HEXAGRAM 56: ORIGINAL, INTERPRETATION AND CASES

HEXAGRAM 56 - Lu - The Wanderer

Above LI THE CLINGING, FIRE

Below KEN KEEPING STILL, MOUNTAIN

· The mountain, Ken, stands still;

above it

· fire, Li, flames up and does not tarry.

Therefore

the two trigrams do not stay together.

Strange lands and separation are the wanderer's lot.

THE JUDGMENT

THE WANDERER.

Success through smallness.

Perseverance brings good fortune

To the wanderer.

When

· a man is a wanderer and stranger,

o he should not be gruff nor overbearing.

· He has no large circle of acquaintances

therefore

o he should not give himself airs.

· He must be cautious and reserved;

in this way

o he protects himself from evil.

· he is obliging toward others,

o he wins success.

A wanderer has no fixed abode;

his home is the road.

Therefore

he must take care to remain upright and steadfast,

so that

· sojourns only in the proper places,

· associating only with good people.

Then

· has good fortune and

· can go his way unmolested.

THE IMAGE

Fire on the mountain: The image of THE WANDERER.

Thus

the superior man

· Is clear-minded and cautious In imposing penalties, And

· protracts no lawsuits.

When grass on a mountain takes fire, there is bright light.

However,

the fire

· does not linger in one place, but

· travels on to new fuel.

It is a phenomenon of short duration.

This is what penalties and lawsuits should be like.

They

· should be a quickly passing matter, and

· must not be dragged out indefinitely.

· Prisons ought to be places where people are lodged only temporarily,

as guests are.

· They must not become dwelling places.

THE LINES

Six at the beginning means:

· the wanderer busies himself with trivial things,

· He draws down misfortune upon himself.

A wanderer should not

· demean himself or

· busy himself with

inferior things he meets with along the way.

· The humbler and more defenseless his outward position,

· the more should he preserve his inner dignity.

For a stranger is mistaken if he hopes to find a friendly reception

through lending himself to jokes and buffoonery.

The result will be only

· contempt and

· insulting treatment.

Six in the second place means:

· The wanderer comes to an inn.

· He has his property with him.

· He wins the steadfastness (1) of a young servant.

The wanderer here described is

· modest and

· reserved.

· He does not lose touch with his inner being,

hence

o he finds a resting place.

In the outside world

· he does not lose the liking of other people,

hence

o all persons further him,

so that

o he can acquire property.

Moreover,

o he wins the allegiance of a faithful and trustworthy servant –

a thing of inestimable value to a wanderer.

Nine in the third place means:

The wanderer's inn burns down.

He loses the steadfastness of his young servant.

Danger.

A truculent stranger does not know how to behave properly.

· He meddles in affairs and controversies that do not concern him;

thus

o he loses his resting place.

· He treats his servant with aloofness and arrogance;

thus

o he loses the man's loyalty.

When

· a stranger in a strange land has no one left on whom he can rely,

o the situation becomes very dangerous.

Nine in the fourth place means:

· The wanderer rests in a shelter.

· He obtains his property and an ax.

My heart is not glad.

This describes

a wanderer who knows how to limit his desires outwardly, though

he is inwardly strong and aspiring.

Therefore

· he finds at least a place of shelter in which he can stay.

· He also succeeds in acquiring property, but even with this he is not secure.

He must be always on guard, ready to defend himself with arms.

Hence

he is not at ease.

He is persistently conscious of being a stranger in a strange land.

Six in the fifth place means:

He shoots a pheasant.

It drops with the first arrow.

In the end this brings both praise and office.

Traveling statesmen were in the habit of

introducing themselves to local princes with the gift of a pheasant.

Here

the wanderer wants to enter the service of a prince.

To this end

he shoots a pheasant, killing it at the first shot.

Thus

· he finds friends who praise and recommend him,

and in the end

· the prince accepts him and confers an office upon him.

Circumstances often cause a man to seek a home in foreign parts.

he knows

· how to meet the situation and

· how to introduce himself in the right way,

he may find

· a circle of friends and

· a sphere of activity

even in a strange country.

Nine at the top means:

The bird's nest burns up.

The wanderer laughs at first,

Then must needs lament and weep.

Through carelessness he loses his cow.

Misfortune.

The picture of a bird whose nest burns up indicates

loss of one’s resting place.

This misfortune may overtake the bird

if it is heedless and imprudent when building its nest.

It is the same with a wanderer.

· lets himself go, laughing and jesting, and

· forgets that he is a wanderer,

he will later have cause to weep and lament.

For

if through carelessness a man loses his cow - i.e., his modesty and adaptability - evil will result.

(1). [Literally, "perseverance”.]

56 THE WANDERER

MANAGERIAL ISSUE:

The wandering CEO – wandering from one project to another, from one takeover to another.

Hexagram 56 describes two types of wandering CEOs:

1) The wanderer investor-CEO - who is always searching for a corporation to buy. He cannot be happy with managing the corporation he just took over, even if he knows he can do it well. He must always look for a new target. He knows his fame and fortune lies in finding the next prey, therefore he must not stay for too long in one single corporation. He must:

a) Avoid any situation that will stop his progress even if temporarily,

b) Quickly look for value in persons and in assets, keeping what is of value and quickly discarding that which has no value,

c) Maintain a quick pace attitude, by imagining he is a shopper in a Turkish bazaar looking for good value for his money, for a quick return in a short period of time. Unlike Warren Buffet, who is the ultimate long term value investor, the workout CEO, like a Don Juan or a Casanova, cannot afford to ruin his reputation by growing old with his conquest.

2) The wanderer manager-CEO - the CEO without a corporation, the workout CEO, the freelance CEO, the CEO who is always looking for a corporation in distress to fix, the ruthless specialist, the hired gun.

MANAGERIAL LESSON:

The wandering CEO knows he can be successful, provided he:

1) Accepts his nature. He must accept he is a natural predator looking for opportunities in weaker corporations; or a hunter looking for poorly managed corporations or corporations with book value much greater than market value.

2) Be resolute. He must be ruthless. Tenacity in hunting is of crucial importance. He must stalk the prey until hunted and then must defend his trophy from other predators.

3) Be highly focused. His eyes, like those of an experienced hunter, should never waver from the prey.

4) Be gentle and humble, if he wants to win over the employees of the conquered corporation. Arrogance and injustice towards the conquered can only result in hatred and sabotage.

5) Be trustworthy, if he wants to be trusted.

6) Be friendly, if he wants to make friends - and eventually he will need friends.

7) Keep his own counsel, if he wants to avoid taking negative advice given by his enemies to deliberately mislead him.

8) Realize he loves the hunt itself more than the hunted object. Much like Donald Trump, he must love the game. In this way he will look for the best preys and the best hunters to accompany him in the hunt. He knows he has no time to waste with losers, such as unprofitable corporations, which no one can turn around or with executives without the guts to do what they must.

9) Be just and fair. Imparting justice will earn him respect and admiration.

10) Avoid all kinds of litigations, whether they come from the employees’ unions or opportunistic investors who feel they have been robbed (they probably were).

INVESTMENT ADVICE:

For the investor, the Wanderer represents in general terms an unfavorable Time-Space to invest. It is quite difficult to manage under a position of constant motion such as that of the Wanderer. This is particularly the case when the wandering CEO is one who is constantly moving from project to project and from corporation to corporation.

By itself (no lines) the Time-Space points to “Success through smallness".

THE WANDERER.

Success through smallness.

Perseverance brings good fortune

To the wanderer.

When a man is a wanderer and stranger, he should not be gruff nor overbearing. He has no large circle of acquaintances therefore he should not give himself airs. He must be cautious and reserved; in this way he protects himself from evil. If he is obliging toward others, he wins success.

A wanderer has no fixed abode; his home is the road. Therefore he must take care to remain upright and steadfast, so that he sojourns only in the proper places, associating only with good people. Then he has good fortune and can go his way unmolested.

The lines include no possibilities of Good Fortune and three of danger or misfortune. The rest are semi negative.

The following are cases of corporations under the Wanderer Time-Space.

· Starbucks Corp. SBUX under CEO Howard D. Schultz

· ARM Holdings plc ARMH under CEO Warren East

· BMC Software Inc. BMC under CEO Robert E. Beauchamp

· Sigma-Aldrich Corporation SIAL under CEO Rakesh Sachdev

(Read at the end of the Hexagram)

THE LINES

SIX IN THE FIRST PLACE

Managerial Issue: The wandering CEO – picking the right project / corporation to go after.

Managerial Lesson: Be dignifying.

Managerial Warning: At the first stage of the Wanderer Time-Space, the CEO risks “demeaning or busying himself with inferior things”

Managerial Advice: The Superior CEO knows that:

· He must act like a good general by picking the fight of his own choice, of his own time and of his own place.

· To come in at a disadvantageous position will only make him the laughing stock of all the employees of the conquered corporation.

Investment advice: Do not invest

SIX IN THE SECOND PLACE

Managerial Issue: The wandering CEO – taking over the corporation with the proper attitude.

Managerial Lesson: Be modest / reserved.

Managerial Warning: At the second stage of the Wanderer Time-Space, the CEO finds his modesty helps him win friends.

Managerial Advice: The Superior CEO knows the proper way to come into a newly acquired corporation is to come in with the proper attitude: with humility, observing all the rules, and keeping his own counsel. Then he will win friends and loyal executives to assist him in all his tasks.

Investment advice: Do not invest. Look for other alternatives.

NINE IN THE THIRD PLACE

Managerial Issue: The wandering CEO – taking over the corporation with the wrong attitude.

Managerial Lesson: Be gentle.

Managerial Warning: At the third stage of the Wanderer Time-Space, the CEO “does not know how to behave properly”.

Managerial Advice: The Superior CEO knows that to take over a corporation with the wrong attitude, foolishly breaking all the rules of the hunt, and particularly lacking in focus, humility and gentleness, will only end in disgrace and further losses.

Investment advice: Do not invest.

NINE IN THE FOURTH PLACE

Managerial Issue: The wandering CEO – failing to take over the corporation in spite of having the proper attitude.

Managerial Lesson: Be patient.

Managerial Warning: At the fourth stage of the Wanderer Time-Space, the CEO “knows how to limit his desires outwardly, though he is inwardly strong and aspiring”.

Managerial Advice: The Superior CEO knows that he must have the right attitude and find the proper corporation to take over; otherwise, even though he is able to conquer the project/corporation, he will fail to feel comfortable with his position in spite of his leadership and managerial qualities.

Investment advice: Do not invest.

SIX IN THE FIFTH PLACE

Managerial Issue: The wandering CEO – warming up to the Board of Directors of a targeted corporation.

Managerial Lesson: Be diplomatic.

Managerial Warning: At the fifth stage of the Wanderer Time-Space, the CEO finds he must warm up to the CEO or the Board of Directors of a targeted corporation. His aim is to get his or their approval to help him in his buy out effort or bring him in on board as a workout-CEO;

Managerial Advice: The Superior CEO knows to get someone’s support he must “know how to meet the situation and how to introduce himself in the right way”, He must first prove he is worth it and up to the task. What are his previous accomplishments? Did he save any other corporation in similar circumstances? Does he have an extensive curriculum proving he has the abilities? Does he have influential friends who can vouch for him? If the answer to these questions is positive, then the CEO or the Board of Directors will support him.

Investment advice: Do not invest.

NINE IN THE SIXTH PLACE

Managerial Issue: The wandering CEO – failing to strengthen the targeted corporation due to his poor attitude.

Managerial Lesson: Be prudent / humble.

Managerial Warning: At the sixth stage of the Wanderer Time-Space, the CEO “is heedless and imprudent” and “loses his modesty and adaptability”. Thus he fails to strengthen the targeted corporation.

Managerial Advice: The Superior CEO knows he must never forget his own wandering predatory nature otherwise he will fail in his task. He must always be himself: a predator who is careful and adaptable. This condition can only get worse if, in addition, he forgets the most basic of the rules for success - humility.

Investment advice: Do not invest.

MANAGERIAL CASES

Starbucks Corp. SBUX under CEO Howard D. Schultz

Howard Schultz’s Performance: ROI= 92.27% Annualized Return= 19.06%

SPY’s Performance: ROI= (18.36%) Annualized Return= (5.27%)

Howard D. Schultz is the founder of Starbucks Corporation and served as chairman of the board of directors since its inception in 1985. In January 2008, he reassumed the role of president and chief executive officer. Since his return in 2008, his performance has been that of a Superior CEO compared to the SPY’s.

Points the investor should consider:

1) THE HEXAGRAM

HEXAGRAM 56 - Lu - The Wanderer

The mountain, Ken, stands still; above it fire, Li, flames up and does not tarry. Therefore the two trigrams do not stay together. Strange lands and separation are the wanderer's lot.

THE JUDGMENT

THE WANDERER.

Success through smallness.

Perseverance brings good fortune

To the wanderer.

2) THE ADVICE

Fire on the mountain: The image of THE WANDERER.

Thus the superior man

Is clear-minded and cautious

In imposing penalties,

And protracts no lawsuits.

When grass on a mountain takes fire, there is bright light. However, the fire does not linger in one place, but travels on to new fuel. It is a phenomenon of short duration. This is what penalties and lawsuits should be like. They should be a quickly passing matter, and must not be dragged out indefinitely. Prisons ought to be places where people are lodged only temporarily, as guests are. They must not become dwelling places.

3) THE LINES:

There are no moving lines.

4) THE MOVING HEXAGRAM

There is no moving Hexagram because there are no moving lines. The focusing point I the Judgment.

THE JUDGMENT

THE WANDERER.

Success through smallness.

Perseverance brings good fortune

To the wanderer.

It is interesting to note the Nuclear Hexagram.

NUCLEAR HEXAGRAM

HEXAGRAM 28 - Ta Kuo - Preponderance of the Great

This hexagram consists of four strong lines inside and two weak lines outside. When the strong are outside and the weak inside, all is well and there is nothing out of balance, nothing extraordinary in the situation. Here, however, the opposite is the case. The hexagram represents a beam that is thick and heavy in the middle but too weak at the ends. This is a condition that cannot last; it must be changed, must pass, or misfortune will result.

THE JUDGMENT

PREPONDERANCE OF THE GREAT.

The ridgepole sags to the breaking point.

It furthers one to have somewhere to go.

Success.

The weight of the great is excessive. The load is too heavy for the strength of the supports. The ridgepole, on which the whole roof rests, sags to the breaking point, because its supporting ends are too weak for the load they bear. It is an exceptional time and situation; therefore extraordinary measures are demanded. It is necessary to find a way of transition as quickly as possible, and to take action. This promises success. For although the strong element is in excess, it is in the middle, that is, at the center of gravity, so that a revolution is not to be feared. Nothing is to be achieved by forcible measures.

The problem must be solved by gentle penetration to the meaning of the situation (as is suggested by the attribute of the inner trigram, Sun); then the change-over to other conditions will be successful. It demands real superiority; therefore the time when the great preponderates is a momentous time.

THE IMAGE

The lake rises above the trees: The image Of PREPONDERANCE OF THE GREAT.

Thus the superior man, when he stands alone,

Is unconcerned,

And if he has to renounce the world,

He is undaunted.

Extraordinary times when the great preponderates are like flood times when the lake rises over the treetops. But such conditions are temporary. The two trigrams indicate the attitude proper to such exceptional times: the symbol of the trigram Sun is the tree, which stands firm even though it stands alone, and the attribute of Tui is joyousness, which remains undaunted even if it must renounce the world.

ARM Holdings plc ARMH under CEO Warren East

Warren East’s Performance: ROI= 90.80% Annualized Return= 6.67%

SPY’s Performance: ROI= 4.49% Annualized Return= 0.44%

Warren East became CEO of ARM Holdings on October of 2001. Since then, he has been able to outperform the SPY substantially.

Because he has been CEO for almost a decade, we asked the Oracle once more about his future. His new hexagram is The Wanderer.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Six in the second place means:

The wanderer comes to an inn.

He has his property with him.

He wins the steadfastness (1) of a young servant.

The wanderer here described is modest and reserved. He does not lose touch with his inner being, hence he finds a resting place. In the outside world he does not lose the liking of other people, hence all persons further him, so that he can acquire property. Moreover, he wins the allegiance of a faithful and trustworthy servant - a thing of inestimable value to a wanderer.

4) THE MOVING HEXAGRAM

HEXAGRAM 50 – Ting - The Caldron

The six lines construct the image of Ting, THE CALDRON; at the bottom are the legs, over them the belly, then come the ears (handles), and at the top the carrying rings. At the same time, the image suggests the idea of nourishment. The Ting, cast of bronze, was the vessel that held the cooked viands in the temple of the ancestors and at banquets. The head of the family served the food from the Ting into the bowls of the guests.1 THE WELL (48) likewise has the secondary meaning of giving nourishment, but rather more in relation to the people. The Ting, as a utensil pertaining to a refined civilization, suggests the fostering and nourishing of able men, which redounded to the benefit of the state. (2)

This hexagram and THE WELL are the only two in the Book of Changes that represent concrete, man-made objects. Yet here too the thought has its abstract connotation. Sun, below, is wood and wind; Li, above, is flame. Thus together they stand for the flame kindled by wood and wind, which likewise suggests the idea of preparing food.

THE JUDGMENT

THE CALDRON.

Supreme good fortune.

Success.

While THE WELL relates to the social foundation of our life, and this foundation is likened to the water that serves to nourish growing wood, the present hexagram refers to the cultural superstructure of society. Here it is the wood that serves as nourishment for the flame, the spirit. All that is visible must grow beyond itself, extend into the realm of the invisible. Thereby it receives its true consecration and clarity and takes firm root in the cosmic order.

Here we see civilization as it reaches its culmination in religion. The Ting serves in offering sacrifice to God. The highest earthly values must be sacrificed to the divine. But the truly divine does not manifest itself apart from man. The supreme revelation of God appears in prophets and holy men. To venerate them is true veneration of God. The will of God, as revealed through them, should be accepted in humility; this brings inner enlightenment and true understanding of the world, and this leads to great good fortune and success.

THE IMAGE

Fire over wood: The image of THE CALDRON.

Thus the superior man consolidates his fate

By making his position correct.

The fate of fire depends on wood; as long as there is wood below, the fire burns above. It is the same in human life; there is in man likewise a fate that lends power to his life. And if he succeeds in assigning the right place to life and to fate, thus bringing the two into harmony, he puts his fate on a firm footing. These words contain hints about the fostering of life as handed on by oral tradition in the secret teachings of Chinese yoga,

1. [There are beautiful examples of the Ting in most of our museums where they are classified as ritual vessels. The German word used by Wilhelm for Ting is Tiegel, meaning literally "caldron" and, in another sense, “crucible." Since this characteristic Chinese vessel is unique in form, so different from either a caldron or a crucible in the usual sense, the word Ting has been retained wherever feasible here.]

2. Cf. the other three hexagrams dealing with nourishment, viz., hexagrams 5, 27, 48.

BMC Software Inc. BMC under CEO Robert E. Beauchamp

Robert Beauchamp’s Performance: ROI= 37.68% Annualized Return= 3.01%

SPY’s Performance: ROI= (16.49%) Annualized Return= (1.66%)

Robert E. Beauchamp became CEO of BMC Software on January of 2001. Since then, he has been able to outperform the SPY.

Because he has been CEO for almost a decade, we asked the Oracle once more about his future. His new hexagram is The Wanderer.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Six in the fifth place means:

He shoots a pheasant.

It drops with the first arrow.

In the end this brings both praise and office.

Traveling statesmen were in the habit of introducing themselves to local princes with the gift of a pheasant. Here the wanderer wants to enter the service of a prince. To this end he shoots a pheasant, killing it at the first shot. Thus he finds friends who praise and recommend him, and in the end the prince accepts him and confers an office upon him.

Circumstances often cause a man to seek a home in foreign parts. If he knows how to meet the situation and how to introduce himself in the right way, he may find a circle of friends and a sphere of activity even in a strange country.

4) THE MOVING HEXAGRAM

HEXAGRAM 33 – Tun - Retreat

The power of the dark is ascending. The light retreats to security, so that the dark cannot encroach upon it. This retreat is a matter not of man's will but of natural law. Therefore in this case withdrawal is proper; it is the correct way to behave in order not to exhaust one's forces. 1

In the calendar this hexagram is linked with the sixth month (July-August), in which the forces of winter are already showing their influence.

THE JUDGMENT

RETREAT. Success.

In what is small, perseverance furthers.

Conditions are such that the hostile forces favored by the time are advancing. In this case retreat is the right course, and it is through retreat that success is achieved. But success consists in being able to carry out the retreat correctly. Retreat is not to be confused with flight. Flight means saving oneself under any circumstances whereas retreat is a sign of strength. We must be careful not to miss the right moment while we are in full possession of power and position. Then we shall be able to interpret the signs of the time before it is too late and to prepare for provisional retreat instead of being drawn into a desperate life-and-death struggle. Thus we do not simply abandon the field to the opponent; we make it difficult for him to advance by showing perseverance in single acts of resistance. In this way we prepare, while retreating, for the counter - movement. Understanding the laws of a constructive retreat of this sort is not easy. The meaning that lies hidden in such a time is important.

THE IMAGE

Mountain under heaven: the image of RETREAT.

Thus the superior man keeps the inferior man at a distance,

Not angrily but with reserve.

The mountain rises up under heaven, but owing to its nature it finally comes to a stop. Heaven on the other hand retreats upward before it into the distance and remains out of reach. This symbolizes the behavior of the superior man toward a climbing inferior; he retreats into his own thoughts as the inferior man comes forward. He does not hate him, for hatred is a form of subjective involvement by which we are bound to the hated object. The superior man shows strength (heaven) in that he brings the inferior man to a standstill (mountain) by his dignified reserve.

1. The idea expressed by this hexagram is similar to that in the saying of Jesus: "But I say unto you, That ye resist not evil" (Matt. 5:39)-

Sigma-Aldrich Corporation SIAL under CEO Rakesh Sachdev

Rakesh Sachdev’s Performance: ROI= (0.27%) Annualized Return= (0.30%)

SPY’s Performance: ROI= (4.67%) Annualized Return= (5.23%)

Rakesh Sachdev became CEO of Sigma-Aldrich on November of 2010. Since then, he has not been able to outperform the SPY.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Nine in the third place means:

The wanderer's inn burns down.

He loses the steadfastness of his young servant.

Danger.

A truculent stranger does not know how to behave properly. He meddles in affairs and controversies that do not concern him; thus he loses his resting place. He treats his servant with aloofness and arrogance; thus he loses the man's loyalty. When a stranger in a strange land has no one left on whom he can rely, the situation becomes very dangerous.

4) THE MOVING HEXAGRAM

HEXAGRAM 35 – Chin - Progress

The hexagram represents the sun rising over the earth. It is therefore the symbol of rapid, easy progress, which at the same time means ever widening expansion and clarity.

THE JUDGMENT

PROGRESS.

The powerful prince

Is honored with horses in large numbers.

In a single day he is granted audience three times.

As an example of progress, this pictures a time when a powerful feudal lord rallies the other lords around the sovereign and pledges fealty and peace. The sovereign rewards him richly and invites him to a closer intimacy.

A twofold idea is set forth here. The actual effect of the progress emanates from a man who is in a dependent position and whom the others regard as their equal and are therefore willing to follow. This leader has enough clarity of vision not to abuse his great influence but to use it rather for the benefit of his ruler. His ruler in turn is free of all jealousy, showers presents on the great man, and invites him continually to his court. An enlightened ruler and an obedient servant - this is the condition on which great progress depends.

THE IMAGE

The sun rises over the earth: The image Of PROGRESS.

Thus the superior man himself

Brightens his bright virtue.

The light of the sun as it rises over the earth is by nature clear. The higher the sun rises, the more it emerges from the dark mists, spreading the pristine purity of its rays over an ever widening area. The real nature of man is likewise originally good, but it becomes clouded by contact with earthly things and therefore needs purification before it can shine forth in its native clarity. 1