Sun Tzu and The Art Of Halal Investing

In this series, I will connect the work of Sun Tzu, specifically the art of war, to the halal (or ethical) investor. Some may think I am stretching by connecting strategy for war to strategies for investment, but I think you’ll be pleasantly surprised. I will also do my best to build this series for someone looking to invest from the ground up, meaning I will put in context the thoughts and mindset (continuing our theme from the last two articles) before setting any action plans.

Let’s begin with the following quote: “The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.” Whether you are an experienced investor, warrior, parent, or just starting out in any field, the first rule is to survive. Warren Buffet famously said “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” The point is you cannot play a game or even win a game if you’re out of it. You cannot win a battle if you’re dead. You cannot take care of your children if you don’t take care of yourself (this can be financially, health wise, etc.)

As an investor who is just starting out, your first order of business is not figuring out what to buy, what to read, or what is halal or haram (or for those whose aren’t Muslim, ethical or unethical). Your first order of business is securing yourself and your family from the possibility of defeat, ie anything that can go wrong or likely to go wrong. For example, before you invest in anything, do you have an emergency fund stashed away for life’s unexpected events? How long can you (or your family) survive if you lost your job next week? If your car broke down tomorrow or you got in an accident (God forbid), do you have the money to fix or replace the car without borrowing money? In order for the good investor to win a battle, they must put themselves beyond the possibility of defeat. There is another quote by Sun Tzu related to this: “Hence the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy.”

Putting yourself in a position where defeat is impossible looks different for different people. Some are comfortable with having 3 months of savings (meaning they can live their exact life without a job for 3 months if they no longer had any income), and some people I know have 1 full year of savings as insurance. People’s risk appetite’s are different, but the objective fact is: the more you have yourself away from the position of defeat, the better decisions you can make and less likely you are to interrupt your investments unnecessarily. Once you secure yourself, and your family, you are ready for gaining clarity as an investor. You are ready to become a skillful fighter.

Thank you for reading. Keep searching forward.