Be a Personal Monopoly Investor

Building a Personal Monopoly is like buying real estate.

Whether you’re making an investment in yourself or a home, you want to choose a strategy that will increase in value. When it comes to housing prices, some areas have appreciated in value more than others. For example, real estate values in cities like San Francisco have appreciated more than rural ones like Billings, Montana. There are two main reasons for the San Francisco boom: increasing demand and restricted supply. 

Basic economy theory says that all things being equal, increasing demand will cause prices to rise. In 2017, the top 25 metro areas made up more than half of American GDP which is why so many young people moved to big cities. San Francisco in particular became a hub for people working in technology. But its real estate values wouldn’t have risen so much without restricted supply. Apartment buildings are illegal to build in 78.6% of San Francisco. Laws and culture make it hard to build in San Francisco, which is why only 5,000 homes were constructed there in 2015 and not a single home was built in some of San Francisco’s wealthiest neighborhoods. In contrast, Tokyo had 142,417 housing starts a year earlier.

The politics of San Francisco housing policy are beyond the scope of this essay, but I’ve written about them before

For now, let’s focus on building Personal Monopolies. 

On the increasing demand side, you should look for growing markets. When I graduated from college, I watched my friends who were interested in finance split into two camps: some followed the traditional route and others studied cryptocurrencies. The ones who followed the established paths are still toiling for 80 hours per week in jobs they mostly despise. But one clever friend (we’ll call him Victor) focused on cryptocurrencies instead. The industry gave him a comparative advantage because it rewarded youth, unlike the other paths he could have taken. As they say in software, he turned a bug into a feature. He devoted his entire senior year of college to developing technical expertise, studying markets, and writing about what he learned. Today, at 26-years-old, he manages hundreds of millions of dollars for a hedge fund in New York. On the scarcity restriction side, Victor now has four years of industry experience, easy-to-demonstrate technical expertise, and a strong industry network that helped him raise all that capital. 

Like real estate, invest in Personal Monopolies with increasing demand and restricted supply. On the increasing demand side, don’t chase hype. If you’re starting from scratch, the hype wave will pass faster than you can become an expert in a subject. Instead, find the intersection between your genuine curiosities and how you think the future will be different. For me, that’s online writing but you can pick anything in the Go-For-It Window. On the supply restriction side, leverage your most unique experiences and build knowledge that’s simultaneously hard to replicate and easy to demonstrate. That way, you can be paid for your expertise. When it comes to your personality type, favor your most distinct traits. Do things that feel like play to you, but look like work to others. By doing so, you’ll invest in a valuable Personal Monopoly.


Cover Photo by Joshua Sortino on Unsplash

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