Lesson One: Building True Wealth: The Distinction Between Trading and Owning Assets
By Michael Lamonacac 12 July 2025
To embark on a successful “il dolce far niente” journey towards financial freedom, we must first clarify a fundamental principle: the profound difference between simply trading items and the strategic acquisition of assets. This understanding is the bedrock of long-term wealth creation.
Beyond Trading: Why “Items” Limit Your Growth
Some may engage in what is essentially “value trading.” This involves a constant search for items to exchange for others perceived to have higher immediate worth. While this might be a viable strategy for certain merchants in specific contexts, its inherent limitation is crucial to grasp. The items themselves rarely increase in value over time without consistent, active effort. A value trader must continually invest time and energy to scout for new opportunities and find willing exchange partners. It’s a continuous, active pursuit where your growth is directly tied to your perpetual engagement.
The Power of Assets: Building Wealth While You Sleep
Our value investing approach, central to the “il dolce far niente” philosophy, operates on an entirely different premise. We focus on acquiring assets – entities that inherently increase in value or generate income over time, often without further direct effort on your part.
Let’s clarify this with simple examples:
- A fish pen is an item. It retains its initial value, but it does not generate more value on its own. It won’t grow your wealth passively.
- An apartment building with rented units, however, is a true asset. It consistently puts money in your pocket through rent as long as you own it.
This leads us to a clear, actionable definition for the disciplined investor: an asset is anything that continues to put money in your pocket for as long as you own it.
Conversely, a liability is anything that takes money out of your pocket as long as you own it. A car, for instance, despite its utility, is typically a liability. It’s an ongoing expense for fuel, maintenance, and insurance, continually drawing funds from your pocket.
The Path to Long-Term Wealth: Accumulating Quality Assets
The bedrock of long-term wealth and genuine financial freedom lies in this distinction. Wealthy individuals focus on owning and continuously accumulating assets, not liabilities, and not just items for active trading. These strategic holdings can take many forms: apartment buildings that generate rent, high-quality stocks that represent fractional ownership in profitable businesses, or bonds that provide consistent interest.
For the “il dolce far niente” investor, this means a meticulous focus on identifying businesses whose intrinsic value is significantly higher than their current market price. Our disciplined approach involves estimating this true worth, and if the market offers a substantial discount, we acquire those stocks and commit to holding them. The beauty is that as time progresses, the value inherent in these businesses continues to compound, naturally building your wealth over the years, often without the need for further active intervention. This patient’s unwavering commitment to holding quality assets is the cornerstone of our strategy.