24. Transition Profit: Wealth Comes from the Trend

24. Transition Profit: Wealth Comes from the Trend

Buying a house was right in the past. Buying a house is wrong now. What was right is not always right. I often discuss with Taiwanese SME owners — why was making money so easy for their parents, and so much harder for them? The answer is not “young people can’t take hardship” — it’s that the era’s tailwind moved. The parents didn’t earn easily because they were more diligent; they happened to be standing in the takeoff wind of Taiwan’s economy: in that era, run a factory, run trade, do contract manufacturing — money flowed like water as long as you worked. That was not personal ability. It was the era’s dividend. This is what “go with the tide” really means — all wealth accumulation is ultimately a transition profit: whenever the social-economic structure undergoes a major shift, those standing on the direction of the shift gain huge wealth; those clinging to the old structure are gradually eliminated. Taiwan’s economy from agriculture → light industry → manufacturing → high-tech — every transition redistributed social wealth.

Every transition comes with brutal elimination. When Walmart appeared, countless American street-corner shops shut. When Amazon rose, even Walmart felt threatened. When AI emerges — as the §1 AI paradigm shift covered — what gets replaced is not just the product but the occupation. This is capitalism’s creative destruction, also called paradigm transition. Stand on the side being destroyed and no amount of diligence helps; stand on the side being created and even the not-brightest share in the era’s dividend. Apply this logic to concrete asset choices, and the conclusion is direct:

• 35 years ago: buying a NT$10M villa in Taipei was right. Sells for NT$30M today.
• 35 years ago: same NT$10M into an index fund, at 10–12% annualized, is today NT$300M to NT$1B.
• NT$10M → NT$30M vs. NT$10M → NT$1B — that is the gap between “with the tide” and “against the tide.” Even within the stock market, transition profit exists: decades ago Dow Jones was right; later SPY became the better instrument; now — see §5’s locomotive metaphor and QQQ vs SPY vs VT — NASDAQ-100 is the choice at the front of the technology wave. What was right is not always right now. What your previous generation taught you was right in their era, not necessarily in yours. Don’t copy their path; see clearly where the wind is now and step onto it. Where is the wind now? AI, cloud, the accelerating evolution of human technological civilization — and the vehicle carrying all of it is the NASDAQ-100 index.

Key Points

One, all wealth accumulation is essentially transition profit. Each transition (agriculture → industry → manufacturing → AI) redistributes social wealth — those on the transition direction win huge; those in the old structure get eliminated. Two, what was right isn’t always right now: parents bought a house — NT$10M to NT$30M over 35 years; same NT$10M in an index fund — NT$10M to NT$1B. The gap is “with vs. against the tide.” Three, creative destruction is capitalism’s essence — Walmart replaced corner shops, Amazon threatens Walmart, AI replaces the occupation itself. See the paradigm transition, stand on the side of wealth creation — and today, that side is the NASDAQ-100.