I didn’t really begin to achieve success in investing until I started learning more about history. Or to state it a bit more emphatically,
You will not achieve much investing success unless and until you brush up on your history.
Why is this so important?
Because history gives you perspective, and perspective is crucial when making investment decisions. Perspective allows you to see “the big picture”, and as much as I talk about the power of focus, “the big picture” is equally important.
This may seem contradictory (“hey, I thought Kung Fu Girl said to narrow my focus, and now she’s telling me I need to understand the big picture?!?!”) but please allow me to explain why both are equally important to your investing success.
It’s time to introduce the kung fu concept of Yin and Yang…
Yin and Yang
Kung fu is based on the symbol of the Yin and Yang, a pair of mutually complementary and interdependent forces that act continuously, without cessation, in the universe.
Here in the West it is common to mistake Yin and Yang as being dualistic (meaning one is the opposite of the other), but in the Tao they are seen as complementary and interdependent (meaning one cannot exist without the other).
Bruce Lee explains Yin and Yang like this:
“They are conceived of as essentially one, or as two coexisting forces of one indivisible whole. They are not cause and effect but should be looked at as sound and echo, or light and shadow. If this “oneness” is viewed as two separate entities, realization of the ultimate reality of kung fu won’t be achieved.” — Bruce Lee, The Tao of Kung Fu
The Yin/Yang symbol has within each of its halves a small circle that is the color of the opposite half. Within the half that is Yin this small circle represents Yang, and vice versa, because one cannot exist without the other.
“Yin” is said to represent anything in the universe as negativeness, passiveness, gentleness, internal, insubstantiality, femaleness, moon, darkness, night, etc.
“Yang” is said to represent anything as positiveness, activeness, firmness, external, substantiality, maleness, sun, brightness, day, etc.
Together, Yin and Yang illustrate the balance that is necessary and inherent in all life—nothing can survive long by going to either extreme, being pure Yin or pure Yang.
As Bruce says (we’re on a first-name basis now that I talk about him almost daily…),
“Extreme heat kills as does extreme cold. No violent extremes endure. Nothing lasts but sober moderation. Notice that the stiffest tree is most easily cracked, while the bamboo or willow survive by bending with the wind. Firmness without pliancy is like a barrel without water, and pliancy without firmness is like water without a barrel.” — Bruce Lee, The Tao of Kung Fu
Another great example of this Yin and Yang “oneness” is riding a bicycle. It is impossible to move forward without simultaneously pushing down on one pedal (Yang) and releasing the other (Yin). Both seemingly “opposite” motions are needed to produce the desired effect (going forward). This Yin (“releasing”) and Yang (“pumping”) result in the “oneness” of pedaling and moving forward.
(And neither extreme will get you anywhere on its own…if you simultaneously push down on both pedals at the same time or “release” them both at the same time you will most likely fall over.)
Which brings me back (finally!) to why understanding “the big picture” is so important to your investing success!
Back to History and the Importance of Perspective
As I mentioned above, understanding history is crucial to your investing success because it provides you with much-needed perspective when you are making your investing decisions.
Like Yin and Yang, you must not only learn the specific focused strategies and techniques (for example, “how to value an individual stock”) but you must also understand the bigger picture (“is the stock market itself in a secular bull or bear market?”).
Knowing either one of these in the absence of the other will absolutely ensure your failure, just like the above example of riding a bike.
If you understand “the big picture” and are convinced the stock market is a good place to invest your hard-earned money, but have no idea how to properly value a stock, you will likely get clobbered. Likewise, if you are an expert at valuing stocks but don’t have a grasp of the big picture forces that are currently wreaking havoc on the stock market, you will also most likely get crushed.
Both the “big picture” and the “focused strategies” are crucial to your investing success, just like Yin and Yang.
We will look at both “the big picture” and the “focused how to strategies” in the coming weeks…I have a lot more specifics in store for you!
And tomorrow I will share with you what I first learned about monetary history, bubbles, stock market history, and more, and how that has affected my own personal investment strategy (e.g. “Why Kung Fu Girl is still bullish on precious metals, especially since they have now dropped in price!”).
In the meantime, consider this….are you a “spender” or a “saver”? (Careful….trick question!) 🙂
I also want to thank you all so very much for your kind and helpful feedback on the survey! If you haven’t had a chance to take it yet you can do so by clicking this link here (thank you!):
Thank you again so much for your comments and feedback—I really appreciate it and I thank you for being a part of our community!
To your financial success,
—Kung Fu Girl
“Kung fu is a way of life as well as a mode of self-defense. It is based on Yin (negative) and Yang (positive), where everything is a complement. Examples are softness with firmness, night with day, and man with woman. It is a quiet awareness of one’s opponent’s strength and plans, and how to complement them.” — Bruce Lee, The Warrior Within