What Karate Can Teach Us About Investing

Please welcome Troy from Market History for today’s guest post on what karate can teach us about investing.

I used to do karate when I was in elementary school and when I first started high school. Unlike many sports, karate is insanely aggressive in which the training is rather painful. There are a lot of parallels between karate and investing because karate isn’t just a sport. It’s more of a way of life that trains both your body and your mind. Here are some lessons from my experiences that you can apply as an investor.

Believe it or not karate can teach us about investing. Here are several important lessons from martial arts that cross over to making you a better investor.

Doing nothing is just as important as doing something

You can easily tell a good martial artist from a bad martial artist. Someone who’s bad at karate will throw as many punches, kicks, and combinations as possible in any given round. A lot of times these attacks will be uncoordinated and can be easily deflected.

On the other hand, a good martial artist’s every move is very well coordinated and planned out beforehand. He will engage in fewer attacks, but his aim is to make every attack count. It is not a “to throw 100 darts and hope one sticks” mentality.

This is very similar to investing. A good investor does not wildly and randomly scatter his “seeds” (money) across dozens of assets. Instead, a good investor will carefully do his research and pick out a few investments that he thinks have the highest odds of success. Although success cannot be guaranteed in the markets, you still need to maximize your odds of success. And since we all have a limited amount of time every day, nobody can carefully analyze dozens of markets at the same time. For example, I run a small hedge fund full time and even then we only focus on one market: the S&P 500. That is why all investors should stick to a few markets/stocks/assets that they know best and ignore the rest.

Be on your A game all the time

Investing is a highly competitive field, especially in this era of low economic growth. A lot of bright talent is attracted to this industry, which means that there is no such thing as making an easy buck.

As a result, you must always improve your knowledge and investment skills if you want to beat the market. Read as much as you can, learn from other successful investors, and most importantly try different investment strategies yourself! You will never really know what strategy works best for you unless you’ve tried them!

Even dividend investors need to be on top of their game all the time. If they miss out on a good dividend stock in their research, other investors will discover that stock, buy a lot of it, push its stock price up and push its dividend yield down.

The early bird gets the worm

In any sparring round, the best opportunity to score points (i.e. hit your opponent successfully) is at the very beginning. This was when your opponent least suspects it. I used to throw a combination of punches and kicks in the first few seconds of every match, many of which resulted in points for me.

When it comes to investing, you should start as soon as possible. Perhaps you’ll lose some money initially because you don’t have a lot of knowledge or experience. If that’s the case, at least you can learn from your mistakes! At least you can avoid similar mistakes in the future.

But if you are successful, then the advantages are even more obvious. Investing is a long term game that requires time. It is not like starting a tech company and then experiencing 7000% growth in 4 years. The earlier you start investing, the more compounding will work to your advantage. An investor who starts 10 years earlier, assuming a 7% rate of growth, will have twice as much money as an investor who starts 10 years later.

Know your strengths

Being tall and lean, I never relied on punches in a sparring round. I could never out-punch the guy who weighed 220 lb. But what I didn’t have in sheer weight I made up in flexibility. I could kick in a lot of crazy angles and at fast speeds. Those were my advantages, and I used them in every round.

Likewise, investors need to know their individual strengths and weaknesses. Focus on your strengths and avoid your weaknesses. Are you really good at dissecting numbers? Try being a value investor and dissect financial statements! We are all naturally talented in certain areas, so as investors we must play to our strengths.

Have you tried different investment strategies? Do you know what your investing strengths are?


  1. Very appropriate analogies, Troy. The toughest for many is the “do nothing” lesson. I understand as humans we often have the need to take action. But if we don’t have a solid reason for WHY we’re taking action, many times we’re better off doing nothing. It takes practice and discipline to ignore noise and stick to a plan.

  2. Thank you, Troy. Very nice analogy. I especially like your “do nothing” strategy. When I first began investing, I would buy and sell a lot without any clear knowledge or research to back up my moves. Not good. Make a lot of mistakes. Once I slowed down and put more thought into my investing strategies, things changed for the better. Karate has to offer in the world of self-defense and investing.

    1. Troy @ Market History

      Did you start during the internet boom? Back then even a lot of college students would day trade to make “side income”. Needless to say most of them lost money in the end when the dot com bubble burst.

  3. Amanda @ centsiblyrich

    As a black belt in TaeKwonDo, I LOVE the analogy here. I think one of the most important lessons is the first – doing nothing is just as important as doing something. Focusing on one thing is more effective than trying to focus on everything at once. This reminds me of the famous Bruce Lee quote: “I fear not the man who has practiced 10,000 kicks once, but I fear the man who had practiced one kick 10,000 times.”

    1. Troy @ Market History

      I saw a kung fu movie a while ago (can’t remember the name – I was watching it with English subtitles). The #1 guy in the world knew a lot of great moves, but the #2 guy only knew how to move his sword in a jabbing-like motion with lightning speed. The #2 guy practiced that over and over, and he eventually killed the #1 guy.

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