An appetizer
With the market up again these past few days, I feel like talking a little more.
A long time ago I saw a news story on Facebook about a young guy who used his FB account to gather tens of thousands of followers, maybe more. He traded stocks, called the shots, and whatever he pointed at seemed to move. In the end, he was convicted. I can’t find that exact link anymore, but I did find similar cases. More than twenty years ago, there was already a gifted teenager stirring up trouble on Wall Street.
I’ve always felt that funds have a similar crowd-gathering effect. The difference is that fund managers are tied down by too many restrictions. They often can’t short, and even building or cutting positions comes with all kinds of limits. The fund category itself is the clearest constraint of all. They’re dancing in shackles. If someone still manages to become the star of the field under those conditions, I think that takes a lot more than skill alone. Fund managers started getting treated like fan-idol figures a long time ago too—handsome men, glamorous women, people with looks that market just as well as performance.
The old man and the sea
I started building my fund positions around 2019. At the peak in 2021, it really did feel like The Old Man and the Sea. I had hooked a huge fish, lashed it to the side of a tiny boat because there was no room to bring it in.
Then came 2022, 2023, and 2024. The giant fish I had caught was picked clean until all that was left was a white skeleton.
What’s strange about the stock market is that fish bones can grow flesh again. As long as you don’t throw the bones away, there’s still a chance. It’s almost like Prince of Persia: The Sands of Time—time reversing itself.
And over the past few days, that rewind has sped up.
Another way to look at it
Cast a long line and wait for a big fish.
I’ve had that line in the water for about five years.
When I add to a position, that’s me letting out more line. At the lows I do add cautiously, because what worries me isn’t whether we’ve already hit the floor. There might be a basement below the floor, and maybe eighteen levels of hell below that.
So if I had to describe myself, I’m less of a value investor than a cyclical investor.
It’s a bit like sensing the rhythm of time. Some people don’t wear a watch and don’t check their phone or computer, yet they can still estimate the time pretty accurately. Some people don’t need a scale—give them a bag of loose rice and they’ll grab something very close to 500 grams.
At bottom, it’s about turning yourself into a measuring instrument. Eyes, ears, nose, tongue, body, mind—you keep using them, and you keep learning.
Learn what, and why?
Some people insist on never studying, never reading, and they still seem to make plenty of money.
But in reality, they learned something too: social maneuvering, flattery, bribery, all that sort of thing. That also takes skill, and some of it is illegal. A lot of the methods for getting rich overnight are practically written into the law books.
Kazuo Inamori nearly ended up becoming a disciple of the underworld. If that had happened, there would have been one less management legend.
Mao once said that the true path of human society is full of upheaval.
What makes something hard is often exactly what makes it interesting. Yesterday I was talking about game difficulty. I like games that are more complicated, and I don’t cheat. Today I was talking with my kid about why I don’t really like RPGs. It’s because I take them too seriously: I clear every map, finish every quest, chase every achievement. Before I even start a game, I usually check how much time it will cost.
Strategy games and RTS games can be slow-paced too, but some RPGs go on even longer, so I don’t play many of those either. What I play more are action-heavy games where one session tops out at around two hours, and more commonly runs ten to thirty minutes.
Most things are interconnected if you really think them through, especially on the mental or spiritual level.
Laozi, Mencius, Confucius, Mozi, Marx—people read and reread them. Mao did too. I’ve been reading more books about Mao lately, and it reminded me of that old story about Luo Yonghao going through New Oriental training, feeling that “cool breeze” of 38-degree heat, then buying several pounds of motivational books.
Now when I read books about Mao, I honestly find them pretty motivational.
There was a time when I kept wondering what was wrong with society. Whenever I saw news about some major corrupt official being arrested, it felt less like justice and more like an advertisement for the civil service: wealth, power, luxury. The same way every story about someone winning billions in the lottery is basically an ad for the lottery.
After reading From Emperor to Citizen and seeing how Puyi and Japanese war criminals were reformed through labor—those scenes, those stories—I gradually understood better why the Communist Party was able to govern. It wasn’t only about political power growing out of the barrel of a gun.
Then I read about Du Yuesheng. Looking at Communist policy, even Huang Jinrong, a gangster who didn’t flee to Hong Kong, did not meet a catastrophic end. Du Yuesheng and Chiang Kai-shek used each other. Both the Nationalists and the Communists invited Du many times, and he went with neither side. He had killed quite a few Communists before, so he wanted to see what would happen to Huang first. He kept watching and waiting until he died.
Those who moved early really did have an edge. Quite a few overseas Chinese had dealt with both sides during the period of KMT-CPC cooperation, and many eventually stopped supporting the Nationalists. The Communists had no grand display. Living conditions were harsh, food and supplies were scarce, even eggs often had to be collected from ordinary people.
Mao read extensively. He reportedly read Dream of the Red Chamber five times. He reread many other books too, ancient and modern, Chinese and Western. He read On War and later wrote On Protracted War. Some people say one of the few natural advantages humans have over many other animals is endurance.
He studied on his own, and he also regularly recommended books and materials for party members to study. I’ve also looked at some reading lists once recommended by Wang Qishan.
Whether it’s an individual, a political party, or any other kind of organization, continuous learning really matters.
As for me, I’m just an ordinary outsider trying to make sense of things, a freelancer—if you want to put it less politely, unemployed.
Most learning is free
In most cases, learning is basically free. And “free” can be the most expensive thing of all.
What that means here is simple: what you spend is the time and energy that could have gone toward making money or entertaining yourself.
So don’t rush into paid financial courses that are really just harvesting fees. Free material is enough for most people.
If you need a certification or a credential for a job, then sure, paid training may help you deal with the exam more efficiently. But most of the time, you don’t actually learn that much.
Insurance and investing belong together
I’ve stressed before that investing should be done with spare money. Anyone who knows the basics has heard that.
The other piece is insurance: critical illness coverage, accident coverage, term life, and the other forms of protection that are actually necessary.
The point of insurance is to make your spare money truly spare. It widens your moat.
What insurance does best is convert risk into a form of return.
To put it bluntly: when you’re alive, you’re a machine for making money. When you’re dead, you can still become a printing press.