What Kind of Money Are You Earning? The Knowledge Economy

What's valuable is expertise in a specific domain. Buffett has areas he deeply understands—real, deep knowledge, not the superficial "know-it-all" kind. With that depth of understanding, he can access capital at low cost. This is the story from Rich Dad Poor Dad: you don't need much capital of your own; it's just a few percentage points. You pay a few points, and people are willing to lend you money. Because capital itself only commands a modest return, so once you subtract those borrowing costs from, say, a 30% return, what remains is the reward for genuine expertise.

If you lack that expertise, you're a net negative—you become the source of someone else's return.