Money and risk
Li Ka-shing
Cycles
Li Ka-shing (Contemporary · 1928–) — Cycles.
What actually happened?
In 1967 Hong Kong was in the middle of riots. Bombs were being left in the streets, British firms were pulling out, and property prices collapsed. Everyone was selling. He was buying. Three years later the city had stabilised and his holdings were worth several times what he paid. The move looks like nerve and is mostly arithmetic: he had done the work of imagining how it could go wrong, and he had the cash to be wrong for a while.
Counter-cyclical, in both directions
Buy in the trough, take money off the table at the peak. Land in the 1967 riots; a steady withdrawal from mainland property from the 2010s, roughly a decade before the consensus. Each time, acting before others noticed the turn.
Never take the last coin
He exits before his own estimate of the top, giving up the final ten or twenty per cent in exchange for certainty. Wanting the last coin means selling only once everyone agrees the top has passed.
Cash is oxygen
Large reserves at all times, accepting lower returns to keep liquidity. In 2008 several large groups ran out of funding. He didn't. Low gearing isn't caution — it buys more chances to be wrong.
How do I use it today?
Once a year, run a cash stress test: if your main income stopped for six months, how long would your reserves last? If the answer is under six months, start building the reserve now rather than after the answer matters.
Deep read
Read alongside
Further
Lines to keep
The first barrel must be solid before you add the second.