Sun Tzu Art of War Quotes

“He will win who knows when to fight and when not to fight” – We should only invest when there is clear benefit to do so, do not do something just for the sake of doing something. Which means, do not invest just because you feel like investing. Have a clear thesis that has been tested through your principles – before putting a penny on any investment.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – If you understand the companies that you are investing in well – and you understand your character well, you can sleep at night and not panic. Not only that, your odds of making money increases by a lot.

If you do not understand the companies or your character well, your odds decrease.

If you do not understand both the companies and your character, it is the pure form of throwing money away – gambling.

“The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity for defeating the enemy.” and “He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.” – What we can control is only our buying and selling prices as well as the company we pick.

We need to pick the best choice possible by first thinking if we are reducing the risks to the best we could.

By reducing the risks in our stock picks decisions, we can enhance our odds of making money.

How can we reduce risks? Some of them include sticking within our circle of competence when picking stocks and invest with a margin of safety – rationally.

“The control of a large force is the same principle as the control of a few men: it is merely a question of dividing up their numbers.” – investing is one of the best businesses in the world because it is scalable. We can generally invest $10,000 or $10,000,000 in the same company and get the same return using roughly the same effort to make the buying and selling decision.

“You can be sure of succeeding in your attacks if you only attack places which are undefended. You can ensure the safety of your defense if you only hold positions that cannot be attacked.” – We should only buy companies at prices that offer a margin of safety. And only hold companies if it still offers strengths that give us a good probability of sustainable business growth in the future.

“Ponder and deliberate before you make a move.” – Whatever buying or selling decisions we make should never be done in haste. They should be done with careful thought and planning. Using system 2 (the rational system) instead of system 1 (the reactive, emotional system).

“Now the general who wins a battle makes many calculations in his temple ere the battle is fought.” and “The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.” – An intelligent person is someone who does not repeat the same mistake because they remember that they made that mistake in the past.

Therefore, in investing, every mistake is a blessing because if we remember them, we are likely not to repeat them in the future. Mistakes such as buying a bad company in the hope that it will turn around or selling of great companies too soon are two examples of common investing mistakes.

In Conclusion

Sun Tzu is a wise person and his teachings can be applied to both life and investment. My favorite quote has got to be “He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.”

What happens with the stock market is something that we cannot control. But what we can control is to try not to do stupid things and maximize our probability of making money over the long run by investing in companies we understand and at a price that makes sense to us.

I hope the above article is value-adding to you. If you like it, please share it! 🙂

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