Psychological construction is very important in investment. We can see some enlightenment from the story of Zeng Guofan and the Taiping Heavenly Kingdom, which helps us to build a stronger psychology and more effective investment strategy in the process of investment and help us to obtain higher returns. What are the implications of the story of Zeng Guofan and the Taiping Heavenly Kingdom in terms of investment? Let's have a look.
At the end of the Qing Dynasty, when the Taiping Heavenly Kingdom revolted, the Qing government mobilized the Eight Banners officers and men to deal with the Taiping Army, but the Eight Banners officers and men were vulnerable. The Taiping Army quickly swept over most of China. At that time, because of the death of his mother, Zeng Guofan was in his hometown in Hunan Province. Zeng Guofan relied on his teachers, disciples and relatives to pull some temporary troops, many of which were local farmers. This force was called "Hunan Army". However, Zeng Guofan created miracles by relying on these grass teams. In 1854, the Hunan army attacked. When other troops were retreating, the Hunan army turned the tide and finally broke the Taiping Heavenly Kingdom.
How did Zeng Guofan use a temporary army to defeat the flourishing Taiping Heavenly Kingdom? Zeng Guofan was able to defeat the Taiping Heavenly Kingdom because he had several secrets in fighting.
Secret 1: Build a Hard Stronghold
The Hunan Army did not rush to fight with the Taiping Army everywhere, but did one thing at once, that is, to "form a hard stronghold" and prepare to defend and counterattack. The Xiang Army sought to build walls and trenches in places that were easy to defend and difficult to attack. The walls were eight feet high and one foot thick, and the trenches should be one foot deep, even if only sleeping. The Hunan Army spends two hours in the morning and more than two hours in the evening, with a maximum of six hours a day for marching. This mobility is relatively poor, but it is less likely to be ambushed or attacked by surprise. In contrast, the Taiping Army is often attacked by surprise because it does not attach importance to this way. In addition, the Hunan Army also put up a fence outside the trench to prevent the cavalry of the Taiping Army from losing too much combat effectiveness. In addition, the Hunan Army spent a lot of money to equip western style muskets, which are powerful in close combat. The loss of Hunan Army is very small each time, but the Taiping Army often suffers heavy losses. This is a tactic of "seeking first but not losing", to ensure that every battle does not fail, and even if it does not win, it must retain most of its combat effectiveness.
Secret 2: Fighting Stupid Wars
To fight in a stalemate is to gradually accumulate advantages. When the advantages are accumulated sufficiently, victory will naturally be achieved. Zeng Guofan was supposed to carry out the task of attacking and suppressing bandits, but he made a defensive counterattack. The Taiping Army hopes to fight with the Hunan Army in the field and give full play to its own advantages, but the Hunan Army just sticks to the most critical place and does not come out. Even when attacking the city, the Hunan Army also dug trenches, which has always blocked the city, and then the enemy cannot supply food and grass, so they break through without attack. It is worth reminding that this tactic was originally a tactic of the Taiping Army in its early days. Zeng Guofan absorbed this tactic and carried it forward.
Build a hard stronghold, defend and counterattack, avoid big risks, and pursue victory on this basis. In a protracted war, we should not rush for a moment. We should patiently accumulate our own advantages and wait for the enemy to rout.
When investing, we have money in our hands. We need to figure out how to avoid losing our troops, and then we can win the war on this basis. Many friends who have lost money in the stock market are soldiers with their own hands, and they will rush to fight hard regardless of whether there is a chance of success, which is naturally disastrous. The more undervalued we are, the deeper our trench will be, the thicker our wall will be, the tighter our defense will be, and the less likely we will suffer losses. Buying an undervalued index fund does not necessarily lead to an immediate rise. Be patient, not in a hurry, and wait patiently for the chance to win. The earnings of the companies behind the undervalued index funds continue to rise. In addition, when we hold index funds, we will receive dividends every year, which will continue to increase our advantages. Slowly, after a few years of persistence, we will find that we rarely encounter a large loss again. After several small victories accumulated, we finally gained satisfactory benefits.
Index funds are rising for a long time. From this perspective, time is our friend. We buy when we underestimate, hold patiently, and the balance of victory will slowly tilt to us.
