Investment Lessons from Ban Chao's Story

Chen Jiahou (Chief Investment Officer of Jiuxiandu Qingquan Technology)

Throughout history, many events have occurred, with different eras and specifics. However, when we carefully analyze the logic behind these events, we find that despite the passage of centuries, the core logic remains surprisingly similar. Let's look at an interesting story.

According to the "Zhi Wang Quan Ji" written by Feng Menglong, in 100 CE, Ban Chao, a renowned official in the Han Dynasty, submitted a memorial to the emperor when he was old and hoped to return home to retire. He was born in 32 CE, which made him nearly 70 years old at that time.

The emperor then allowed Ban Chao to return home and appointed an official named Ren Shan to take his place and manage the Western Regions. When Ren Shan met with Ban Chao, he asked for guidance on how to manage the diverse ethnic groups in the region.

Ban Chao replied, "The border officials are not filial sons or good subjects. They were all transferred from other places due to their mistakes. The local people have a nature akin to beasts and birds, difficult to nurture and prone to defeat."

After analyzing the situation in the Western Regions, Ban Chao continued to advise Ren Shan that these people are not easy to govern, so it is necessary to adopt a flexible approach. The key is to take a broad view and grasp the overall direction, without being too rigid or anxious.

In essence, Ban Chao's method was simple: these people are not good subjects, cannot be governed, and should be managed with flexibility. Ren Shan did not accept this advice at first, thinking it too straightforward and easy to understand. However, after Ban Chao left, Ren Shan privately told his friends, "I have a peculiar strategy, which is to take things as they come."

But simple methods do not necessarily mean they are ineffective. Ren Shan did not listen to Ban Chao's advice and soon found himself at odds with the Han court. The Western Regions began to rebel against the Han Dynasty, just as Ban Chao had predicted.

Many investors today have a similar mindset to Ren Shan, thinking that investing is too easy or simple, but in reality, they are often unable to make a profit. Warren Buffett and Howard Marks, two investment gurus, have stressed the importance of value investing, which involves finding good companies at low prices, taking advantage of market opportunities, and diversifying to avoid mistakes.

However, many investors still think that these simple investment strategies are too easy or straightforward. They often end up losing money in the long run due to their lack of patience and understanding of the market.

Take, for example, large shareholders of listed companies. They often buy more shares when prices are low and sell when they're high. These shareholders have a deep understanding of their companies and can make informed decisions based on market trends. Investors should follow the wise advice of these experienced investors.

However, many investors still find reasons to doubt the wisdom of large shareholders. They think that large shareholders are only motivated by personal financial needs or a desire for control over the company, rather than making decisions based on market trends. We have heard many such arguments.

Another example is when the market is severely overvalued and risks are high. Regulatory agencies may issue warnings about the risks involved and impose restrictions on trading. At this time, a rational approach would be to assess the market's valuation level and avoid assets with high valuations. However, many investors are so caught up in rising prices that they ignore the risks.

Throughout history, the path to success has been simple. The most effective methods are often not too complex. Successful investors have shared their experiences, which are surprisingly straightforward. If we can humbly accept these excellent investment principles and advice, without dismissing them as old-fashioned or naive, then when we face today's investments, we will be able to make the right decisions.