Bruce Lee’s Guide to Investing: Fluid Strategies and Relentless Focus

During their recent episode, Taylor, Carlisle, and Steve Hou discussed Bruce Lee’s Guide to Investing: Fluid Strategies and Relentless Focus. Here’s an excerpt from the episode:

Tobias: I want to do some questions about the economy and the macroeconomy in general. But before we do that, JT, do you want to do your vegetables?

Jake: Yes, sir.

Tobias: do it a little bit early today?

Jake: Sure.

Tobias: Steve, Jake brings some interesting learnings for everybody, and then he tries to– from an unrelated area.

Jake: Or, make benefit–

Steve: Okay. Am I getting a quiz?

Tobias: No. Well, maybe then he tries to make it related to investing. So, that’s the best part of the whole thing.

Jake: Yeah, that’s where usually where the wheels fall off the wagon. [laughs] So, this week– This just happens to be a coincidence that we have someone of Asian descent on the show. But we’re going to delve into the world of Bruce Lee today.

And so, I just happened to be flipping on the TV and Enter the Dragon was on. If course, it’s really hard to keep going once that’s on. You got to just stop and watch it. I just remembered how much I loved Bruce Lee. And then, not only was he just a badass in these martial arts scenes, but there’s this inner strength and coolness that to me, just exudes from him that I’ve always been attracted to.

Of course, everybody knows he died super tragically, young at just 32 years old. But he left us a treasure trove of wisdom that’s not just about fighting, but thriving. Maybe we can even draw some investment parallels. We’re going to center off of four quotes from Bruce Lee. So, number one, let’s kick it off. Maybe his most famous piece of advice, which is “Be water, my friend.”

Now, this isn’t just about fluid movements in martial arts, although he did emphasize what he called the style of no style in his fighting. He didn’t want to be that formalized and traditional in his approach. He wanted to be like water. I think there’s something powerful there is investment strategy as well.

So, picture water ever adapting, flowing, taking the shape of its container, finding a way around obstacles. And in investing, I think this translates to embracing opportunity, however it presents itself and then navigating these challenges without forcing things. So, sometimes net-nets are available, like in Korea in the early 2000s. Sometimes it means getting a super high-quality business franchise for an ordinary price. Sometimes it’s merger arb, junk bonds, spinoffs. The point is to have lots of different strategies that you can low toward, depending on what the environment is calling for. Avoid labels. Have the style of no style. Accept this fundamental precept of getting a lot for your money, perhaps, and making good risk reward decisions. Just like water, you don’t have to force it, and take the shape of the container that’s offered by the marketplace.

Related to this concept is wu-wei, which we’ve covered in Season 3, Episode 40. If you want to double click on that concept. Toby, what’s the good working definition of wu-wei that you have?

Tobias: Yeah. Flow state, being in just the right thing at the right time. Minimal efficiency, I think.

Steve: Is this a Chinese phrase?

Jake: Yes.

Tobias: Wu wei is.

Jake: Yeah.

Steve: Sorry?

Tobias: It’s Taoist, isn’t it?

Steve: Okay. Wu wei. All right. Yeah. Okay.

Tobias: What does that mean to you, Steve?

Steve: It is a famous phrase from Taoism. It means doing by not doing, I guess.

Tobias: Yeah.

Jake: Yeah, that’s right. Effortless effort.

Tobias: Effortless achievement.

Jake: Yeah. All right. Quote number two. “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” So, this is really about mastery, focus, repetition, closing feedback loops, super deep concentration, deliberate practice. Really, you got to put in those reps in order to be good at this. It’s this relentless pursuit of improvement that leads eventually to exceptional results. And it’s very nonlinear.

Shane Parrish has this great quote that’s “Ninety percent of success can be boiled down to consistently doing the obvious thing for an uncommonly long period of time without convincing yourself that you’re smarter than you are.” All right, related quote number three. “The successful warrior is the average man with laser like focus.” So, in today’s world, filled with digital distractions, having a laser-like focus on your most important goals is, I think it’s damn near a superpower, these days.

In researching these veggies today, I stumbled across some of Lee’s personal journals. It became clear to me that based on the wording that he used, there’s these little clues, these mantras that he would repeat to himself in his journals. I’m pretty positive that Bruce Lee at one point read Think and Grow Rich by Napoleon Hill. I think it had a major impact on him. So, I personally think it’s a terrific book, and I’d encourage everyone, anyone, to read it. I’ll give a little unsolicited parenting hack that I’ve personally implemented, I thought would be fun to share.

So, I bought each of my boys, a leather-bound copy of Hill’s classic. It looks very serious. It looks like a Bible. It has black leather, it’s gold embossed writing on it, very, very Bible like. I think there’s something to the weight of a message that is derived from the medium that carries it. It feels very serious.

So, when each of my sons, when they turned 12, I gave them their copy of Think and Grow Rich. Before that, I went down to the bank and I got a big stack of $2 bills. I put one bill at the end of each chapter in the book, and I told them that that cash would then be unlocked as they read through the book and got to the end of that chapter. The only catch was that the money had to be spent in pursuit of their dreams. So, [Tobias laughs] that was my little parenting thing you guys can steal that if you want.

Tobias: That’s a good one.

Steve: [laughs] Excellent.

Jake: And then, last quote, number four. “There are no limits. There are plateaus, but you must not stay there, you must go beyond them. If it kills you, it kills you.” Now, that part I’m not sure I agree with, but–

[chuckles]

Jake: This is really about pushing past your boundaries, embracing that mindset of continuous growth. In any pursuit, you’re going to run into plateaus. It can be really disheartening and frustrating when you feel stagnant. I think investing is no different. It could feel like ground dog day. Toby, tell me if this rings true for you. Mag Seven up, Russell 2000 value down, value spread [Tobias laughs] widened again, yield curve still inverted. [laughs] I’m going to stop now before you start crying, but–

Tobias: I think that’s an excellent segue, because we got Steve here. That’s exactly where I was going to go next. What do you think, Steve? Where are we? Where are we with all of that, the economy, the stock market, inflation? We’re going to go through all of that with you now.

Jake: Well, let me just finish these off.

Tobias: I’m sorry. I’m sorry.

Jake: Because if I lose my train of thought, I will never get it back. All right. So, after all that– I’m just teasing you, Toby. I think this too shall pass. Even when you feel bored by the market, you could still keep working on your skills. I think Peter Cundill said something like, “There’s Always Something to Do.” That was the title of a book of his.

You can learn about new businesses, you can learn about new business models, you can discover new mental models, you can add new analogies to your toolkit, which I like to work on. You can read history, you can look for interesting data correlations like Steve does, you can read trade magazines, get your physical and mental health dialed in, so that you’re ready for battle when it does shift into the next phase. Work on your metagame of sharpening all of your processes, keep score, track your KPIs, there’s lots of things you can always be working on.

If you think about complex adaptive systems, in general, like the stock market, there is no standing still. The market’s always adapting. It’s always neutralizing edges, and the bar is always being raised for what’s expected of you. And so, if you aren’t serious about that active improvement and you’re not putting in the dedicated work, you’re naturally falling behind. There is no treading water, really. You’re either advancing or falling behind.

So, Bruce Lee’s wisdom, I think, offers us incredible guidance, not just for the martial arts, but for achieving excellence in any field, including investing. So, remember to flow like water, master your craft, stay focused and keep pushing your limits.

Tobias: That was a good one.

Jake: All right. Over to you, Steve.

Steve: [laughs] That’s a hard act to follow. [laughs]

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts