February 16, 2007 – In martial arts, there is the concept of mu shin ryu, which loosely translated means “abandon the mind.” In almost every blog, I speak of how martial arts concepts can make you a better investor. In this instance, it is not the application of this concept, but the recognition of this concept and how it is applied to your disadvantage, that is important. Almost every school of martial arts, if it is a proper one, will teach some variation of this concept. Even Bruce Lee’s famous “Feel. Don’t think” quote from Enter the Dragon was an extension of mu shin ryu. In martial arts, one practices techniques until they become second nature so that mind, body and spirit can act in harmony without the process of thinking and reacting slowing one down. Thought and reaction become instantaneous.
It’s ironic because in many ways, global investment houses have become demagogues in this aspect. They have convinced people over decades to “abandon the mind” and to trust them explicitly. Even though the masses of people recognize that the quality of publicly accessible information about investments has grown by leaps and bounds over the past decade, most will still unfailingly “abandon the mind” and blindly accept that the best way to invest is the singular method taught by every global investment house — that of diversification.
In fact, every single unscrupulous business that only wants your money will try to convince you to “abandon the mind”, including shady investment newsletters, shady investment software programs that make outrageous claims of predicting every market correction and bull run at precise points, multiple get rich at home schemes, and so on.
How many “get rich quick” pitches have you ever heard that present unlimited upsides with seemingly no downside? How many meetings have you had with financial consultants that tell you, “Listen, if you think about it, there is no comparison between the financial products that existed 25 years ago and the ones that exist today. Back then we didn’t offer baskets of foreign currency to hedge against a declining dollar; or caps, collars, and swaps; or commission free trading (Bank of America in the United States has offered online commission-free trades; or private equity funds. The difference between back then and today is like night and day. But isn’t it crazy that our recommended investment strategies (primarily Modern Portfolio Theory of diversification) hasn’t evolved at all?”
You’ll never hear that comment. Instead, you much more likely to hear in so many words, “We’re the experts, trust us, and this is what you need to do with your money” with a subliminal message of “abandon the mind’ thrown in the pitch somewhere. The concept of mu shin ryu or of “abandoning the mind” can both be dangerous and beneficial to an investor. It can be dangerous when one allows oneself to be manipulated by instinctive responses to the play on fear and greed that investment firms utilize to convince you to turn their money over to them. It can be beneficial if one abandons the conditioning of investment firms that their way is the best way, that markets are 100% efficient, and numerous other universally accepted beliefs. To have a free mind in this aspect and to question all questionable theories and strategies imposed upon you will undoubtedly make you a better investor.
I only can imagine that most investors unfailingly accept this rubbish because they don’t know the proper types of questions to ask. If you don’t ask the right types of questions, you’ll get wrong answers until your face turns blue. To assist you, my partner J.S. will compile a list of some of the right types of questions to ask your investment advisor, so keep an eye out.
J.S. Kim is the founder and Managing Director of maalamalama, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.