The Similarities Between Investing and Martial Arts

November 4th, 2006

November 4, 2006 -

Since Kaeho has been absent in training recently, I’ve handed over the Friday post to him this week. The light hearted Friday post is one day late, but finally….here it is.

Like the stock markets, martial arts are dynamic. There are so-called “hard” art forms such as kyokushinkai karate founded by Mas Oyama and “soft” styles such as aikido founded by O’Sensei Ueshiba. “Hard” styles are linear, focused on chopping and cutting an opponent’s attack whereas “soft” styles are circular, never fighting the energy presented by an opponent’s attack.

With soft styles, if someone grabs your arm, you disengage the opponent not by retracting and pulling away but by extending the path of his attack until the energy dissipates and returning the opponent’s energy to him. It is the path of least resistance but nonetheless extremely effective. In investing, sometimes during bull runs you want to take this path and just go with the flow. But many times, things are not what they seem. In this case, you want to cut the illusion in half and take an opposition, confrontational stance.

In a previous blog entry, J.S. wrote about how big firm analysts and economists more times than not will tow the company line at the expense of the goodwill of their clients. He wrote about how the punishment for not doing so is often being dismissed by the firm. The financial media is often the same, towing the line of what the financial powers in their country want them to say. Listening to them can often hurt you as well.

However, now is not the time to discuss this and I’m sure J.S. will discuss this more in depth in a later blog entry. For now enjoy, this video of multiple aikido senseis demonstrating randori, defense against multiple attackers. Many people that don’t know anything about martial arts claim that randori demonstrations are “fake” and that in a real combat situation, people would not go flying in the air. Aikido deals with the breakage of bones and luxation of joints.

The only reason people go flying in the air or do flips in randori is that the techniques being applied to them are so painful that performing a flip alleviates the tension of the technique that would otherwise fracture bones and dislocate joints. Sure, the participants, or attackers, acquiesce to the sensei, but the reason they do so, is that if they did not, the results would be a trip to the hospital.

Maholo,

Kaeho

Entry Filed under: The Zen of Investing