How Taoist Philosophy Deals with Volatile Markets

How Taoist Philosophy Deals with Volatile Markets

by Ras Vasilisin
13. April 2022
How Taoist Philosophy Deals with Volatile Markets

The world is in constant chaos, and it’s no secret that volatile markets cause investors to panic. 


The key to generating exponential returns is to ignore the noise. You lead a less stressful life if you don’t get distracted. 


Daoism and bitcoin


You can apply one ancient teaching to investing and sleep well at night. 


One of the most useful concepts of Daoism is called Wu Wei. It literally translates to no action or inaction. It refers to the acceptance of the events of life and the flow of the universe.


In other words, it means to not go against nature, not to impose our will on events but simply let them happen. 


Let Dao do its thing


How does it apply to finance?


Investing and finance are full of action. Almost every process in the global financial system is cumbersome and requires effort. 


But, the key to successful investing is to stay simple and focus on your investment long-term. 


If you ignore short-term volatility, geopolitics, and central banks and apply Wu Wei in your investment approach, you’ll sleep better at night. 


The best investors invest and never sell, even if the markets look volatile. They buy and hold, that’s it. 


Whether it’s stocks, real estate, or bitcoin, one thing remains consistent: They don’t ever sell.


As Warren Buffett once said, “Our favorite holding period is forever.” 


In other words, persistence is a superpower. 


Well, how do you make money if you never sell?


We have to understand that “buy and never sell” is a bit of an exaggeration. They never sell unless they need the money for something important like a bigger investment or sending their kids to college. It’s not like they never sell, but it’s just that they hold onto their assets long into the future. 


Playing the long game has worked in the past

It’s historically proven that long-term investing works. Anyone can see it just by looking at 10-year growth charts.


Real estate, stocks, or bitcoin will all eventually go up in value after a long enough time.

The beauty of taking a long-term, non-action approach to investment is that you can live a less stressful life. 


One of the biggest bitcoin bulls, MicroStrategy’s Michael Saylor, clearly articulated his bitcoin strategy. 


Saylor said in an interview, “Bitcoin will be volatile, but it will go up forever.” And he added, “We’re only acquiring and holding Bitcoin. That’s our strategy.” 


This may seem insane, but this strategy is not unusual to large investors, no matter what asset they own. If they hold a high conviction investment in their portfolio, they just keep accumulating and never sell it. 


When you are dollar-cost averaging, it is impossible to know whether you are buying the top or bottom. If you have a long-term view, you don’t care. You simply convert your currency into the asset of choice. Regardless of what is happening globally, a long-term bitcoin investor will continue to simply dollar cost average. 


So whether it’s war, interest rate hikes, or inflation, you must learn to ignore it. 


As the founder of Daoism, Lao Tzu, said, “When you arrive at non-action, nothing will be left undone.”


In short, buying a high conviction asset and never selling is how you become wealthy, remain wealthy, and transfer wealth to your kids.


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