, film after — the ideal summer pairing.

Patrick’s defence of putting a crime novel on an investing list: the four amateur detectives win through patience, pattern recognition and teamwork. Funnily enough, those qualities serve you just as well in markets as in solving a mystery.

4. The Outsiders — William N. Thorndike

Seraphin’s pick

If you read only one business book this summer, make it this one.

Thorndike studies eight CEOs who delivered extraordinary long-term shareholder returns — Henry Singleton at Teledyne, Tom Murphy at Capital Cities, a young Warren Buffett at Berkshire — and asks what they had in common. The answer wasn’t charisma or vision statements. It was ruthlessly rational capital allocation: buying back stock when it was cheap, ignoring Wall Street’s quarterly games, and obsessing over cash flow per share instead of reported earnings.

Seraphin calls it a field guide to one of our core quality criteria, and he’s right. When we assess a company, management’s capital-allocation track record is decisive. Thorndike shows, case by case, exactly why. It’s the closest thing to a textbook for how we think about quality.

Three sentences to take to the beach

1. Reasoning from first principles — stripping a problem down to what is actually true — beats following the crowd, in business and in investing alike.

2. Wealth begins in the mind: clarity of purpose and the persistence to stay invested matter more than any single clever move.

3. The best CEOs are master capital allocators — and disciplined capital allocation is exactly what separates great companies from merely good ones.

That’s the list. Find a shady spot, pour something cold, and let one of these four do its work on you.

I’d genuinely love to hear what you’re reading this summer — hit reply or leave a comment. The best recommendations I’ve ever received came from readers.

Enjoy the sun,

Thierry

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Most investing books tell you to buy low and sell high.

William O’Neil’s How to Make Money in Stocks tells you the opposite: buy high, and sell higher.

That single inversion — buy strength, not weakness — made O’Neil one of the most influential market thinkers of the last 60 years. He bought his seat on the New York Stock Exchange at 30. He founded Investor’s Business Daily. And he built a system, CAN SLIM, that has been studied by more serious traders than almost any other.

I should be upfront about something: I’m an IBD partner. Investor’s Business Daily is the company O’Neil founded, and I work with them to help spread CAN SLIM and the tools around it — including MarketSurge, the chart-screening platform I use every day — across Europe. So yes, I have skin in this game. But I’d be writing about this book regardless, because it genuinely shaped how I think about market timing and momentum. Everything below is free to read, no paywall, no catch.

Let me walk you through the system that took O’Neil from a small account to a NYSE seat — and why it still works.

Who Was William O’Neil?

William J. O’Neil (1933–2023) was a stockbroker, researcher, and entrepreneur from Oklahoma. After serving in the Air Force, he started as a broker in the late 1950s and became obsessed with one question: what do the biggest winning stocks have in common before they make their big moves?

So he did something almost no one had done at the scale he did it: he studied them. Systematically. He analyzed the greatest stock market winners going back to the 1880s — hundreds of them — looking for the shared traits they displayed right before they launched.

The patterns he found became CAN SLIM. He used the system to turn a modest sum into enough to buy a seat on the New York Stock Exchange at age 30 — one of the youngest ever at the time. In 1984, he founded Investor’s Business Daily as a data-driven competitor to the Wall Street Journal, built specifically to surface the metrics CAN SLIM relies on.

His book, How to Make Money in Stocks, has sold millions of copies and remains one of the most recommended trading books in the world — featured, fittingly, in many “best investment books” lists alongside Lynch and Graham.

The Core Insight: Winners Look Expensive Before They Win

Here’s the psychological hurdle most investors never clear.

The best-performing stocks in history were almost never “cheap” before their biggest runs. They were already at new highs. They had strong earnings, leadership in their sector, and institutional money piling in. They looked expensive.

The average investor sees a stock at a new 52-week high and thinks: “I missed it. Too late.” O’Neil’s research showed the opposite — a stock making a new high on strong volume is often just getting started. What looks expensive is frequently the beginning of the move, not the end.

This is the hardest thing to internalize. It runs against every “bargain hunting” instinct we have. But the data O’Neil compiled is overwhelming: the stocks that go on to gain 100%, 300%, 1,000% don’t start from the bargain bin. They start from strength.

CAN SLIM, Letter by Letter

CAN SLIM is an acronym. Each letter is a trait O’Neil found in the biggest winners before they made their major advance. Here’s the full breakdown.

C — Current Quarterly Earnings

Look for stocks with current quarterly earnings per share up at least 25% versus the same quarter a year earlier. The biggest winners often showed even more — earnings accelerating sharply in the quarters right before their breakout.

The logic is simple: earnings drive stock prices over time. A company suddenly earning far more than it did a year ago is a company something has changed at. Acceleration matters more than the absolute number — earnings growth that’s speeding up is the signal.

A — Annual Earnings Growth

One great quarter could be a fluke. So O’Neil also wanted strong annual earnings growth — ideally 25%+ annual growth over the last three years, plus a high return on equity. The bigger and more consistent the long-term growth, the better.

C and A together form the fundamental backbone: a company growing fast right now, on top of a track record of growing fast.

N — New Product, Service, Management, or Price High

The biggest winners almost always have something new driving them: a new product, a new service, new management, a new industry trend — or the stock pushing into new price-high territory.

This is the catalyst. Innovation and game-changing products are what fuel huge moves. And paradoxically, the “new price high” itself counts — a stock breaking out to new highs is often the market’s way of pricing in a new reality before the news is obvious.

S — Supply and Demand

Price is set by supply and demand, and shares are no different. O’Neil looked for strong demand against limited supply. A surge in trading volume on an up day signals institutions accumulating. Companies buying back their own shares (reducing supply) is another plus.

This is where volume becomes critical: a breakout on heavy volume means real demand is showing up. A breakout on weak volume is suspect.

L — Leader or Laggard

In any strong industry, there are leaders and there are laggards. O’Neil’s research was blunt: buy the leaders, avoid the laggards. Find the best one or two stocks in the strongest industry groups — the ones with superior earnings and sales growth and the best relative price strength.

Most investors do the opposite. They buy the “cheap” laggard hoping it’ll catch up to the leader. It usually doesn’t. The leader leads for a reason.

I — Institutional Sponsorship

Professional investors — mutual funds, pension funds, banks — account for the vast majority of market activity. O’Neil wanted to see a stock owned by a growing number of quality institutions. You want big money buying alongside you, because their sustained demand is what drives a stock higher over months.

But there’s a nuance: you want increasing sponsorship, not a stock that’s already over-owned. The sweet spot is a stock being discovered by quality funds, not one every fund already holds.

M — Market Direction

This is the one most people ignore — and O’Neil considered it the most important. Three out of four stocks follow the overall market trend. So even a perfect CAN SLIM stock will likely struggle if the broad market is in a downtrend.

You have to know whether the general market is in an uptrend or a correction, and trade in sync with it. O’Neil developed methods of reading daily index price and volume — “distribution days” and “follow-through days” — to gauge whether the market is under accumulation or distribution. Buy when the market confirms an uptrend. Raise cash when it doesn’t.

CAN SLIM in One Paragraph

Buy a stock with accelerating current earnings (C) and strong annual earnings growth (A), driven by something new (N), with demand outstripping supply on heavy volume (S), that is the clear leader in its industry (L), being accumulated by quality institutions (I) — but only when the overall market is in a confirmed uptrend (M). Then cut every loss short, and let your winners run.

The Rule That Matters More Than Any Letter

If you take only one thing from O’Neil, take this: cut your losses at 7–8%. No exceptions.

O’Neil was ruthless about this. His research showed that the single biggest difference between investors who succeed and investors who blow up isn’t stock selection — it’s loss management. A stock that drops 8% can be recovered with a 9% gain. A stock that drops 50% needs a 100% gain just to break even.

So O’Neil’s iron rule: if a stock you bought falls 7–8% below your purchase price, you sell. Immediately. No “it’ll come back.” No averaging down. You’re wrong, you’re out, you move on. The 7–8% cut is what keeps a single bad trade from becoming a catastrophic one.

This pairs with the flip side: let your winners run. Cut losses short, hold gains long. It sounds obvious. Almost no one does it, because it’s emotionally backwards — we want to take quick profits and “give losers time.” O’Neil’s data says that instinct is exactly wrong.

My Take: Where CAN SLIM Fits — and Where It Doesn’t

I’ll be honest about the tension here.

At arvy, I’m a long-term quality investor. I buy great companies and hold them for years. CAN SLIM is a momentum-and-timing system designed for active traders who manage positions tightly. These are different sports.

So why do I love this book, and why am I helping spread CAN SLIM in Europe?

Because the underlying research is some of the best ever done on what actually drives winning stocks. Even if you never place a single CAN SLIM trade, understanding why leaders lead, why earnings acceleration matters, and why market direction dominates individual selection will make you a sharper investor. The “M” lesson alone — respect the broad market trend — has saved more portfolios than any stock pick ever made.

And there’s a European gap worth closing. CAN SLIM, IBD, and the whole O’Neil methodology are deeply embedded in the US trading culture and almost unknown to most European retail investors. The tools — like MarketSurge for chart screening — are genuinely excellent, and Europeans rarely hear about them. That’s the gap I’m working to close as an IBD partner.

Where I’d add a caveat: CAN SLIM demands real discipline and screen time. The 7–8% sell rule only works if you actually follow it, every time. For most people with a job and a family, a disciplined automated approach (the kind of thing I build at arvy) will beat a half-followed trading system. CAN SLIM rewards the committed and punishes the casual.

Three Sentences to Remember

1. The biggest winners look expensive before they win — strength, not bargains, is the signal.

2. CAN SLIM is seven traits, but one rule rules them all: cut every loss at 7–8%, no exceptions.

3. Three out of four stocks follow the market — so respect the trend before you trust the pick.

If this was useful: subscribe. I write deep dives like this on investing, trading systems, and the books and tools that actually move the needle — all free to read.

And if you want to explore CAN SLIM properly, the source is William O’Neil’s How to Make Money in Stocks and the data tools at Investor’s Business Daily — including MarketSurge, which I use for chart screening almost daily. As an IBD partner, my goal is simple: get more European investors exposed to a methodology that the US has known about for decades.

Next week: Stan Weinstein’s Stage Analysis — the four-stage framework that pairs beautifully with CAN SLIM, and gives you a map for when in a stock’s lifecycle to act.

Until then,

Thierry

The Book of Elon — What Every Investor Should Take From It

Eric Jorgenson did it again.

After The Almanack of Naval Ravikant — 2 million copies, 40+ languages, zero marketing budget — he’s applied the same method to the most polarising entrepreneur alive.

The Book of Elon dropped today. Five years of research. Millions of Musk’s own words. Distilled into one concentrated read.

This isn’t a biography. It isn’t hero worship. It’s a mental model extraction — the same curatorial method Jorgenson used for Naval, now applied to Elon Musk.

Love him or loathe him — his frameworks are worth understanding.

Here are the three ideas that matter most for investors.

1. First-Principles Thinking

The most discussed Musk concept, and Jorgenson gives it the space it deserves.

First-principles thinking means breaking a problem down to its fundamental truths and reasoning up from there — rather than reasoning by analogy.

SpaceX: rockets cost $65M. Musk asked what they’re actually made of. Raw materials: ~2% of the price. The rest was inefficiency and unchallenged assumptions. He built his own. Cost per kg to orbit: down 95%.

Tesla: batteries cost $600/kWh. Musk decomposed to raw materials (~$80/kWh) and engineered the gap away.

The investor application: When the market prices a company at 40× earnings because “AI will change everything,” the first-principles investor asks: what are the actual cash flows? What’s the return on invested capital? What’s priced in — and what’s assumed?

Don’t accept consensus valuations. Decompose them.

2. The Algorithm

Musk’s five-step process for every engineering and manufacturing challenge:

Step 1: Question every requirement. Each must come with a person’s name — not a department. Requirements from smart people are the most dangerous.

Step 2: Delete any part or process you can. If you’re not occasionally adding things back, you’re not deleting enough.

Step 3: Simplify and optimise. But only after deleting — optimising a step that shouldn’t exist is the most common mistake.

Step 4: Accelerate cycle time. But only after steps 1–3.

Step 5: Automate. Last — because automating a bad process locks in dysfunction permanently.

The ordering is everything. Most organisations do it in reverse: automate first, question never.

The investor application: Apply this to your own finances. Question every expense. Delete what you can. Simplify your structure. Accelerate your savings rate. Then automate with a standing order. Most people start at step 5 and wonder why nothing changes.

3. Purpose Scales. Talent Doesn’t.

The deepest layer of the book. Jorgenson’s thesis: Musk’s defining advantage isn’t intelligence, capital, or luck. It’s purpose.

He chooses missions so large they attract talent, capital, and attention by gravitational force. Making humanity multiplanetary. Accelerating sustainable energy. Building AGI. These aren’t business strategies — they’re civilisational goals.

The audacity of the mission creates a self-reinforcing loop: bold mission → best engineers → better products → more capital → next impossible project.

The investor application: The companies that compound longest are purpose-driven. LVMH’s obsession with craftsmanship compounds through every cycle. Visa’s infrastructure sits behind every transaction on Earth. Nestlé’s mission has endured 150 years.

Companies built on purpose compound. Companies built on quarterly targets don’t.

The Jorgenson Trilogy

Read together, Jorgenson’s three books form a Silicon Valley intellectual trilogy:

Book Subject Core Framework Almanack of Naval Naval Ravikant Wealth = assets that earn while you sleep Anthology of Balaji Balaji Srinivasan Technology as the new geography The Book of Elon Elon Musk First principles. The Algorithm. Purpose as gravity.

Naval teaches you how to think about wealth. Balaji teaches you how to think about technology. Musk teaches you how to think about building.

Start with Naval. It’s the better book for most readers. The Book of Elon is for those who’ve internalised Naval’s philosophy and want to see what happens when someone applies extreme purpose at civilisational scale.

What’s Missing

The book is necessarily one-sided. Built from Musk’s own words, you get Musk’s version — not the version his employees, ex-wives, or regulators would tell. The human cost of his intensity is largely absent. The political dimension (DOGE, government contracts) barely touched.

For the full picture, read alongside Isaacson’s Elon Musk (2023).

3 Sentences to Remember

1. First-principles thinking strips away assumptions and gets to what’s actually true. Apply it to your career, your spending, and your investments.

2. The Algorithm: question, delete, simplify, accelerate, automate — in that order. Most people start at automate.

3. Purpose scales. Talent doesn’t. Own companies built around missions that outlast any single quarter.

Get the book: Amazon · Free chapters at navalmanack.com

Full analysis with Swiss investor context, comparison tables, and actionable takeaways: Read the complete arvy Book Club review →

Every Friday, we break down one company or investment idea for 12,000+ readers. Quality investing, first-principles analysis, no hype.

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arvy’s Teaser: This week’s arvy’s Weekly will dissect the fertiliser crisis triggered by the Strait of Hormuz — urea up 29% in eleven days, food prices following. But why does a narrow waterway between Iran and Oman matter for bread prices in Cairo? Why did the Gulf become the world’s nitrogen factory in the first place? The answer isn’t politics. It’s geography. Jared Diamond wrote the blueprint 27 years ago. A Pulitzer Prize winner that explains why the map always mattered more than the people on it — and what that means for investors.

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The Book in 60 Seconds

Guns, Germs, and Steel (1997) by Jared Diamond asks the biggest question in human history: why did some civilisations conquer the world while others didn’t? His answer: not because of racial or cultural superiority, but because of geography. The continents dealt different hands — different plants, different animals, different axes of orientation — and those starting conditions compounded over 13,000 years into vast inequalities in technology, military power, and disease resistance. Eurasia won the lottery of domesticable species, an east-west axis that allowed innovations to spread across similar climates, and proximity to livestock that bred deadly germs (and immunity to them). The book won the Pulitzer Prize and remains one of the most influential works of popular science ever written.

Jared Diamond · 1997 · Geography, History & Civilisation
German edition: Arm und Reich — Die Schicksale menschlicher Gesellschaften

Idea 1: Geography dealt the cards — culture just played them

The central thesis: the fate of civilisations was largely determined by the geographic and ecological conditions of the continents they happened to inhabit — not by any inherent superiority of one people over another.

Around 11,000 BC, every human society on Earth was a band of hunter-gatherers. By 1500 AD, some had steel warships and gunpowder while others still used stone tools. Diamond argues this divergence traces back to a single root cause: who had access to domesticable plants and animals.

The Fertile Crescent had the largest number of domesticable wild grains and large mammals on the planet. Not because the people there were smarter — but because the biology happened to be there. Europeans who later arrived in Australia never domesticated a kangaroo or built a yam plantation either. They succeeded by importing European crops and livestock. The environment, not the people, was the variable.

The Investor Lesson: Resource endowments still determine economic fates. The Gulf states didn’t become fertiliser giants because of superior innovation — they sit on cheap natural gas, the primary input for nitrogen production. When you read that 34–50% of all globally traded urea flows through the Strait of Hormuz, you’re reading Diamond’s thesis in real time. Geography first. Everything else second.

Idea 2: The axis of the continent determined the speed of progress

One of Diamond’s most elegant arguments: the orientation of a continent — east-west versus north-south — determined how quickly innovations could spread.

Eurasia stretches primarily east-west. This means that crops, animals, technologies, and ideas could diffuse across thousands of kilometres of similar climate. Wheat domesticated in Mesopotamia could grow in Egypt, India, and eventually Europe — all at roughly the same latitude, with similar day lengths and seasonal patterns.

The Americas and Africa, by contrast, stretch primarily north-south. A crop developed in Mexico had to cross deserts, tropical rainforests, and entirely different climate zones to reach Peru or the Mississippi. This made the diffusion of agriculture dramatically slower.

A single domesticated plant in the right geography could spread 8,000 kilometres east-west across Eurasia in centuries. The same plant might take millennia to travel 2,000 kilometres north-south across the Americas — if it made it at all.

The consequence was compounding advantage. Faster agriculture meant faster population growth. Larger populations meant more specialists — scribes, priests, soldiers, inventors. More inventors meant more technology. More technology meant more military power. The gap widened with each century, driven not by intelligence but by the shape of the landmass.

The Investor Lesson: This is the original compounding argument — applied to civilisations rather than portfolios. Small advantages at the start (better crops, easier trade routes) compound into massive divergences over time. The same logic applies to investing: starting early, staying invested, and letting small edges compound is exactly how wealth grows. A CHF 500/month savings plan at 7% grows to CHF 610,000 over 30 years — 75% of which accumulated in the final 15 years. Geography compounds. Time compounds. (→ Compound Interest Calculator)

Idea 3: Germs were the ultimate weapon — and they came from livestock

Perhaps Diamond’s most devastating insight: the germs that killed millions of indigenous people worldwide originated from the domesticated animals of agricultural societies.

Smallpox came from cattle. Influenza from pigs and ducks. Measles from cattle rinderpest. Tuberculosis from cattle. Societies that had lived in close proximity to livestock for thousands of years gradually developed immunity. When those societies encountered peoples who had never been exposed, the results were catastrophic.

In 1532, Francisco Pizarro arrived in Peru with 168 soldiers. He faced the Inca emperor Atahuallpa and an army of 80,000. Within ten minutes, 7,000 Inca soldiers were dead. Not a single Spaniard was killed. The military technology mattered — steel swords versus wooden clubs — but the real weapon had arrived years earlier. Smallpox had already killed the previous Inca emperor and perhaps half the population, triggering a civil war that fractured the empire before Pizarro even landed.

An estimated 95% of Native American deaths following European contact were caused by disease, not warfare. The germ exchange was almost entirely one-directional — from Eurasia to the Americas — because Eurasia had far more domesticated animals, and therefore far more animal-origin diseases.

The Investor Lesson: The things that kill empires (and portfolios) are often invisible, slow-moving, and already in motion before anyone notices. Covid-19 was a reminder. The current fertiliser crisis is another. While Brent crude dominates headlines, the nitrogen shortage will transmit through food prices over months — invisible until it isn’t. The best portfolio defence is the same as the best civilisational defence: diversification, resilience, and the patience to survive what you can’t predict. (→ Quality Investing explained)

What This Means for Swiss Investors

Switzerland is one of the great beneficiaries of the geographic logic Diamond describes. Positioned at the crossroads of Europe, protected by Alpine geography, integrated into global trade but never dependent on a single resource — it is a case study in how geography creates durable advantage.

1. Diamond’s Principle Swiss Investor Application Geography determines resource advantage

   1. The Gulf’s dominance in fertiliser exports comes from cheap gas, not innovation. When geopolitics disrupts geography-dependent supply chains (Hormuz, Suez, Taiwan Strait), the companies least dependent on a single route win. Swiss multinationals with diversified supply chains — Nestlé, Roche, ABB — are built for this. (→ Tim Marshall Book Club)

2. Small advantages compound into vast divergences

   1. The same compounding that turned early agriculture into empires turns early investing into wealth. Switzerland’s tax-free capital gains + Pillar 3a + automatic savings plans = a compounding machine most countries don’t offer. Use it. (→ Savings Plan)

3. Continental axes facilitate or block diffusion

   1. Switzerland sits at the heart of the European east-west axis — the same axis that enabled Eurasia’s compounding advantage. Today that translates into: EU single market access, global financial hub, multilingual talent pool. This structural advantage is geographic, not cultural.

4. Invisible threats (germs) do more damage than visible ones (guns)

   1. The fertiliser crisis won’t make headlines like an oil spike. But it will hit food prices, consumer spending, and emerging market stability — quietly, over months. Own companies with pricing power that can pass through cost increases. Avoid commodity producers trapped in boom-bust cycles.

arvy’s Take

What holds up: The core argument — that geography, not race or culture, determined the broad trajectories of civilisations — is one of the most important intellectual contributions of the last 50 years. It reframes every conversation about global inequality, trade, and geopolitics. The book is sprawling but remarkably readable, and its central insight has only become more relevant in an era of supply chain disruptions, resource competition, and climate-driven migration. When we watch the Strait of Hormuz choke global fertiliser trade, we’re watching Diamond’s thesis play out in real time.

What’s missing: The theory is powerful but reductive. By focusing on environmental determinism, Diamond underplays the role of institutions, culture, individual agency, and political choices. Why did Europe — and not China, which had many of the same geographic advantages — end up colonising the world? Diamond’s answer (Europe’s geographic fragmentation encouraged competition between states) is his weakest chapter. The book also can’t explain why some countries with similar geographies diverge sharply (South Korea vs. North Korea, for example). It’s a brilliant framework for the first 12,500 years — and an incomplete one for the last 500.

What we’d add: Read Diamond alongside Tim Marshall’s geography trilogy for the modern geopolitical layer, The Lessons of History for the civilisational pattern, and The Fourth Turning for the cyclical overlay. Together, these four books form a lens through which to understand why the world looks the way it does — and why the companies and economies that are geographically well-positioned tend to compound through crises. The meta-lesson for investors: don’t bet against geography. Bet with it.

3 Sentences to Remember

1. Geography dealt the starting hand. Domesticable plants and animals, continental orientation, and climate determined which civilisations developed first — and which compounded fastest.

2. The invisible threats (germs, not guns) did the most damage. Today’s invisible threats — fertiliser shortages, supply chain fragility, demographic shifts — will do the same.

3. Small advantages compound into vast divergences — over millennia for civilisations, over decades for portfolios. Start early. Stay invested. Let geography and time work for you.

Best

Thierry

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Chris Miller’s Chip War

If geography explains the physical chessboard of power, semiconductors explain the circuitry that runs it.

In Chip War, Chris Miller tells the story of how tiny silicon chips became the most strategically important technology in the global economy — and how their supply chains now sit at the center of geopolitical rivalry.

This is not a book about gadgets.
It is a book about power.

For investors, it is essential reading.

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I. The Most Important Industry Most People Never See

Semiconductors power everything:

• Automobiles.

• Smartphones.

• Cloud computing.

• Financial markets.

• Artificial intelligence.

• Missile guidance systems.

• Telecommunications infrastructure.
  

Yet the semiconductor supply chain is one of the most complex and geographically concentrated production systems ever built.

Design may happen in the United States.
Manufacturing equipment may come from the Netherlands or Japan.
Fabrication may occur in Taiwan or South Korea.
Assembly may happen in Southeast Asia.
Rare earth inputs may come from China.

The result is a hyper-specialized, interdependent ecosystem that took decades to construct — and cannot easily be replicated.

For investors, that concentration is both a strength and a vulnerability.

II. From Silicon Valley to Strategic Weapon

Miller traces the origins of the semiconductor industry from early Cold War research through the rise of Silicon Valley, Japan’s memory dominance in the 1980s, the resurgence of U.S. design leadership, and the ascent of Asian fabrication powerhouses.

The key turning point: chips stopped being just commercial products and became geopolitical leverage.

Advanced chips determine military superiority, AI capability, cyber dominance, and economic productivity.

The country that controls the most advanced chip supply chains holds structural power.

This is why export controls, industrial subsidies, and technology restrictions now dominate U.S.–China relations.

Chips are no longer neutral components.
They are strategic assets.

III. Taiwan: The Critical Node

One of the book’s most important insights is the centrality of Taiwan.

The world’s most advanced semiconductor manufacturing capacity is concentrated in a single company: Taiwan Semiconductor Manufacturing Company.

TSMC does not design most of the chips it produces. It manufactures them for others — Apple, Nvidia, AMD, Qualcomm, and many more.

This makes Taiwan the linchpin of the global technology system.

A disruption to Taiwan’s fabrication capacity would not merely affect one company. It would ripple across global supply chains, from consumer electronics to automotive production to defense systems.

Investors who ignore this geographic concentration underestimate systemic risk.

IV. The Illusion of Easy Reshoring

In response to growing geopolitical tension, governments have launched large subsidy programs to bring semiconductor manufacturing “home.”

But Miller makes clear how difficult this is.

Advanced fabrication plants cost tens of billions of dollars.
They require extreme ultraviolet lithography machines built by a single Dutch company.
They depend on deep supplier ecosystems, skilled labor pools, and decades of accumulated process expertise.

Semiconductor manufacturing is not easily replicated by political decree.

This matters for investors evaluating industrial policy, subsidy cycles, and national competitiveness.

Announcements are easy.
Ecosystems are hard.

V. Why This Book Matters for Investors

1. Semiconductors Are the Infrastructure of the Digital Economy

AI, cloud computing, data centers, autonomous systems — all depend on increasingly advanced chips.

Understanding semiconductor bottlenecks helps investors evaluate which technological revolutions are scalable and which are constrained by physical production limits.

Compute is not infinite.
It is manufactured.

2. Supply Chain Concentration Equals Systemic Risk

The semiconductor industry is efficient because it is specialized.

But specialization creates fragility.

Pandemic shortages exposed how dependent global manufacturing had become on just-in-time chip supply. Automotive production lines shut down not because of engine failures, but because of missing microcontrollers.

Future geopolitical disruptions could be far more severe.

Markets do not always price systemic fragility correctly — until stress tests occur.

3. Industrial Policy Is Back

For decades, globalization pushed toward efficiency and cost optimization.

Chip War shows that strategic industries are now being pulled back into the realm of statecraft.

Subsidies, export controls, sanctions, and national security reviews are reshaping capital allocation.

For investors, political risk in technology is no longer secondary. It is central.

4. Technological Leadership Is Power

In previous eras, control over oil fields or shipping lanes determined geopolitical weight.

Today, control over advanced semiconductor manufacturing capacity may matter just as much.

This reframes how we think about:

• Defense spending

• AI leadership

• Cybersecurity

• Productivity growth

• National competitiveness

Chips are upstream of nearly every modern growth industry.

Connecting Chip War to Structural Investing

If geography defines the map, semiconductors define the infrastructure layered on top of it.

Marshall’s geography trilogy explains why nations compete.
Miller explains one of the most critical arenas of that competition.

Together, they form a powerful framework:

• Geography shapes long-term power constraints.

• Technology determines how that power is expressed.

Investors who understand both gain structural clarity.

They see why certain regions matter disproportionately.
They understand why export controls move markets.
They recognize why semiconductor capex cycles are not just cyclical — but strategic.

Final Thought

Chip War is not just a history of the semiconductor industry.

It is a warning.

The modern global economy rests on a highly concentrated, technologically complex, geopolitically sensitive supply chain.

That supply chain is now contested.

For investors, this changes how risk should be assessed.

Technology is no longer purely a growth story.
It is a geopolitical story.

And in a world where compute power underpins economic and military strength, the battle over chips may define the next era of markets.

Best

Thierry

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Markets move on earnings, liquidity, narratives, and innovation.

But beneath all of that lies something far more structural: geography.

In three tightly connected works — Prisoners of Geography, The Power of Geography, and The Future of Geography — Tim Marshall makes a simple but profound argument: nations are not free agents. They are constrained, shaped, and often trapped by physical geography. Mountains, rivers, oceans, deserts, climate, and access routes quietly dictate strategy, prosperity, and conflict.

For investors, this perspective is not academic. It is foundational.

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I. Prisoners of Geography: The Map as Destiny

In Prisoners of Geography, Marshall explains how physical terrain has shaped the behavior of major powers for centuries.

Russia’s repeated push westward is not simply ideological; it is geographical. The North European Plain provides no natural defensive barriers. Historically, invasions have come through this corridor. Buffer zones become strategic necessities.

The United States enjoys a rare geographic gift: vast fertile land, navigable rivers, two protective oceans, and friendly neighbors. This foundation made industrial dominance and geopolitical security far easier than in most regions of the world.

Africa’s fragmentation, the Middle East’s persistent instability, China’s maritime ambitions — all make more sense when viewed through the physical constraints imposed by terrain and borders.

The lesson is uncomfortable but clear: history is not random. It is often the logical extension of geography.

For investors, this means political risk is rarely a surprise. It is usually structural.

Energy chokepoints, trade routes, access to warm-water ports, water scarcity — these are not temporary issues. They are recurring themes.

II. The Power of Geography: The Next Pressure Points

If Prisoners explains the past, The Power of Geography examines the future.

Marshall moves from structural foundations to emerging flashpoints: the Indo-Pacific, the Horn of Africa, the Sahel, Iran, Turkey, Australia, even outer space.

The message is not that geography determines everything. It is that geography sets the parameters within which everything else operates.

Ethiopia’s control of Nile headwaters matters because water is power.
Iran’s location matters because it sits astride strategic energy corridors.
The Arctic matters because melting ice opens new trade routes and resource access.

Markets tend to price events after they occur. Geography allows investors to think probabilistically before events occur.

Understanding where geographic pressure is building can illuminate future supply chain vulnerabilities, commodity volatility, defense spending cycles, and strategic industrial policy.

III. The Future of Geography: Expanding the Map

Marshall’s most forward-looking book argues that geography is no longer limited to Earth’s surface.

Low Earth orbit, lunar resources, satellite networks, and space governance are becoming extensions of geopolitical competition.

Satellite infrastructure already underpins communications, navigation, military coordination, weather forecasting, and financial systems. Control of orbital lanes and launch capabilities is becoming a strategic advantage.

This is not science fiction. It is an emerging capital allocation reality.

As private firms and governments expand their presence in space, the next geopolitical frontier may influence telecommunications, energy systems, defense technologies, and even resource extraction.

For investors, the question is not whether space matters. It is who will control the infrastructure.

Why This Trilogy Matters for Investors

1. Markets Operate on Terrain

Capital does not flow in a vacuum. It flows across geography.

Ports, pipelines, rare earth deposits, agricultural land, shipping chokepoints — these are physical realities that shape industries and corporate margins.

Understanding geography sharpens macro awareness. It clarifies why certain regions sustain growth and why others remain fragile.

2. History Is Context, Not Decoration

Investors often treat history as anecdotal background. Marshall’s work reminds us that historical behavior often repeats because geographic constraints persist.

Russia’s insecurity is not new.
China’s maritime ambition is not new.
Middle Eastern instability is not new.

Recurring geopolitical patterns create recurring market disruptions.

Recognizing those patterns early is a competitive advantage.

3. Structural Forces Outlast Cycles

Quarterly earnings fluctuate. Interest rate cycles turn. Narratives shift.

Geography does not.

Structural forces — demographic clusters, water access, mineral deposits, navigable waterways, defensive barriers — endure across decades.

Long-term investing benefits from understanding what cannot easily change.

4. Risk Is Often Geographic

Energy crises, trade wars, sanctions, military conflicts, refugee flows — all are geographically anchored.

When investors ignore geography, they underestimate tail risk.

When they understand geography, they better price uncertainty.

Connecting Geography to Capital

If technology books explain innovation cycles, and economic histories explain financial systems, Marshall’s trilogy explains the physical chessboard on which both operate.

It teaches patience. It teaches context. It teaches structural thinking.

In a world obsessed with short-term signals, these books force a longer lens.

They remind us that nations are shaped by land and sea long before they are shaped by ideology or markets.

And because markets ultimately reflect human behavior under constraints, geography becomes an investing variable.

Not in a predictive sense, but in a probabilistic one.

You do not need to forecast every conflict.
You need to understand why certain conflicts remain plausible.

You do not need to predict every supply disruption.
You need to understand where disruptions are structurally likely.

That is the investing value of history and geography.

Final Thought

Prisoners of Geography gives you the foundation.
The Power of Geography gives you the emerging pressure points.
The Future of Geography extends the map into the next strategic frontier.

Together, they offer something rare: a structural framework for thinking about power.

And power, in the end, shapes capital.

For investors willing to look beyond quarterly noise, geography may be one of the most underappreciated variables in understanding markets.

Best

Thierry

There are books that describe markets, and then there are books that quietly reshape the way you interpret every major investment theme that follows. Engines That Move Markets by Sandy Nairn falls firmly into the latter category.

I first read it to better understand technology bubbles. I recently revisited it while watching the accelerating AI arms race between OpenAI, Anthropic, Google, Microsoft, and Nvidia. What struck me is not just how relevant the book remains, but how precisely it frames the situation we are living through today.

If you want to think clearly about AI as an investor — not as a technologist or enthusiast — this book offers one of the most durable frameworks I’ve encountered. It is also a powerful reminder that sometimes a $30 book can improve your decision-making more than months of market noise.

The Historical Pattern Behind Technological Revolutions

Nairn examined multiple transformative innovation waves: railroads, electricity, automobiles, telecommunications, and the internet. Despite the enormous differences in technology, geography, and time period, the underlying capital cycle followed a remarkably consistent structure.

Each revolution began with a genuine breakthrough that improved productivity and reshaped society. That breakthrough attracted capital at an accelerating pace. The initial success stories validated the narrative, which attracted even more funding. Eventually, capital flooded the system faster than the economic returns could justify. Infrastructure was overbuilt, competition intensified, pricing power deteriorated, and investors discovered that transformative technologies can still produce disastrous returns.

The most important insight is not that bubbles exist. It is that they are structurally embedded in technological progress. Major innovations almost always destroy capital before they create durable wealth.

This distinction between technological inevitability and investment viability is subtle but decisive.

AI: Industrialization for Cognition

In recent discussions, Nairn argues that artificial intelligence is not merely another software cycle. In his view, it is closer in magnitude to industrialization itself. Instead of mechanizing physical labor, AI mechanizes cognitive processes.

Three forces have converged to make this possible: exponential computing power, massive data availability, and architectural breakthroughs such as the transformer model. When these forces align, progress can feel unstoppable.

However, the investment question is separate from the technological question. While model developers are generating billions in revenue, the infrastructure required to support AI — data centers, chips, cooling systems, energy — demands tens of billions, potentially trillions, in capital expenditure. High-end chips depreciate within a few years, meaning the asset base must be continuously renewed.

This creates a gap between current monetization and long-term capital intensity. Historically, such gaps lead to what Nairn describes as a refinancing phase — a period when the availability of capital tightens and only the strongest balance sheets survive.

Refinancing phases are rarely gentle.

Monetization and the Advertising Constraint

One of the most interesting pressures in the current AI cycle is monetization. Only a small percentage of users are willing to pay meaningful subscription fees. For AI models to justify their infrastructure costs, large-scale advertising or enterprise integration becomes critical.

But unlike the early internet, the advertising market is not empty territory waiting to be claimed. It is dominated by incumbents, particularly Google. Any serious attempt by model providers to monetize through advertising implies competitive displacement rather than organic market expansion.

That distinction matters. Competitive displacement compresses margins, increases strategic aggression, and often accelerates capital destruction before equilibrium is reached.

History suggests that the outcome of such battles is rarely a fragmented landscape of many winners. It tends toward consolidation. A duopoly is more common than a diversified ecosystem.

The Valuation Dimension

There is another layer to this cycle that investors often underestimate: valuation. The U.S. equity market is trading at elevated cyclically adjusted valuations, while capital expenditures for AI infrastructure are projected at historic highs. Optimism about productivity gains is reflected in prices long before those gains are fully realized in earnings.

It is entirely possible that AI transforms global productivity, reshapes industries, and generates enormous societal value. It is equally possible that investors who buy at peak optimism experience years of muted or negative returns.

The lesson from railroads and the internet is not that innovation fails. It is that capital markets often front-load expected success into prices. You can be directionally correct about the future and still achieve poor investment outcomes if you overpay.

What History Suggests May Happen

If we map prior innovation cycles onto the current environment, several phases appear likely. We should expect an IPO wave as companies attempt to capitalize on enthusiasm. We should expect funding stress if capital becomes more expensive or if growth disappoints. We should expect consolidation, in which weaker players disappear and a handful of structurally advantaged firms dominate.

The long-term winners of technological revolutions often emerge stronger after the capital destruction phase. But identifying them requires patience and discipline during the excess phase.

This is why Nairn emphasizes capital cycles over narratives. Narratives feel persuasive and inevitable. Capital cycles are mechanical and indifferent.

Why This Book Matters Now

What makes Engines That Move Markets so valuable today is not that it predicts specific companies or timing. It provides a lens through which to interpret the relationship between innovation and capital.

It teaches three enduring principles:

1. First, technological progress tends to be exponential once key constraints are removed.

2. Second, capital allocation is cyclical and prone to overshoot.

3. Third, valuation ultimately determines investment returns.

Most investors focus almost exclusively on the first principle. The second and third are what shape outcomes.

For me, this book remains one of the clearest guides to understanding how extraordinary progress can coexist with mediocre or even disastrous investment results. It reinforces intellectual humility and encourages patience when capital flows become euphoric.

And once again, it proves something I deeply believe: sometimes the highest-return investment you can make is not a stock, but a framework. A single book that improves how you interpret cycles, incentives, and valuation can compound far more reliably than chasing momentum.

In times of technological acceleration, clarity is rare. History, however, is abundant.

Best

Thierry