Build Wealth With The Art of War
When I started my first real job in New Mexico (NM) I had this big fear. I was scared that I would die penniless. My salary at the time was just at the NM poverty level and I worried constantly that I would be thrown out on the cold street when I got old. I wanted to build wealth as fast as I could so I wouldn’t die a pauper.
I was a worry wart back then because I was stressed to make ends meet. My bosses loved it because it forced me to come in and “push the broom,” a funny euphemism for forced work.
Eventually, I saved up a month’s expenses for emergency money. I thought my stress would go away but instead, it got worse. I read about how you needed six months of expenses saved for emergencies and I was nowhere near that.
One Saturday morning, when I was working overtime (they loved to force you to work overtime for free), I ran into one of my bosses. I was dead tired and looked like shit. He asked me if I was ok and I told him I had a lot on my mind when it came to finances. I asked him what he did to save up enough money for retirement.
He looked me straight in the eye and said to “ start a business” or “ invest in the stock market.” He did both.
That fateful Saturday morning led me down a path filled with trials and tribulations filled with successes and failures. In the beginning, there were a lot of failures because I fell victim to “get-rich schemes.” One time I blew out my entire life savings on trading futures options.
After I recovered from that debacle I opened up a brokerage account and bought cheap stocks only to have them sell off on me.
Again, I lost my life savings.
After that second blow up I stopped and thought that I needed really understand where I was going wrong. I started to read books on investing. I started listening to radio talk shows about investing slowly. I learned about DRIP stocks and so much more.
I started to learn the mechanics of trading and investing. I learned the dos and don’ts. I learned about expectancy value and how to trade with stops. Over time I learned the day-to-day tactics of being in the markets. I had more wins than losses and I was ecstatic!
Still, I wasn’t satisfied. I had learned the tactics of the market but I wanted to learn the grand strategy. I was tired of the tit-for-tat and energy I was spending every single day to build my wealth. I wanted to learn how smart money does it.
But where to begin?
I spent thousands of dollars on “get rich fast” books. Some books were better than others and I kept those. The best ones sit in my personal library right now and I refer back to them all the time.
One book sits at the top of the pile. That book is Sun Tzu’s Art of War.
Sun who? I’m sure you’ve heard about The Art of War from popular culture but what does a war book have to do with building wealth?
It turns out, everything.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” ― Sun Tzu, The Art of War
On its surface, The Art of War is about fighting and winning a war, but dive below the surface and you’ll find it to be a philosophical text that can be applied toall facets of your life.
You can apply it to running a business. You can apply it to your love life or to relationship dynamics. You can apply it to your job.
Its framework is applicable to nearly all areas of your life.
I’ve used it to build my wealth over the years and I think you’d benefit from it too.
Build wealth with the basics
Let’s start with the basics. Sun Tzu didn’t write fluff. All 13 chapters of his book are valuable and should not be skipped.
You will need to go below the surface and make the connections to thin
You might wonder, what does employing spies and starting fires do with building wealth? Simple, education and research (spies) and buying quality assets (fire) on the cheap are always great ways to build your wealth.
You just need to connect the dots here.
Chapter 1 — Estimations
This chapter is about estimating your position, financially or personally. So often people always make stupid gambles and “go for broke.” They YOLO (you only live once) a decision and then wonder why they failed.
Estimating your strengths and weakness is crucial to building your wealth.
It’s OK not to have any wealth or be a fat wretch. You can change and it’s important to know where your starting line is. This way you can measure your success (or failure) over time and make adjustments.
Chapter 2 — Waging War
Every day can be a fight just to get up and go to work. You probably hate it. You probably want to spend time doing the things you want to do, like playing drums or gardening. We trade our valuable time for money, and all too often too little money.
I consider this chapter to be about living your life. This is work, this is the grind, the 9 to 5. This is everything around you that seeks your time, good or bad.
Do you set yourself up for winning or losing? That is the question.
Chapter 3 — Planning Offensives
This chapter builds on the first two and I apply how much money I’ve saved up if any. I remember what it was like back at my first job and how scary it was. One time I had to eat Bologna sandwiches for a week because I fucked up my budget.
I consider every single dollar I have saved up as a soldier in my wealth army. Each soldier can be called up to fight in a financial war. I don’t want to see them get wasted on frivolous things.
I carefully plan my big purchase and always ask, will this purchase or investment increase the money soldiers I have? Or will it deplete them for no strategic advantage?
Chapter 4 — Military Disposition
This chapter is about how organized your soldiers are in your wealth army. Do you do things randomly or do have a budget? Let’s face it until society changes it will take money to live. You need food, you need housing, you need all the trappings of modern life and everyone has their hand out.
What’s your plan for saving, how do you keep your “powder dry” to buy assets on the cheap if the time comes?
There is incredible power in using your saved wealth to acquire valuable assets when they are out of favor or cheap. That’s how the rich get richer.
Chapter 5 — Strategic Military Power
I love this chapter. This is where your reputation and your strategies are so bulletproof that people just step out of your way when you come. You want to build your wealth this way. You want to build it up with such a mass that no market downturn or real estate market implosion could hurt you.
This chapter builds on the premise of the last chapter. You will need to figure out a budget to live on but make sure you invest and save. The strategic power of your wealth will come from your reserves, your savings. When you have enough savings you can buy that extra vacation house or stock when people are selling out of fear.
Chapter 6 — Vacuity and Substance
I love this chapter too because it teaches us to engage with the ordinary but win the extraordinary. I have my partner to thank for understanding this one in depth.
When I worked in Engineering I was designated as a “Senior Engineer.” That meant I was within an income-earning band. I could only make so much money per year and I had to fight my way out to higher earning band.
I resigned myself to believing “that’s the way it is” and grin and bear it. My partner said, “no fucking way, you’re way too smart for this! Don’t be a beat-down dog!”
Then I made a bold move and left that firm. Two weeks later I was earning 20% more. This is the essence of vacuity and substance.
You are worth it. You will always be worth it. Don’t ever let them tell you otherwise. Companies will gaslight you so they don’t have to pay you more.
Chapter 7 — Military Combat
This is how you engage with negotiating a new salary or buying a big asset like a house. How do you put your wealth army to work, how do you execute your planned offenses?
Education is key here. This chapter is similar to Chapter 13 (below) but executing your new business, startup, or new job will depend on how solid financially you are. If you’re living paycheck to paycheck, your new boss will “sense” that and pay just above peanuts. He knows you’ll take it and you’ll remain trapped.
Going into stupid debt is a surefire way to lose in any engagement where money and wealth are in focus.
Chapter 8 — Nine Changes
Shit happens. Sometimes your best-laid plans fail because life can be so unpredictable. We bought a property right toward the end of the 2007 real estate bubble. The bubble popped and we got left holding the bag. We couldn’t sell and we were in danger of blowing out.
By this time I had gotten smarter and refused to have a major financial blow-up, instead, we turned the property into a rental and sat on it till recently. It turned out to be a profitable asset in the long run.
In the end, we had to zig when life threw a zag at us.
Chapter 9 — Maneuvering the Army
You found an asset you want to buy, now what? How do you maneuver your wealth army for maximum success and minimal losses? Part of this is figuring out what market you’re really in and how to navigate all the pitfalls of it.
If you’re investing in real estate there will be LLCs, inspections, attorneys, and big cash outlays. You will need to organize investors to invest in your investment. I’ve seen this done but it’s so damn complicated.
If you invest in stocks and bonds then you’ll need to understand earnings, 10ks, and other financial documents. You’ll need to know when to buy and maneuver your wealth army into the most advantageous position.
Buying when everyone is buying is a surefire way to pay too much for an asset. You should be selling when people are in a buying frenzy.
Chapter 10 — Configurations of Terrain
There are different markets out there. Real estate, stock market, coin collecting markets, etc. Don’t start buying stuff in markets you don’t know anything about! I did that with the futures market and got taken to the cleaners.
If you’re a car guy and know cars in and out, you’ll see a good deal before anyone else does. If you’re the same car guy you shouldn’t be buying currency futures.
Stick to the markets you know and leverage them. Invest in what you know best.
Chapter 11 — Nine Terrains
You make your money when you buy a house or another asset. This is counterintuitive thinking. Everyone thinks you make money when you sell the asset.
Seek out high-quality but cheap assets and you’ll never go wrong when you sell them. Buying is hard, selling is easy. Along the way, you’ll have to tend to the asset. If it’s a house you might need to buy a new roof. The lifecycle of the asset will change over time and you’ll need to adjust with it too.
Chapter 12 — Incendiary Attacks
I like this chapter a lot because it reminds me to strike when the opportunity presents itself. The old stock market saying “be fearful when people are greedy and be greedy when people are fearful” has served me well.
After we got sucked into the real estate peak back in 2005–2007, we took a different strategy coming out. Building up cash and buying when people were fearful.
It’s hard to get on the opposite cycle from all the rest of the herd of people but once you do, you just can’t help but build your wealth.
Chapter 13 — Employing Spies
Read, read, read, and read some more! Education is the key here and being out there in the thick of things. The best thing you can do is learn how to read the zeitgeist of your community and the markets.
Talk to other people. Be social. Go to parties. Just get out there and listen. You’ll be surprised what you might hear! You might see new trends developing or find a new career. It could be anything. I got my last three jobs through word of mouth and mingling with people.
Do yourself a favor and don’t go home after work, get out there and network!
End notes
There are many books that I reread in any given year. It depends on my mood but The Art of War is one that is atop that list.
If you want to build wealth then do yourself a favor and get a copy of The Art of War. Borrow it from your library or buy it outright. There are many translations of it but I prefer the Ralph D. Sawyer translation.
Get it now, you’ll thank me later.
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