The Investment U E-Letter: Issue # 480
Monday, October 24, 2005

How Lin Yutang Can Make You a Better Investor: Investing in Thought, Not Stock… When All Sectors Are Down
by Dr. Mark Skousen, Chairman, Investment U

O wise humanity! How inscrutable is the civilization where men toil and work and worry their hair gray to get a living and forget to play!

- Lin Yutang, The Importance of Living

CNBC’s Jim Cramer says, “there’s always a bull market somewhere.” Well, there are times when every investment area is either flat or falling, as has been the case in the past few weeks.

Domestic stocks recently hit a five-month low, but lately, even foreign stocks, mining, energy, and real estate have corrected downward. Mind you, I don’t think this situation will last long, but what to do during dog day corrections?

It probably drives people like Jim Cramer crazy (or worse, leads them to a heart attack). Me? I take it easy and re-read a classic book from my personal archives

Lin Yutang: The Importance of Living… An Old Classic Book from my Library

One of my favorites is The Importance of Living - The Noble Art of Leaving Things Undone, by the great Chinese-American philosopher Lin Yutang. It was originally published in 1937, but has recently been reprinted by Little, Brown & Company. (I prefer the first edition published by John Day & Co., with its running heads and beautiful Chinese painting on the cover.)

Yutang’s philosophy of letting go helps you enjoy life better and take a long-term perspective, showing you that there’s more to life than going to work and making a killing in the markets like family, friends, and “the divine desire to lie on a plot of grass under tall beautiful trees of an idle afternoon and just do nothing.”

I actually think this book by Lin Yutang can make you a better investor, or businessman. Let me explain how

Shut Down Your Laptop and Avoid the Three “American Vices”

In his classic chapter, “On Lying in Bed,” Lin says that “many businessmen who pride themselves on rushing about in the morning and afternoon, and keeping three desk telephones busy all the time, never realize that they could make themselves twice the amount of money if they would give themselves one hour’s solitude awake in bed. There, comfortably stretched or curled up in his pajamas, the real business head can think for the thinker, the inventor and the man of ideas, lying quietly for an hour in bed accomplishes even more.”

So put away your cell phone and your laptop, relax and think. Spend a little more time at home.

Personally, I think one of the reasons I’ve been a successful investor is that I make sure I have a lot of free time each day to relax and think on my own.

Yutang says, “Those who are wise won’t be busy, and those who are too busy can’t be wise.” If you’re too busy to understand this profound statement, you need to read and practice The Importance of Living. (I once wrote this quotation on the blackboard in front of MBA students at Columbia Business School, and a third of the students dropped out of my class. They were too busy to understand.)

The Three American Vices According to Lin Yutang

So, what are the three American vices? The answer will surprise you: “Efficiency, punctuality, and the desire for achievement and success.” Yes, I know, aren’t these virtues? Lin demurs: “They are the things that make the Americans so unhappy and so nervous.”

Ironically, today’s Chinese have adopted the American approach to business - they are efficient, punctual goal-seekers. Lin Yutang would not understand today’s China.

One of the advantages of being an armchair investor (a member of the leisure class) is that we can profit from the overworked businessman in the U.S. and China without overworking ourselves.

But while we wait for the markets to recover, here’s a chess problem that you can enjoy during your leisure moments

White Mates in Two

The Problem: What is white’s next move, and how does the rest of the match unfold?

The first 10 Investment U subscribers to get the correct answer to the chess problem above (there may be more than one) will receive a beautiful American Eagle Silver Dollar in brilliant, uncirculated condition. They will also get a copy of my book, Economic Logic - a general introduction to economic theory and practice that includes the chapter, Financing Capitalism: The Stock and Bond Markets.

Editor’s Note: We will announce the winners in two weeks. Please note that this is restricted to Investment U E-Letter subscribers only.

Today’s IU Crib Sheet

• For further “leisure” reading, check out Empire of Debt - which takes a critical look at the global position of the U.S., and how the world’s strongest economy went from being the largest creditor to its biggest debtor.

Good thinking, AEIOU,

Mark

P.S. In the next IU, I’ll assess the impact of new Fed chairman Ben Bernanke, and what his appointment means for the markets. Stay tuned

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• Long-Term Stock Market Forecast: What Can We Expect in the Next Three to Five Years?
• Investing Books: A recommended list of classic investing books

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