Having techniques without Dao leads to stagnation; having Dao without techniques means techniques can still be sought — The dialectics and practical insights of Dao and Shu in investment.

One, The Essence of Dao and Shu: The dialectical relationship between laws and tools.

'Having techniques without Dao leads to stagnation; having Dao without techniques means techniques can still be sought' reveals the deeper logic of human cognition and practice. In the field of investment, this philosophical proposition can be interpreted as: 'Dao' is the core law and underlying logic of investment, while 'Shu' is the tool and method to achieve goals. If one solely pursues technical means while neglecting the essence of laws (having techniques without Dao), one will inevitably fall into the quagmire of blind operations; if one grasps the laws but lacks effective methods (having Dao without techniques), one may miss practical opportunities.

Two, 'Dao' in Investment: The depth of cognition determines the height.

The 'Dao' of investment is the underlying logic that penetrates market fluctuations, reflecting profound insights into human nature, cycles, and value.

1. Human Nature Patterns: The market is driven by collective emotions, with a perpetual cycle of greed and fear. As Howard Marks said: 'In the short term, the market is a voting machine; in the long term, it is a weighing machine.' Understanding this allows investors to cope with uncertainty using probabilistic thinking and avoid emotional decision-making.

2. Essence of Value: Quality companies achieve compound growth through continuous generation of free cash flow, which is the core 'Dao' of value investing. Buffett validated the feasibility of 'buying quality assets at a reasonable price' by holding Coca-Cola, Apple, and other companies for the long term.

3. Cyclical Patterns: Economic and industry cycles are like the changing of the seasons; undervaluation strategies yield excess returns at the bottom of the cycle, embodying the practice of 'mean reversion'.

Three, 'Shu' in Investment: Flexibility and Adaptability of Methods.

'Shu' is the bridge connecting theory and practice, which needs to be iteratively optimized in a dynamic market.

1. Fundamental Analysis Techniques: Screening quality companies through financial metrics (such as ROE, cash flow), but one must be wary of 'financial traps' (such as the abnormal accounts receivable before LeEco's collapse).

2. Technical Analysis Techniques: Tools such as candlestick charts and moving averages can aid in judging trends, but one should avoid falling into the trap of 'predicting the market'. As the Wall Street saying goes: 'The market always moves in the direction of least resistance.'

3. Risk Management Techniques: Position control and stop-loss discipline are survival rules. Bridgewater Associates achieves stable returns through a 'risk parity model', confirming the wisdom of 'first ensuring invincibility, then seeking victory'.

Four, Integration of Dao and Shu: The ultimate realm of investment practice.

1. Mastering Techniques with Dao: Value investors anchor on 'long-term value of the enterprise' and dynamically adjust valuation methods (such as combining DCF models with price-to-earnings percentiles).

2. Entering Dao through Shu: Novices often get lost in technical indicators, while seasoned investors gradually understand the essence of trading through reviewing historical fluctuations, grasping the notion of 'cutting losses short and letting profits run'.

3. Contrarian Thinking: Buying quality assets during market panic (such as the 2008 financial crisis) requires combating short-term volatility with the belief in 'Dao', which embodies the notion of 'waiting for the clouds to part and see the moonlight'.

Five, Insights for Investors

· Cognition First: Investment is the realization of cognition, requiring the priority to build an understanding of the 'Dao' (such as long-termism, margin of safety), before exploring the suitable 'Shu'.

· Unity of Knowledge and Action: Munger emphasizes 'to attain something, first make yourself worthy of it'; investment requires honing one's character under the guidance of 'Dao', avoiding deviation from principles due to short-term temptations.

· Dynamic Balance: Changes in the market environment give rise to new 'Shu' (such as quantitative trading, AI stock selection), but the core of 'Dao' (such as risk management, value creation) remains stable. Investors need to find a balance between adhering to principles and innovation.

Conclusion

Investment is like a practice; 'Dao' is the lighthouse illuminating the way forward, while 'Shu' is the bridge crossing ravines. Only by prioritizing 'Dao' and applying 'Shu' can one navigate through the fog of the market and achieve stable wealth growth amidst volatility. As stated in the Tao Te Ching: 'The great way is very simple'; the ultimate wisdom of investing is often contained in the simplest principles.