Last week, I read The Bond King, a biography about Bill Gross and how he built PIMCO into an investing powerhouse. Gross is an eccentric character, which was one factor that contributed to his downfall and exit from PIMCO. But one thing that stuck with me was that he used a similar strategy to several other prominent investors who founded their own investing firms.

I wrote about this a few weeks ago (see here). Gross was early to understand that the 1970s high-inflation environment and subsequent decline meant that there was an opportunity to generate outsized returns by buying and selling bonds more frequently. This was different than the traditional “buy a bond, lock it in a vault, and collect your income coupons.” He wanted to trade bonds instead of just buying and holding them. This was novel at the time, and there weren’t other players doing this, so he essentially had the entire market to himself.

Gross found a small, inefficient market with no competition. He generated outsized returns there, then moved to larger, more efficient markets as his capital base grew. It’s the same playbook that others like Ed Thorpe, Warren Buffett, and others also used.

When lots of smart people land on the same strategy to achieve outsized success, that’s not a coincidence.