Going with the Flow

Robert Hsu, July 01, 2007

One of my favorite books of all time is Tao Te Ching, also known as the Book of Tao. The text was written over 2,000 years ago by the ancient Chinese sage Lao Tzu, and it spawned the Eastern philosophy known as Taoism (or the Study of the Way). Taoism is one of the most influential schools of thought in China.

Like other prominent religious texts, the Book of Tao explores many different themes and life lessons. One of the book's key themes -- and the one that I use most in my own life -- involves how to interact with one's surroundings. Taoism is about finding the best ways to deal with life's problems. I don't know anyone who doesn't want to find a better, more efficient way to deal with the challenges that life throws our way.

This Taoist lesson can best be summed up in the famous phrase "go with the flow." Many people associate this idea with laziness -- they think that going with the flow requires no thought or work. But this couldn't be further from the truth.

Instead of advocating laziness, this concept deals with the value of working smart over working hard. Going with the flow increases productivity with less effort by working in the direction of bigger-picture change. For example, you can go far without exerting much effort just by sitting on a boat floating downstream. But rowing a boat upstream requires lots of work just to stay in one place. What many people don't realize is that the hardest part of the job here is determining which way the water is flowing, and then pointing your boat in that direction.

Working with the forces of the world -- not fighting them -- is exactly what I've done in my life. In my career, there were two main trends I spotted early and jumped on with satisfying results. The first was the emergence of the hedge fund industry during the 1990s. I first entered the hedge fund business 17 years ago, before most people knew what hedge funds were. Today, assets under management and revenues in the hedge fund industry total $1.5 trillion, generating $70 billion in fees a year. That's nearly 50-fold growth since 1990!

The second major trend I jumped on was the economic emergence of China. The phenomenal growth that we're seeing in China right now represents one of the biggest wealth-building opportunities in history. We've already made some impressive gains in our China Strategy portfolio, and I believe there are even more profits to come in the years ahead as long as we keep our boat headed in that direction.

Recently, I gave a talk to MBA students at UC Irvine's Paul Merage Business School. One student asked me for specific career advice. I told him to "go East, young man," and spend time in the Greater China region. Why? The reason is simple -- China is where the growth is today. That's where the economic flow is going, and the best course of action is to follow it rather than to ignore it or work against it.

Until next month,

To receive my weekly China Strategy dispatches, visit www.chinaprofitstrategy.com and become a member today.