Investing Is War

April 30, 2013

Investing

Investing is war

 

The Art of War is an ancient Chinese military manual written by Sun Tzu, a high ranking military general who thrived in strategy and tactics. This manual consisted of 13 lessons that were devoted to one aspect of warfare. Some people believe that making the correlation between war and investing is absolutely absurd. I will admit that assumption is warranted but there are a significant parallels between investing in the stock market and the principles of war that Sun Tzu outlines in his book Art of War.

What’s At Risk To You?

When a nation or entity engages in warfare each side has something to lose, in most cases what they have to lose is significant, otherwise they wouldn’t have gone to war in the first place. While real war results in the unfortunate loss of life let’s not forget what’s at risk if you lose in terms of investing.

Successful Retirement – There will come a time in your life when working a full time job will no longer become feasible. As of today the U.S. Social Security Administration predicts you will reach this point at age 66. While I personally plan to work well into my 70′s doing something that I love, this is the line in the sand that the Federal Government has established. Once you retire you give up your active income and will now rely solely on your pensions, investments, and social security payments for income. While some companies still offer retirement benefits, the overwhelming majority of companies no longer offer pension plans. Only 11% of Fortune 1000 companies offer pension plans and the Social Security administration recently admitted that they will soon start paying out more benefits than they receive. So, “Will Social Security be there when I retire?” I don’t believe you need a degree or CPA to answer that question. This leaves the only dependable option you currently have, investing!

Reduced Standard of Living – I’m a big promoter of a minimalist lifestyle, but it will be my decision and not a situation in which I am forced to reduce my standard of living. Every year there are thousands of retirees who suddenly realize they will no longer be able to enjoy the lifestyle they had prior to retirement. This forces them to move, sacrifice, or endure hardships that they never had to face their entire lives.

Quality Health Care – As you move into retirement you will realize that health care costs will rise dramatically. Without an employer to subsidize the cost of healthcare coupled with increasing premiums health care can easily become one of your top expenses. How does the old saying go? “You don’t know what you have until it’s gone?” I have a close friend who’s parents spend approximately $1000/month in terms of health care, definitely a hefty sum to say the least!

You have worked hard and will continue to work hard for every dollar you make. Keep it!

Army Of Dollars

Start thinking of the hours you spend at your day job as time recruiting soldiers. Kevin O’leary from Shark Tank understands Sun Tzu’s principles in relation to investing. Kevin views his money as soldiers, he sends them out every day expecting them to take prisoners to bring home. This is the mentality you should have when approaching investing, while war results in loss for both sides, it is your number one objective to never lose money!

Public speaking

Investing isn’t an easy task to learn, however it is a lot easier to understand than most people think. You simply need to master the following 4 investment principles:

  • Discipline
  • Strategy
  • Tactics
  • Patience

With that said, I’m happy to announce my “Investing Is War” series. Where I go into detail about these investment principles that will help you navigate the battlefield of the stock market. Enjoy!

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46 Responses to “Investing Is War”

  1. Zach @ Dividend Ladder Says:

    I love the army of dollars idea. It’s a great way to think about each dollar you earn and save and what it can do for you when its properly invested.

    Reply

  2. My Financial Independence Journey Says:

    I’ve read The Art of War several times, so I am looking forward to reading this series. I am particularly interested in how you’re going to relate chapter 12 to investing.

    Reply

    • Marvin Says:

      It took some thinking over but I was able to make a comparison with chapter 12 I hope you like it.

      Reply

  3. Matt Becker Says:

    I definitely agree that you need to get your money out working for you early on. That alone pays huge dividends down the road. I’ll be interested to see where this goes, as I don’t view good investing as war at all. It’s actually really simple and simply involves saving as much as possible and diversifying across a few good index funds. All the trading/stock-picking can be interesting, but it’s not what will really make you wealthy.

    Also, a slight disagreement on the point that “it is your number one objective to never lose money”, though maybe it’s semantics. I think it’s important for people to understand that their investments will lose value at different points in time, sometimes dramatically. And that isn’t a reason to panic, as long as you have a good plan in place. It’s impossibly to avoid all loss, and trying to do so will get you in more trouble than not.

    Reply

    • Marvin Says:

      Thanks for stopping by Matt! While starting early and compounding wealth is essential I personally do not invest in index funds. I’d much rather own capital efficient businesses with wide moats instead of a broad market of stocks. But as with anything to each his own.

      Undoubtedly you will lose money in the markets and Warren Buffet himself has had losing positions. I believe his quote shouldn’t be taken literally but should stand as a mindset for an investor to adopt. If you make it a point to never lose money I believe you will find yourself more vigilant on the stock positions you choose to place in your portfolio.

      Reply

  4. Kurt @ Money Counselor Says:

    Take no prisoners Marvin! Looking forward to your series…

    Reply

  5. John S @ Frugal Rules Says:

    I’ve never read the book, but I have heard great things about it. Looking forward to your series Marvin!

    Reply

    • Marvin Says:

      Great read and would highly recommend it, although I would recommend the updated version which is a lot easier to read.

      Reply

  6. Broke Millennial Says:

    Mastering investing is my next financial milestone. Excited to get some tips from this series!

    Reply

    • Marvin Says:

      Glad to hear that is your milestone. Definitely a great one to have, I hope you will find this series adds some value to your ultimate goal.

      Reply

  7. JC @ PassiveIncomePursuit Says:

    Looking forward to the series. I’ve been meaning to read The Art of War but I always get distracted by a new book. Shiny object syndrome. At least it’s for something that gets me thinking and not just a new toy. An army of dollars can accomplish so much more if put to work. I guess the sports saying about “defense winning championships” applies to personal finance as well. It doesn’t matter how much money you make, what matters is how much you keep.

    Reply

    • Marvin Says:

      Great read, I would even recommend the audiobook for when you are in the car traveling or working out.

      Absolutely, I know couples who clear over $350k a year but have no networth to show for it!

      Reply

  8. AverageJoe Says:

    You know how much I love this book. I can’t wait for the series. You’re going to have lots of great ground you can cover in that tome.

    Reply

  9. Grayson @ Debt Roundup Says:

    I like the series concept. I am trying hard to build my money army and then I will send them out to war.

    Reply

    • Marvin Says:

      Forming that mindset has made me a much better investor, maybe it’s from my military background but I deeply resonate with the idea of my money being soldiers.

      Reply

  10. Free Money Minute Says:

    “Army of Dollars” is the foundation of compound interest working in your favor.

    Reply

  11. Greg@Thriftgenuity Says:

    I definitely like the dollars as soldiers idea. Looking forward to the series.

    Reply

  12. Untemplater Says:

    Patience is a big one. It’s hard to not make investment decisions like selling due to fear based on emotion.

    Reply

    • Marvin Says:

      Very true, fear overcomes our entire sense of rational thinking which can wreak havoc on portfolios.

      Reply

  13. Mo' Money Mo' Houses Says:

    Cool, can’t wait to read more about in your investing series, since I really don’t know what I’m doing when it comes to investing.

    Reply

  14. Integrator Says:

    I can see some of the analogies between war and investing. Both require being aggressive, ruthlessness at times with your methodology, screening and execution. Both also require periods of extreme patience and discipline to stick with a strategy, even in the face of doubt and external forces. Look forward to reading more.

    Reply

  15. Jim Says:

    Fabulous post Marvin, I really dig the analogy that Kevin uses with regard to money being soldiers! You are right about healthcare costs in the future! The time in your life when you typically need healthcare the most is the time when you are typically not working full time, this seems like a recipe for disaster. Medicare will help if it is still around when we turn 65, which I seriously doubt.

    Reply

    • Marvin Says:

      I seriously doubt it as well Jim. That is why I pound my fist on the table when I talk about investing for your future. This is serious business and if you wait until you turn 60 it will be far too late.

      Reply

  16. Buck Inspire Says:

    Kevin O’Leary is hilarious on Shark Tank and he knows what he’s talking about. Army of Dollars? Interesting concept on deploying and bringing home prisoners. Another take on make your money work for you? Can’t wait for your series!

    Reply

    • Marvin Says:

      A lot of people hate Kevin but I like him. He’s a straight shooter. My second favorite quote from him is “Don’t cry over money because it certainly doesn’t cry for you”

      Reply

  17. Chad | The Stock Market and I Says:

    I think it comes down to “know the outcome before you go into battle”. This amounts to educate yourself before you hop in.

    Reply

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