Sun Tzu was a military genius who wrote a classic treatise entitled The Art of War.
The principles in this ancient text are relevant whether you are planning a military coup, aiming for success in the boardroom, or desire to excel as a trader.
The fact that his ideas were expressed approximately 2500 years ago ensures that these concepts have stood the test of time.
Let’s have a look at some of his key concepts and apply these to assist our investing results.
“Possessing the ability to calculate the difficulties and danger is a basic requirement for a good general”
Your number one goal in the market must be preservation of capital.
If you have not evaluated the risks involved, you should not invest.
Effective money management skills allow you to quantify the worst-case scenario before engaging the market.
“To be prepared beforehand for any contingency is the greatest of virtues. The degree of success depends upon the extent of planning for the anticipated victory”
- Meticulous planning – Before engaging in battle, you have already won the war.
- Careless planning – Before engaging in battle, you may have already lost the war.
- No planning – Your defeat is certain.”
Investors who work to a clear cut strategy stack the odds in their favour.
The market is a more efficient, bigger and scarier opponent than you have ever faced in your life. You cannot defeat it unless you ‘out-think’ and ‘out-plan’ it.
“You need to strengthen yourself and prepare yourself mentally to be the target of attack. Know the enemy and know yourself and in a hundred battles, you will never be in peril”
The more knowledge that you can muster about the market, the more likely you will be to succeed.
Investing favours the strong of mind.
“Those who carefully calculate their strategies will be led to victory. Those who carelessly calculate their strategies will be led to defeat”
Sometimes it is difficult for investors to adhere to the strategy because their own psychology often defeats them
“Within the universe, there are no eternal conquerors”
Even the bravest among us have learned that:
“Out of orderliness comes chaos. Out of courage comes cowardice. Out of strength comes weakness.”
You cannot afford to let your guard down, or you will suffer the consequences.
“When the victory is not certain, adopt defensive tactics. When the odds for victory are overwhelming, adopt offensive tactics”
Remember – every boom leads the way for the next downturn, just as every downturn sets the scene for the next Boom.
These principles have been utilized throughout the ages to build effective strategies and enduring victory.
If you use them properly, they will bring you success in the investment arena.
Profitable investment does not rely on luck. It demands the highest levels skill and discipline, and lucratively rewards the people who develop these qualities.
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.