Thursday, November 29, 2007

Of students and masters (5)

Probably not many readers know about the works of Liu I Ming, a Quanzhen Daoist in China, who was considered a master of the three doctrines – Taoism, Confucian and Buddhism - and the Zhouyi during his time about two centuries ago. His deep understanding of Tao and of the Zhouyi differs much from what is written in online Daoist or Yijing forums and blogs.

Take for example, his understanding of the Lo Shu (Lo Writing) which is associated with the time of Da Yu (The Great Yu):

Nature has the quality of love for life, so it used an uncanny turtle to divulge the Tao of restoration and return, to guide people to return home and recognize their origin, to set their feet on the fundamental basis of essence and life.

And his understanding of the fall of humankind or fall from Tao:

The real gets buried and the false runs wild. People have all sorts of emotions, feelings, and desires, developing complex and involuted psychologies. A hundred worries disturb their minds, then the thousand things tax their bodies. They think what is miserable is enjoyable, they think what is false is real. They have entirely lost the original state.

The remedy for this is said to be in the center, which represents will, attention, sincerity, or truthfulness. According to Liu, the set in the center of the Lo Shu signifies that kindness, justice, courtesy, and wisdom are all rooted in truthfulness, while the surrounding sets represent using truthfulness to operate kindness, justice, courtesy, and wisdom.”

[I Ching Mandalas – Thomas Cleary]

It may take some time for students and masters to absorb or accept what Liu I Ming had indicated, especially those who doubt that Chinese Daoists cultivate the same virtues as the Confucians.

If Western students intend to improve on their Yi studies, perhaps they should no longer hold onto prejudices on what is considered Confucian in the Zhouyi by others – the so called Western Yi experts and scholars. A better course could be to follow the examples of Steve Marshall, Harmen and Professor Sam Crane who can be considered knowledgeable in the Yi in their own right. They read the Confucian books and Daoist classics too, to understand more about Chinese civilization, humanity and Tao.

Of course it really depends on how earnest and sincere we students want to be in the studies and practice in our search for excellence.

Saturday, November 24, 2007

Wishful thinking

The analysts are still at it. Some recommend buying shares since the stock markets have fallen so much and seemed cheap while others argue it is time to sell to preserve capital from further deterioration. We cannot begrudge analysts because it is their job, their profession, to recommend the buying or selling of investments. They have to make a living too. It is always up to investors to follow their recommendations or not.

However if investors do not do their own homework before investing or divesting, it amounts to wishful thinking especially in times of a financial crisis. It tantamount to holding onto false hopes if investors continue to ignore the current implosion of stock markets, the continual freefall of the US dollar, and various warnings by established institutions of further turmoil up ahead.

According to Bloomberg this week, Japan was the first major stock market to turn into a bear market in 2007. Her Topix Index has fallen by more than 20% from its high this year.

The Chinese stock markets (Shanghai and Hong Kong) could be next as they have plunged and are hovering just above the 20% drop level where they will technically turn into bear markets if crossed. The Shanghai Stock Exchange Index hit a record high of 6,124.04 points on October 16th while the Hang Seng Index reached its highest ever 31,958.41 points on October 30th. If the SSEI and the HSI fall below 4,899 and 25,566 points respectively, these Chinese stock markets will be called 'bear markets'.

Meanwhile the Dow Jones Index has fallen below the 12,845.78 points reached on August 16 when the credit crunch hit before the US Federal Reserve reduced both the discount and bank lending rates twice. According to those who subscribed to the Dow Theory, if the DJI close below that figure again, it signals a bear market. On Wednesday November 21 the DJI ended at 12,799.04, its lowest close since April.

In Malaysia if investors have not noticed, many low liners are hovering just above and some had gone below the prices reached on August 17th, the day of the huge panic in the KLSE and the Asian stock markets. It is wishful thinking if investors believe that the KLSE will not be affected by the prevailing havoc in global financial markets. Like a good mare, the KLSE follow leading stock markets, especially in plunges. Look at the money traded, just over RM 1 billion on Friday.

Also like good mares following the lead of Deutsche Bank, analysts have been emboldened to estimate the huge losses that global banks (commercial and investment) may write off going forward. The DB analysts opened the floodgates with estimated losses of USD 250 to 500 billion, quickly followed by others (including the US Fed Chairman) who predicted losses ranging from USD 100 billion to 200 billion. According to the Organisation for Economic Cooperation and Development (OECD) this week, losses from US subprime mortgage foreclosures, coupled with slowing economic growth and falling house prices could reach as much as USD 300 billion. OECD estimated a fifth of subprime mortgages are at risk.

Frankly speaking, all these estimates including those figures provided by the OECD sound rather optimistic.

Global banks that overtraded by financing long term loans with short term money are floundering. If you ask any insolvency expert, they will tell you the main cause for bankruptcy of once profitable businesses is overtrading. The banks knew that it was wrong to overtrade, but bankers too have their own frailties. Who do not want to make more money?

My prudent estimate of losses arising from CDOs and mortgage defaults amount to USD 900 billion or more. (According to the US mortgage association, outstanding housing mortgages total USD 10.9 trillion. CDOs and related derivatives amount to USD 6 trillion. Source: Bloomberg)

If this worst case scenario ever happens, expect some global banks (commercial and investment) to go under next year or the year after. What then would happen to global financial markets is anyone’s guess.

If regular readers who invest in Asian stock markets did not heed my recent advices to hold more cash rather than shares since early October and preferred to stand in the middle of the mountain at the end of October, hope they are well prepared for the freefalls down the chasm of Kun / The Receptive Earth since the mountain has imploded this November just like in 1997.

If some readers think that one knows more than the ShenXian, one was just following the ancients by reading the past to foreknow the future. In truth, the final quarter of my Yi chart for 1997 depicts what would and is currently happening to Asian stock markets. The reason for my forewarnings on the Chinese stock markets which include Hong Kong and lately the South Korean stock market. (Foreign funds were net sellers of Korean stocks for the entire week ending November 23rd.)

Hopefully, investors will stop listening to the Xiao Ren, whose influences have waned; wishful thinking, perhaps? Since fate and luck continue to play a part in determining with whom, when, or where the buck and music will finally stop.

Tuesday, November 20, 2007

Notes on Sun and Yi

My Daoist friend reviewed my translation of TTC Chapter 48 on Wu Wei, last week. While he understood and agree with the translation, he had considered my commentary too deep. Therefore I made the necessary explanations on Hexagram 41 Sun / Decrease and Hexagram 42 Yi / Increase where it relates to cultivation of essence and bodily life to him, and gave two examples of how Wu Wei can arise.

On a similar note, little nuggets appear in Book III of the Wilhelm translation of the Zhouyi when a student is ready to understand them. (Yi students would require ten years of studies of Book I before they venture into Books II and III, otherwise they could struggle at the deep end of the pool.) Some of the nuggets are listed below for sharing:

Appended Judgments:

“Decrease shows the cultivation of character. It shows first what is difficult and then what is easy. Thus it keeps harm away.

Increase shows fullness of character. Increase shows the growth of fullness without artifices. Thus increase furthers what is useful."

“Hexagram 11 Tai / Peace and Hexagram 12 Pi / Standstill have an inner connection with Decrease and Increase, because through the transference of a strong line from the lower to the upper trigram, Decrease develops from Peace, and through the transference of a strong line from the upper to the lower trigram, Increase develops from Standstill. Thus when in Pi / Standstill, the lowest line of the upper trigram (representing Heaven) is transferred to the bottom; the resultant new hexagram is Yi, Increase.

The fact that continuous decrease finally leads to a change into its opposite, increase, lies in the course of nature, as can be perceived in the waning and waxing of the moon and in all of the regularly recurring process of nature.” [W/B]

In previous entries, one has written thoughts on some of the twelve sovereign hexagrams which follow the waning and waxing of the moon phases that relate to neidan studies. Peace and Standstill form two of these sovereign hexagrams. In his commentary, Wilhelm provided a connection between these two hexagrams with Sun and Yi. It would have made life much easier if he and his teacher, Lao Nai-hsuan had also provided the link of Sun and Yi to Chapter 48 of the Tao Te Ching.

Now students like me have to make their own examination into the Zhouyi to connect with what Laozi said in TTC 48:

Studying daily increases (Yi), acting on Tao daily decreases (Sun).

Decrease to further decrease to arrive at non action (Wu Wei).

If Daoist students think that Laozi advised against studying in the first sentence of TTC 48, since studies increases while acting on Tao decreases – using the intellect versus meditation arguments – they have misunderstood how Wu Wei comes about.

If students want a good example of Wu Wei in action and the thoughts behind it, I suggest they watch the Chinese movie where Jet Li acting as the young leader of Ming Jiao learns Taijiquan from his legendary grandmaster, Daoist Zhang San Feng. Reference may have been made to the first sentence of TTC 48 when ‘Zhang’ told Jet Li’s character to learn the Taijiquan moves (increase) and then to forget all about them (decrease); to let spontaneous action take over. Wu Wei or non action during meditation is almost similar to this.

In case an arrogant Daoist student thinks he or she can rule all under heaven by cultivating Tao and upon reaching the state of Wu Wei, Laozi advised it is not their business neither do they possess the ability to rule all under heaven? Similarly, Buddha had warned meditators in the Shurangama Sutra (Leng Yen Jing) against thinking they have become sages when they reached various states of meditation.

To master the Zhouyi is so difficult, let alone Tao, since Tao can be so vast or minute. Perhaps those who claimed to be Tao masters or sages have forgotten what Laozi said in Chapter 48 and/or what Buddha said in the Shurangama Sutra. By not listening to the advice of these two great sages, the self appointed Tao masters or sages can come to harm one day, for example Osho, since they seemed not to understand the real workings of Tao and Heaven. This also provides a hint as to what constitutes ‘Studying daily increases (Yi)’.

Decrease (Sun) relating to cultivation could be more difficult to grasp if readers do not practise meditation, and I will leave it at that. However Hexagram 41 Sun / Decrease (the Wilhelm translation) will provide the relevant answer to your question or doubt if you are earnest enough. All is required is to find that out for yourself.

Friday, November 16, 2007

Update on the KLSE and others

By the middle of September, I have cleared the balance of my stock investments. Nothing much has changed then, except I buy on dips and sell into the rallies to make some much needed pocket money.

Inflation has started to burn a hole in my pockets in Malaysia, you see, but there is minimal price rises in the US, if people want to believe in government statistics.

Reviewing online financial information of past investments, I was pleasantly surprised to see my name featured in the top thirty shareholders list of a few public quoted companies. Nothing to shout about really, since these companies are in the penny stocks categories. Ten years ago you have to be a multimillionaire to own the same amount of stocks to get into their top thirty shareholders lists. How times changed. From inflation to deflation, share price rises once again, hopefully.

Dabblers in the stock market are currently quite happy with their twenty to thirty percent gains, a far cry from earlier in the year when they would not sell for anything less than double their investment costs. Times have changed, and they are being realistic. Hopefully they will not be caught in a huge plunge in the KLSE, since the low liners have been drifting lower. If they have not noticed the KLCI prices had been shored up by last minute buying for the past two weeks. And there is not much money in the market.

Goldman Sachs has recently called for a sell in emerging markets which include Malaysia to take profits. Do not expect anyone to shore up the index if foreign fund managers start selling down their huge holdings. They need whatever profits or money in foreign currencies to fill up the big hole existing in their balance sheets. Yes, I know, they used to call it redemptions.

But nowadays the global and investment banks need the cash more than their clients, since they have started and are in the business of laying bets. Casinos or houses never lay bets but global banks broke that golden rule by gambling with their own and clients’ money.

Remember the European Central Banks' constant whispers on moral hazards?

In October, the KLSE Index finally broke the 1,400 point mark and reached an intraday record high of 1,423.81 on November 1st, only to tumble almost 40 points the next day caused by an overnight fall of 362 points in the Dow Jones index. There was not much joy for retail players since the low liners drifted. The Shanghai Stock Exchange Index shot up to its new record high of 6124.04 points on Oct 16 and has fallen about 18% since then till November 12.

Those who traded in the Chinese call warrants and derivatives in the KLSE may have made some money during the early part of October. They probably lost a fortune thereafter, when the plunges took place, what with the 30 to 50 percentage falls on some trading days during the second half of October and the past fortnight.

Malaysian readers who have heeded my warning not to bet on the Chinese stock markets, with ‘That October month again’ entry on October 2nd, may count their lucky stars, today?

If you are sitting on a cash pile and your hands feel itchy, after abstaining from investments for the past two months, make a small bet in the KLSE on one of your favorite stocks. I do not want readers, especially those of Chinese origin, to suffer from ‘withdrawal symptoms’ for not making any bets in the stock market!

Get ready to sell the investment, if the Korean stock market freefalls. You can always buy the shares back later, for cheaper or dearer!


Monday, November 12, 2007

TTC Chapter 48 - Wu Wei

Laozi discussed Wu Wei (non action) in Chapter 48 of his Tao Te Ching which included how to achieve that state. Let this student attempt to translate what the great sage had said, with some commentary, and see if readers can make more sense of it:

Studying daily increases, acting on Tao daily decreases.

Decrease to further decrease to arrive at non action.

Non action means no need for action.

To rule all under heaven is not your business.

Reaching that possess business insufficient to obtain all under heaven.


With study our good thoughts and knowledge daily increases. With daily meditation amidst the stillness; thoughts and anger decreases. (Meditation is part of cultivating or acting on Tao.)

When there is out and out decrease in thoughts and anger, a cultivator arrives at non action (Wu Wei). When the cultivator arrives at non action, it leads to spontaneous action without action. The spirit manifests and magic sets in.

Upon reaching such a state, it is not the cultivator’s business neither does he have sufficient knowledge, to rule all under heaven.

If cultivators examine the Yi / Increase and Sun / Decrease hexagrams in the Zhouyi carefully, they can come to a better understanding of the requisite dual cultivation of essence and bodily life as espoused by Laozi in the Tao Te Ching including Chapter 48. And do not forget to take this translation with a pinch of salt, as usual.

Thursday, November 08, 2007

Comparison of Zhou and Chin Dynasties

Wu Pei was a general of Liu An, Prince of Huainan during the Han Dynasty. Liu An consulted him for advice to overthrow the emperor. Wu Pei gave this brief comparison between the Zhou and Chin dynasties to Liu An to persuade the prince not to plan revolt:

“Let me offer your Highness some advice.

I have heard that a man with good ears can hear what has not yet made a sound, a man with good eyes can see what has not yet taken form. That is why a sage succeeds in all he does. King Wen of old made but one move, yet he has been honoured for a thousand generations as the founder of one of the three great dynasties. For he carried out the will of Heaven and all men followed him of their own accord.

This is a case from a thousand years ago, whereas the Chin Dynasty of a hundred years ago and Wu and Chu in recent times are examples of how kingdoms fall. I am not afraid to share the fate of Wu Tzu-hsu, but I hope your Highness will not listen to wrong advice like the king of Wu.

Chin abandoned the ways of the former kings, killed scholars, burnt the ancient songs and documents, gave up ceremony and justice, advocated treachery and force, relied on punishments and shipped grain from the coast to Hsiho. In those days, although men wore themselves out in the fields, they had not even enough chaff or husks to eat. Although women wove and spun, they had not clothes enough to cover themselves.

The emperor sent Meng Tien to build the Great Wall extending thousands of li from east to west. He kept hundreds of thousands of troops deployed in the field, and the dead were past counting. Corpses lay strewn for a thousand li, hundreds of mou flowed with blood, and the people were so exhausted that five households out of ten longed to revolt.

Then Hsu Fu was sent out to sea in search of supernatural beings (ShenXian), and on his return he lied to the emperor, saying, ‘I have seen the great god of the ocean, who asked whether I was the envoy from the Emperor of the West. When I signified that I was, he asked me my business. I told him I was looking for an elixir to prolong life. He replied that since the king of Chin’s gifts were so poor, I could see what I wished but might take nothing away. Then he let me go southeast to Mount Penglai, where I saw palaces built of sacred fungus. There was a god the colour of bronze and shaped like a dragon, whose light blazed up to illuminate the sky. I bowed and asked what presents I should bring, and the god replied that the elixir could be had by anyone who brought young boys and girls and crafts of every kind.’

The First Emperor of Chin (Chin Shi Huangdi) in high delight sent him back with three thousand boys and girls, the five types of grain and a hundred different craftsmen. But when Hsu Fu reached a plain with a broad expanse of water, he set himself up as king there and never returned. Then the people grieved over their bitter loss, and six households out of ten longed to revolt.

Then the emperor dispatched Chao To south across the mountains to attack the Yueh tribes. Knowing that the people were at the end of their tether, Chao To set himself up as king there and did not go back but sent to ask for thirty thousand unmarried women to mend his troops’ uniforms and the emperor sent him fifteen thousand women. That was when the people became further demoralized and seven households out of ten wanted to revolt.

In time past the emperor of Chin defied what was right, oppressing and injuring the people. He had a retinue of ten thousand carriages, built Apang Palace, took away over half his subjects’ income in taxes, and conscripted those who should have been exempt from service. Fathers were unable to support their sons, elder brothers to help their younger brothers. Harsh administration and cruel punishments made the whole country groan in distress. The people craned their necks to look for salvation and inclined their ears to listen, crying out to Heaven and beating their breasts in hatred of the emperor. That is why the whole empire responded to Chen Sheh’s call.

Now our emperor rules over a united empire, his love extends to all, his virtue and liberality are manifest. His lips do not move, yet his voice travels with the speed of a thunderbolt. He issues no order, yet his influence spreads like magic. When he wishes for something, his might is felt ten thousand li away and his subjects respond like a shadow or an echo. Furthermore, Grand Marshal Wei Ching is abler than either Chang Han or Yang Hsiung. And so I think your Highness is mistaken to compare yourself with Chen Sheh and Wu Kuang.”

[Records of the Historian – HY and Gladys Yang]

Many lessons can be learned from this brief by Wu Pei.

The most basic of all is not to believe historians who still think that Chin Shi Huangdi was a great emperor. Either these historians did not do enough homework (research) to teach ancient Chinese history or are biased. Since some of them read the Records of the Historian – Shiji - too.

Monday, November 05, 2007

Top line of Po / Splitting Apart

The Judgment in Hexagram 23, Po says:
Splitting Apart. It does not further one to go anywhere.

Due to the time, it is not favorable for the superior man to undertake anything. Therefore he waits for a more favorable time.

Nine at the top means:
There is a large fruit still uneaten. The superior man receives a carriage. The house of the inferior man is split apart.


Here the splitting apart reaches its end. When misfortune has spent itself, better times return. The seed of the good remains, and it is just when the fruit falls to the ground that good sprouts anew from its seed.

The superior man again attains influence and effectiveness. He is supported by public opinion as if in a carriage. But the inferior man’s wickedness is visited upon himself. His house is split apart.

A law of nature is at work here. Evil is not destructive to the good alone but inevitably destroys itself as well.


If we look at the recent upheavals in the high street and investment banks in the US, perhaps Yi students can understand the wisdoms contained in the Judgment, the Great Image and the six lines of Po.

The Junzi at the top line has ensured his or her position by giving generously to those below. Therefore the public gives their support carrying him, going forward.

The Xiao Ren who wielded influence by sharing pecuniary gains with others through possible collusion and hoodwinking ‘less intelligent’ investors (the old fools) are now forced upon to retire and held accountable for their failures. Many innocent bystanders (the investors) have suffered more than them in monetary terms in the recent turmoil and credit crunch in the global financial markets, a consequence of previous wrongful actions by these inferior men.

Payback time has come and the inferior men’s houses are beginning to split apart. If regulators are allowed to properly discharge their duties, the real culprits have nowhere to hide. (Think of recent investigations into global ratings agencies and a back-to-back arrangement to dispose of CDOs ‘with recourse’ to the seller)

It seems that Citibank has quickly forgotten its dilemma back in the early 1990s where it had to source the world for an investor to take up 25% of new share capital for about 900 millions of dollars. According to recent reports, there is a much bigger hole to fill in, this time round. The worst thing is that no one knows the collateral damage.

The total expected fallout from the CDOs and other derivatives can be frightening if readers know the published figures since the amount of US home loans is so huge, more than doubled the current size of the US Government debt securities. (Read Bloomberg online for more information, if interested.)

Therefore if you decide to wade into the stock market after a huge plunge, be careful.

Meanwhile try not to stand in the middle of the mountain.