36 Stratagems for Investors E-Book
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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: Wiley Investment Classic Series
- Sprache: Englisch
The 36 Stratagems are a unique collection of ancient Chinese proverbs that describe some of the most cunning and subtle strategies ever devised by man. Readers, and specifically investors, at all levels will benefit from this interpretation of the 36 stratagems detailing how to apply them in investment and "economic warfare." HSBC's 36 stratagems encourage flexibility and new ways of thinking about investment issues. "Investor education is not merely about how many lessons can be taught; but how much investors can learn from each lesson. This book combines modren investment and ancient Chinese wisdom in plain language and with interesting stories. It explores investment concepts yet opens your mind and shows you a new way of understanding fund investing." Mark McCombe, Global Chief Executive Officer, HSBC Global Asset Management "There is an old saying, "Gain knowledge for the preservation of wealth." Funds create value, and knowledge of funds will similarly enable investors to create value. The value of knowledge is no less important than the value of capital. For that reason, 36 Stratagems for Investors has set out to show the value of knowledge as a way to capital accumulation and preservation. Readers will benefit from stratagems explained in every page of the book to aid them in their financial investment." Qin Shuo, Chief Editor, China Business News "HSBC Jintrust's 36 Stratagems for Investors is an eye- opener for readers, investors and non- investors alike. HSBC Jintrust has done an impressive job of creating a book with the retail investors in mind; as it puts itself in their shoes to explore issues and solutions as they would. Each of the 36 stratagems is clearly and succinctly told and explained to allow prompt application. May the stratagems depicted in this book gain popularity to become part of the fund culture and investment culture in China, to enable tens of millinos of investors to profit by it." Liu Dong, Deputy Editor, 21st Century Business Herald
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Seitenzahl: 217
Veröffentlichungsjahr: 2012
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Contents
Foreword
Stratagem 1 Fool the Emperor to Cross the Sea
Origin of the Stratagem
New Spin on Funds
Stratagem 2 Besiege Wei to Rescue Zhao
Origin of the Stratagem
New Spin on Funds
Stratagem 3 Kill with a Borrowed Sword
Origin of the Stratagem
New Spin on Funds
Stratagem 4 Bide Your Time to Wear Down the Enemy
Origin of the Stratagem
New Spin on Funds
Stratagem 5 Loot a Burning House
Origin of the Stratagem
New Spin on Funds
Stratagem 6 Clamor in the East and Attack the West
Origin of the Stratagem
New Spin on Funds
Stratagem 7 Create Something from Nothing
Origin of the Stratagem
New Spin on Funds
Stratagem 8 Repair the Walkway Openly but March Secretly to Chéncng
Origin of the Stratagem
New Spin on Funds
Stratagem 9 Observe the Fire from the Opposite Shore
Origin of the Stratagem
New Spin on Funds
Stratagem 10 Hide a Dagger Behind the Smile
Origin of the Stratagem
New Spin on Funds
Stratagem 11 Sacrifice a Plum Tree for a Peach Tree
Origin of the Stratagem
New Spin on Funds
Stratagem 12 Seize the Opportunity to Lead a Sheep Away
Origin of the Stratagem
New Spin on Funds
Stratagem 13 Beat the Grass to Startle the Snake
Origin of the Stratagem
New Spin on Funds
Stratagem 14 Borrow a Corpse to Raise the Spirit
Origin of the Stratagem
New Spin on Funds
Stratagem 15 Lure the Tiger Down the Mountain
Origin of the Stratagem
New Spin on Funds
Stratagem 16 To Catch Something, First Let It Go
Origin of the Stratagem
New Spin on Funds
Stratagem 17 Toss a Brick to Draw a Gem
Origin of the Stratagem
New Spin on Funds
Stratagem 18 Nab the Bandits to Capture the Ringleader
Origin of the Stratagem
New Spin on Funds
Stratagem 19 Rake the Firewood from Under the Pot
Origin of the Stratagem
New Spin on Funds
Stratagem 20 Fish in Murky Waters
Origin of the Stratagem
New Spin on Funds
Stratagem 21 Shed Your Skin Like the Golden Cicada
Origin of the Stratagem
New Spin on Funds
Stratagem 22 Shut the Door to Catch the Thief
Origin of the Stratagem
New Spin on Funds
Stratagem 23 Befriend a Distant Enemy to Attack One Nearby
Origin of the Stratagem
New Spin on Funds
Stratagem 24 Borrow the Road to Conquer Guo
Origin of the Stratagem
New Spin on Funds
Stratagem 25 Replace Beams with Rotten Timber
Origin of the Stratagem
New Spin on Funds
Stratagem 26 Point at the Mulberry but Curse the Locust Tree
Origin of the Stratagem
New Spin on Funds
Stratagem 27 Feign Ignorance to Bide Time
Origin of the Stratagem
New Spin on Funds
Stratagem 28 Lure the Enemy Onto the Roof and Remove the Ladder
Origin of the Stratagem
New Spin on Funds
Stratagem 29 Tie Silk Blossoms to the Dead Tree
Origin of the Stratagem
New Spin on Funds
Stratagem 30 Switching from the Role of a Guest to that of a Host
Origin of the Stratagem
New Spin on Funds
Stratagem 31 Seductress at Work
Origin of the Stratagem
New Spin on Funds
Stratagem 32 Semblance of Calm in the City
Origin of the Stratagem
New Spin on Funds
Stratagem 33 The Strategy of Sowing Discord
Origin of the Stratagem
New Spin on Funds
Stratagem 34 Inflict Harm on Oneself to Gain Sympathy
Origin of the Stratagem
New Spin on Funds
Stratagem 35 The Strategy of Combined Tactics
Origin of the Stratagem
New Spin on Funds
Stratagem 36 If All Else Fails, Beat a Retreat
Origin of the Stratagem
New Spin on Funds
Index
Copyright © 2009 John Wiley & Sons (Asia) Pte. Ltd.
Published in 2009 by John Wiley & Sons (Asia) Pte. Ltd.
2 Clementi Loop, #02-01, Singapore 129809
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as expressly permitted by law, without either the prior written permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center. Requests for permission should be addressed to the Publisher, John Wiley & Sons (Asia) Pte. Ltd., 2 Clementi Loop, #02-01, Singapore 129809, tel: 65-6463-2400, fax: 65-6463-4605, e-mail: [email protected].
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional person should be sought.
Neither the authors nor the publisher are liable for any actions prompted or caused by the information presented in this book. Any views expressed herein are those of the authors and do not represent the views of the organizations they work for.
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Library of Congress Cataloging-in-Publication Data:
ISBN 978-0-470-82433-7
The HSBC logo is a registered trademark of the HSBC Group. HSBC Jintrust is duly authorized to use the trademark.
Typeset in 11.5/14pt Bembo by Aptara Inc., New Delhi, India
10 9 8 7 6 5 4 3 2 1
Foreword
Within two years of its inception, HSBC Jintrust published two books. The first was Honglou Fortune—Wealth for Generations. And this is the second, 36 Stratagems for Investors—Timeless Financial Wisdom from A Chinese Classic. In both instances, we use ancient Chinese Classics as reference points largely because traditional Chinese culture has made its influence felt far and wide, and is therefore able to trigger a fair degree of resonance. Another reason is that scholars from the ancient times have much to offer in terms of their intellectual discourse and wisdom, even to people in the modern day and age. Their thoughts and teachings could very well bring us enlightenment and solutions to many of the problems that we often struggle to come to grips with.
The 36 Stratagems are a collection of the military tactics and strategies employed in ancient China. Many of the terms coined for the stratagems have evolved into popular proverbs. More often than not, reverse psychology and divergent thinking are tactics used to take the enemy by surprise. In our attempt to incorporate such tactical moves into fund investment, we discover they make the key rationales for fund investment much easier to comprehend and relate to.
As Confucius was recorded as saying in Yi Zhuan, or the Commentary on the Book of Change (also known as I-Ching), a feasible plot must be one that the masses can partake in. Hence, military generals and commanders do not have exclusive rights over the use of strategies. Everyone should be able to adopt the 36 Stratagems for problem solving. This book uses each of the 36 Stratagems to guide investors on how to identify and pick a trustworthy fund company as well as a suitable fund product, how to earn higher returns and avoid unnecessary losses, as well as how to avoid all sorts of common mistakes.
Generally speaking, in an emerging market, investors may invest in funds in the same way as they think and do in stocks. As a result, these investors may develop many habitual biases and misconceptions. However, as the market gradually matures and investors begin to choose to move collectively in the same direction, it will become a force to be reckoned with, to the extent of effecting a major market differentiation and restructuring exercise. I believe there will come a time when fund companies undergo further vertical segmentation to increase their focus on niche investment areas. Consequently, investors will cease to rely solely on their impressions of fund companies to make their choices. Instead, they will pay greater attention to a series of composite benchmarks, consisting of performance results, services, level of professionalism, and company image. Investors will also cease to pick fund products purely for short-term rate of return. Instead, they will build a portfolio of products strategically tailored to their personal as well as families’ needs.
Of course, I hope growing acceptance of these two books will help bring about greater transparency and progress to the fund industry. We hope to work hand in hand with the industry to realize rational fund investing. To use Hollywood as an analogy, Tinsel Town is not merely a processing plant for movie productions. It has produced numerous derivative products that have become trailblazers and trendsetters in more ways than one to effect changes in people’s lifestyles and values. I believe fund investing is not so imposing and daunting that only a handful of people are able to comprehend it. By incorporating it into our culture, it will be transformed from a series of boring numbers into a lifelong lifestyle concept.
I would like to extend my heartfelt thanks to Ms. Rena He Hanxi and her team for their top-notch work and astuteness in the market, their efforts in culling and compiling copious amount of market case studies and materials, as well as their judicious professional attitude and insurmountable passion in writing this book. I believe many of the examples and thoughts cited in the book will remain useful and valuable references even after years when the market has undergone a sea of changes.
I sincerely hope that every reader and investor will stand to gain from this little book.
Steve Lee
CEO
HSBC Jintrust Fund Management
Stratagem 1
Fool the Emperor to Cross the Sea
See Through All Guises for Calculated Returns
Origin of the Stratagem
Emperor Tang Taizong, the second emperor of the Tang Dynasty, who ruled from 626 AD to 649 AD, was said to have once led 300,000 soldiers from Changan to Liaodong. When the troops arrived at a beach, Emperor Tang Taizong looked troubled as he scanned the cold and choppy waters. Sensing his anxiety, General Xue Rengui invited the emperor to join him and his soldiers in a tent for some food and wine.
Music filled the air. All the merrymaking soon made the emperor relax and forget his worries. However, the respite was cut short by the sound of abrupt and thunderous waves. Worried, the emperor took a cautious peek out of the tent. To his surprise, his war vessels had set off without his knowledge, and were almost reaching the opposite shore of the sea. This tactic employed by General Xue Rengui is still used by the military today, as they carry out stealth missions.
New Spin on Funds
US$1 funds and the truth about net asset value
Performance indicators
Do your math
US$1 funds and the truth about net asset value
Investors love “US$1 funds,” as the very claim of US$1 net asset value (NAV) seems such a bargain, compared with a US$2 net asset value. In fact, the net asset value alone does not tell us anything. It is also a fallacy to judge a fund’s performance based on its net asset value. More critically, we should take into consideration the history of the fund, the potential dividend payouts, how the fund compares with the performance of similar funds in the market, and so on. Someone may say: “This fund has a net asset value of just US$1 right now. You should buy it!” That should raise the red flag. Do not be fooled.
Truth be told, a “US$1 fund” does not enjoy any advantage over other funds in terms of its growth potential, except for the fact that a US$1 fund makes returns easy to calculate and follow. Even a spinoff will not affect the asset size of a “US$1 fund.” The only change in the event of a spinoff is an increase in its holdings, which offers a fair amount of flexibility if you decide to buy back or swap your shares.
Performance indicators
A bias toward “low net-asset-value funds” is not encouraged. If you are not convinced, the following arguments may well change your mind. Smart fund investors always do their homework with regard to how fund investment returns are calculated, the fund’s net asset value per share, as well as the correlation between accumulative net asset value and dividends.
Net asset value per share, accumulative net asset value, and dividends are direct indices of a fund’s investment returns. Net asset value per share refers to the actual value of a single unit at a certain point in time. It is a key index to measure how well or how badly a fund is managed. It is also an indication of the bidding and buyback (trading) price of a unit of fund. The prices do not factor in dividends which reflect the profitability of a fund. It shows the fund’s actual earning power.
Accumulative net asset value is the total sum of the latest net asset value and accumulated dividends, which reflects the accumulated net income of the fund since its inception. Accumulative net value also tells us about a fund’s dividend performance. Hence, accumulative net asset value is more important than the latest net asset value or dividend as an indicator for an investor to measure investment returns. Accumulative net asset value captures more directly and broadly the performance of the fund in operation. Higher accumulative net asset value generally means the fund is faring better than before.
Dividends refer to cash payouts or dividend reinvestment awarded to fund shareholders for profit made.
Do your math
What if there is a dividend payout? You will see net asset value per share taking a dip after the payout. Let’s say net asset value per share stands at $1.06 before the payout, and dividend per share comes up to $0.05. Net asset value per share after the payout will drop to $1.01. In this case, you have to factor in the impact of the dividend on net asset value when calculating the overall return on investment. If you have difficulty tallying up the numbers yourself, simply go to MorningStar Fund QuickRank to check out the indices called “Total Return Percentage.” Having said that, investors should bear in mind that MorningStar’s method of calculation for the rate of return is based on the assumption that dividends are reinvested. Hence, if you opt for cash payouts, and invest the dividends or spend the money elsewhere, your actual income will be somewhat different from the calculated rate of return.
An investor should note that net asset value per share affects only the size of your holdings, not your future returns on investment. Let’s say there are two funds, called Fund A and Fund B, with a net asset value of $1 and $2 respectively. You invest $20,000 in each fund, which gives you 20,000 shares in Fund A and 10,000 shares in Fund B. Assuming the net asset values of both funds surge 20 percent after three months (with no dividend payout during this period), the net asset value of Fund A and Fund B will now stand at US$1.20 and US$2.40 respectively. Can you tell what the current market value of the fund is? Check out the answer below.
You will discover that the returns from both funds are the same. The net asset value at the time of purchase makes no difference at all.
Therefore, there is no such thing as a cheaper or more expensive fund. Whether or not a fund is worth investing in depends on its future earning power. When we talk about a fund having high accumulative net asset value, we are referring to the caliber and capability of its managers, and the fund’s resilience in weathering different market conditions in the past. That earns the fund greater trust with investors. The level at which the net asset value is at has no direct impact on the future value of the fund either.
A share price gets its boost from a listed company’s prospective ability to create greater profit. Once the company’s profitability lags behind the rate at which the share price is rising, the share price inevitably falters. A share price is prone to adjust downward once it scales to a certain height. A fund invests in myriad stocks that are considered a basket of good “eggs.” Periodically, the fund manager will remove “rotten eggs” from the lot, and replace them with “good ones.” Therefore, a fund has to adopt a sound strategy in picking stocks, and make appropriate adjustments in the investment portfolio to propel its net asset value higher.
Stratagem 2
Besiege Wei to Rescue Zhao
Take Advantage of Fund Switching
Origin of the Stratagem
In 354 BC, when King Weihui sent General Pang Juan to attack the Zhao State’s capital of Handan, the king of Zhao immediately sought help from King Qi Weiwang of the Qi State. Tasked with the defense mission, military advisor Sun Bin offered his strategy to General Tian Ji who was commanding the Qi troops: “Do not get into a mindless fistfight. Resolve the problem without getting into a struggle. Find out their weaknesses to gain the upper hand without having to resort to violence. The Wei troops are out in full force. If we attack them head-on, Pang Juan is bound to beat a retreat. He will lose his stranglehold on Handan. We shall ambush him midway and defeat his troops.”
Tian Ji carried out the mission as planned. True to Sun Bin’s predictions, the Wei troops left Handan and were ambushed by the Qi army at Guiling. Exhausted after a long march and fight, the Wei army surrendered. The Qi State emerged on top by coming to the rescue of the Zhao State.
New Spin on Funds
Fund swap as a way out
The less costly route
Swap medium- and high-risk funds for low-risk funds
Change tack according to market conditions
The difference in risk endurance
Fund swap as a way out
Stock markets are volatile and unpredictable. Fund investors will inevitably get caught when the markets trend downward. Whether or not to redeem funds becomes a burning issue. Pulling out of one may spell losses, while staying put means having to bear with the pain of a downward spiral in net asset value.
Learning to adopt the stratagem as illustrated in the classic story “besiege Wei to save Zhao” may well save you the angst. Shift your attention away from the glare of the “bears” that are out in full force by making good and flexible use of fund companies’ swap services. Convert a share-based fund into a currency fund belonging to the same company at an appropriate time to protect future earnings, and prevent losses. Reconvert it into a share-based fund only when the stock markets are back in favor. By turning a share-based into a currency fund, or by buying a currency fund, you are making good use of your investment in a share-based fund. It is a tactic worth borrowing from the war strategy used by the Qi army to save Zhao.
The less costly route. Swapping funds is a key transaction method used in overseas markets. In China, several fund companies have started to do the same. A fund swap refers to an investor’s request for a fund manager to diversify all or part of his or her holdings in a fund into another or other funds. A fund swap produces the same result as the redemption or re-subscription of a fund, but the inner workings of the two are as different as chalk and cheese. A fund swap costs less transaction time and money than redemption and re-subscription. The transaction of a fund swap takes three to five working days, while redemption and re-subscription requires five to seven working days. The monetary costs of a fund swap are divided into three components, namely the redemption fee for the exiting fund, the differential in subscription fees between the exiting fund and replacement fund, and the fund swap fee which is usually set at zero. The total rate charges of these fees are generally lower than the redemption rate and re-subscription rate.
A fund swap has to take place at the right place and the right time to produce the desired investment effect, just as Tian Ji timed his move to besiege the strongholds of the Wei State to trap Pang Juan into submission.
Swap medium- and high-risk funds for low-risk funds. Swapping a low-risk currency fund with a high-risk share-based fund is an example of the most effective fund swap. Swapping funds with similar risk returns is only recommended if there is a huge gap in performance between the fund you wish to exit from and the one you wish to get into. Oftentimes, such a gap is inherent in the management of the fund.
Change tack according to market conditions. You can discern signs of whether a stock market is doing well or poorly by making a meticulous study of macro trends. If the market is mired by bears, convert share-based funds into bond or currency funds to avoid losses from shrinking net asset value. When the stock market is flying high, trade bond and currency funds for share-based funds to enjoy more lucrative long-term investment returns.
The difference in risk endurance. Age may make an impact on a person’s income. Older folks are likely to face more health issues, which will affect their work ability. That may lead to a drop in income level. Any investor in such a dilemma should trade share-based funds for bonds or currency bonds to raise the safety net of an investment portfolio. At the other end of the spectrum are the individuals enjoying job promotions, incremental increases in their salaries, and other improved conditions. As these people are able to endure risk better, they should, as investors, convert bonds or currency bonds into share-based funds to beef up their investment portfolio returns.
Stratagem 3
Kill with a Borrowed Sword
Gain Full Market Exposure in One Go
Origin of the Stratagem
Before his attack on the Wei State during the Spring-Autumn Period from 800 BC to 300 BC, Zheng Huangong got a hold of the names of Wei’s ministers and generals. He then announced that after he had defeated Wei, he would make them lords and dukes, and let them share the Wei territory. Zheng Huangong put the names in an urn at an altar that he had set up in the country, and swore to deliver on his promise.
The king of Wei was furious when he got wind of the news, and gave orders for all his great ministers and generals to be sent to the guillotine. In one fell swoop, the Zheng State had destroyed the Wei State.
New Spin on Funds
Leverage through a third party
Amass huge capital gains through funds
Explore unfamiliar territories
Financial management is a buzzword these days. With a constant stream of new products coming into the marketplace every day, the average investor can’t help but feel bombarded and perplexed. Worst of all, individual investors often do not qualify for some of these products, or find many of the products too difficult to comprehend. So, how should one invest? You may want to consider taking a leaf out of the “killing with a borrowed sword” stratagem. Fear not, there is no blood and gore involved. It simply means riding on the strength of a third party to realize one’s financial goals. In other words, use the power of funds as a leveraging tool to boost your profit.
