The Third Source of Excess Returns: Beyond Risk Compensation and Behavioral Biases

This paper constructs an interdisciplinary framework for investment philosophy, aiming to provide ordinary investors with a logically rigorous, long-term executable strategy system. The core contributions are: integrating Taoist philosophy, Sun Tzu‘s Art of War, and basic sociological knowledge into a complete deductive chain; proposing the concept of “market relativity“ as a supplement to the global finance paradigm; and demonstrating that the deductive process itself constitutes the ultimate source of investment conviction. The derived strategy——using a market benchmark as the foundation, a technology broad index as the source of excess returns, and annual rebalancing as the discipline——does not rely on stock selection, market timing, or information advantages, and possesses the logical necessity to outperform the market benchmark over the long term. The core insight is that the market is relative. The nature of investment returns——whether they are excess returns, whether they are zero-sum, whether they are inevitable——is not absolute but depends on the frame of reference chosen by the investor. Relative to the individual stock frame of reference, excess returns are a zero-sum game; relative to the industry-as-a-whole frame of reference, excess returns can be inevitable. This idea of “market relativity“ forms the basis for this paper‘s supplement to the global finance paradigm.