February 2, 2007 – To win in investing, one has to deliver your punch while the markets are “breathing in”. What does this mean? Think about how your lungs operate. When you breathe in, your lungs contract and shrink and when you breathe out, your lungs expand. Just as a martial artist wants to deliver a punch when his or her opponent is breathing in, as an investor, to be successful, you must also deliver your punch when the markets are contracting as well.
Stocks are probably the only thing in life that most people want to buy as their prices expand. If you were willing to pay $200 for a pair of shoes, how many people would then pay $500 for those same pair of shoes? Maybe 1 in a 1000. Maybe even zero. Yet it is all too common that stocks languish at about $20 a share and then when they move to $60, everybody piles in when the risk-reward setup of the stock is terrible and people are more likely to lose money than make money.
If you find assets or stocks as they are contracting, or before they begin their expansion higher, this is the safest place to enter a position. Even analysts at major firms are guilty of attacking the markets when they are breathing out and not in. I know that J.S. has told me that he’s seen stocks recommended as strong buys from analysts at the top global firms after they have doubled in price from the point he has bought them. If an asset or stock becomes known to the masses, including analysts, most likely the asset has already breathed out. Attacking it at this point by buying into it will most likely result in failure.
Every martial artist knows the benefits of zen breathing. I’ve always been extremely fit, and when I first started training in martial arts, as our class proceeded through a series of progressively more strenuous exercises, I remember thinking, “How come I’m winded when these people I know I’m in better shape than aren’t?” I was to learn later it all had to do with my failure to breathe properly.
Though this sounds like an oxymoron, most people never learn to breathe properly. You would think that we would be born with the ability to breathe properly, and as babies, this is the closest most people will ever come to breathing properly. But as we grow older, most people stop taking deep breaths and breathe in short shallow breaths. Most people only use about 30% of the capacity of their lungs. Divers naturally learn to use a greater capacity of their lungs than most people. Ever wonder how free divers can stay under water for unbelievable spans of eight to ten minutes or more? It’s because they’ve learned how to use a greater capacity of their lungs than most people.
When sparring, if you haven’t learned to breathe properly, your failure as a martial artist will become most apparent. While you are sucking wind, your sparring partner may not seem to be breathing hard at all. To martial artists, how one regulates breathing patterns is critical as well. Strike someone while breathing out and while he is breathing in and the strike can be devastating.
Although all karate practitioners are familiar with the “kiai”! shout, many still don’t understand its true nature – to summon up one’s spirit and simultaneously deliver the strength of one’s spirit through a coordinate “kiai” shout and strike. On the contrary, strike someone while breathing in and while he is breathing out and the same strike may have no effect. Weight lifters are well aware of the importance of breathing as well. Novice weight lifters, when straining to lift weights near their maximum capabilities, often make the mistake of holding their breath. Lifting the weight is much easier if they breathe out while doing so.
Breathing is even critical in regulating stress and fear. If you ever feel extremely stressed out or frightful, breathe deeply for just one minute and you will be amazed at how quickly your stress or fear dissipates. In martial arts, when attacking, one always tries to win by striking an opponent while they are breathing in. This is the exact purpose of the double punch. The first punch is performed to make the opponent gasp in. Then, as the opponent is gasping in, a one-inch punch is delivered while the opponent is still breathing in. It is the second punch, not the first, that will deliver devastating effects. A sealed fist is delivered for exactly the same reason.
Attacking, or buying into assets, when they are calm, breathing in, and unknown, is much more likely to result in success.
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.