Positioning Like a General
The Art of War and the Investing Battlefield
The Art of War and the Investing Battlefield
"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat." — Sun Tzu
Trading is not just about picking stocks or chasing headlines. It’s about strategy. It’s about seeing the battlefield before the first move is made. That’s why I come back to The Art of War. Sun Tzu wrote about generals, soldiers, and terrain — but the lessons are timeless. For traders, the “terrain” is the macro environment. The “army” is your capital. And the “enemy” is uncertainty.
Right now, the terrain is reflationary heading towards stagflationary. That’s the key.
What Reflation Means
Reflation is when growth and demand are expanding across the globe, and prices — especially for real assets like commodities — are rising to reflect that strength. It’s the opposite of deflation, where demand falls and prices weaken. In reflationary regimes, you want to own what’s strong: metals, miners, energy, emerging markets, and the risk-on parts of equities.
We don’t guess at this. The market tells us. The sectors and asset classes leading the charge today are classic reflationary groups. And until the market changes that message, our positioning doesn’t change either.
The Risk: Watching Growth and Inflation Closely
Even though we’re in reflation now, the risk is clear: if growth or inflation slows, this could hurt our trades. Think of it like an army on the march. Momentum carries you forward — but if the supply lines dry up, the advance stalls. That’s why I’m constantly watching growth data and leadership. If growth/inflation fatigue sets in, it will show up in the markets first, and we’ll adjust.
For now, the message is simple: stay with strength.