HEXAGRAM 60: ORIGINAL, INTERPRETATION AND CASES

HEXAGRAM 60 – Chieh - Limitation

Above K'AN THE ABYSMAL, WATER

Below TUI THE JOYOUS, LAKE

· A lake occupies a limited space.

When more water comes into it,

· it overflows.

Therefore

limits must be set for the water.

The image shows

· water below and

· water above,

· with the firmament between them as a limit.

The Chinese word for limitation really

denotes the joints that divide a bamboo stalk.

· In relation to ordinary life

o it means the thrift that sets fixed limits upon expenditures.

· In relation to the moral sphere

o it means the fixed limits that the superior man sets upon his actions -

the limits of loyalty and disinterestedness.

THE JUDGMENT

LIMITATION.

Success.

Galling limitation must not be persevered in.

· Limitations are troublesome,

but

· they are effective.

· we live economically in normal times,

· we are prepared for times of want.

To be sparing saves us from humiliation.

Limitations are also indispensable in the regulation of world conditions.

In nature there are fixed limits for

· summer and winter,

· day and night, and

these limits give the year its meaning.

In the same way,

economy,

by setting fixed limits upon expenditures,

acts to

· preserve property and

· prevent injury to the people.

But in limitation

we must observe due measure.

· If a man should seek to impose galling limitations upon his own nature,

o it would be injurious.

And

· if he should go too far in imposing limitations on others,

o they would rebel.

Therefore

it is necessary to set limits even upon limitations

THE IMAGE

Water over lake: the image of LIMITATION.

Thus

the superior man

· Creates number and measure, And

· examines the nature of virtue and correct conduct.

· A lake is something limited.

· Water is inexhaustible.

A lake

· can contain only a definite amount of the infinite quantity of water;

· this is its peculiarity.

In human life too

the individual achieves significance through

· discrimination and

· the setting of limits.

Therefore

what concerns us here is

the problem of clearly defining these discriminations,

which are, so to speak,

· the backbone of morality.

· Unlimited possibilities are not suited to man;

· if

· they existed,

· his life would only dissolve in the boundless.

To become strong,

a man's life needs the limitations

· ordained by duty and

· voluntarily accepted.

The individual attains significance as a free spirit only

· by surrounding himself with these limitations and

· by determining for himself what his duty is.

THE LINES

Nine at the beginning means:

Not going out of the door and the courtyard

Is without blame.

Often a man who

· would like to undertake something

· finds himself confronted by insurmountable limitations.

Then he must know where to stop.

· rightly understands this and

· does not go beyond the limits set for him,

· accumulates an energy that enables him,

when the proper time comes,

· to act with great force.

Discretion is of prime importance in preparing the way for momentous things.

Concerning this, Confucius says:

· Where disorder develops,

o words are the first steps.

· If the prince is not discreet,

o he loses his servant.

· If the servant is not discreet,

o he loses his life.

· If germinating things are not handled with discretion,

o the perfecting of them is impeded.

Therefore

· the superior man

o is careful to maintain silence and

o does not go forth.

Nine in the second place means:

Not going out of the gate and the courtyard

Brings misfortune.

When

· the time for action has come,

· the moment must be quickly seized.

Just as

· water first collects in a lake without flowing out,

· yet is certain to find an outlet when the lake is full,

so it is in the life of man.

· It is a good thing to hesitate

so long as

· the time for action has not come, but no longer.

Once

the obstacles to action have been removed,

anxious hesitation

· is a mistake that is bound to bring disaster,

· because one misses one's opportunity.

Six in the third place means:

He who knows no limitation

Will have cause to lament.

No blame.

· an individual is bent only on pleasures and enjoyment,

· it is easy for him to lose his sense of the limits that are necessary.

· he gives himself over to extravagance,

· he will have to suffer the consequences,

with accompanying regret.

He must not seek to lay the blame on others.

Only when

· we realize that our mistakes are of our own making

· will such disagreeable experiences free us of errors.

Six in the fourth place means:

Contented limitation.

Success.

· Every limitation has its value,

but

· a limitation that requires persistent effort entails a cost of too much energy.

When, however,

· the limitation is a natural one

· (as for example, the limitation by which water flows only downhill),

· it necessarily leads to success,

for then

· it means a saving of energy.

The energy that otherwise

would be consumed in a vain struggle with the object,

· is applied wholly to the benefit of the matter in hand, and

· success is assured.

Nine in the fifth place means:

Sweet limitation brings good fortune.

Going brings esteem.

The limitation must be carried out in the right way

if it is to be effective.

If we

· seek to impose restrictions on others only,

· while evading them ourselves,

· these restrictions will always be resented and will provoke resistance.

If, however,

a man in a leading position

· applies the limitation first to himself,

· demanding little from those associated with him, and with modest means

· manages to achieve something,

good fortune is the result.

Where such an example occurs,

· it meets with emulation,

· so that whatever is undertaken must succeed.

Six at the top means:

Galling limitation.

Perseverance brings misfortune.

Remorse disappears.

· one is too severe in setting up restrictions,

· people will not endure them.

· The more consistent such severity,

· the worse it is,

for in the long run

· a reaction is unavoidable.

In the same way,

· the tormented body will rebel against excessive asceticism.

On the other hand, although

· ruthless severity is not to be applied persistently and systematically,

there may be times when

· it is the only means of safeguarding against guilt and remorse.

In such situations

· ruthlessness toward oneself

· is the only means of saving one's soul,

which otherwise

· would succumb to irresolution and temptation.

60 LIMITATIONS

MANAGERIAL ISSUE:

The CEO – managing to establish and apply the corporation’s Limitations – in all things (material, mental, emotional, and spiritual) - be thrifty.

Hexagram 60 refers to the CEO’s need to:

· Establish Limitations or firm rules for the corporation to work properly.

· Apply these Limitations to turn a universe of resources into a single, focused and very specific business model.

MANAGERIAL LESSON:

The Superior CEO knows he can be successful as long as he establishes:

1) Limitations to the number of resources. There is an entire universe of ideas, but to create a successful corporation requires limiting it to a single idea. The CEO must choose a single idea and turn it into a reality. There are billions of human beings, but the CEO must choose from these billions only a limited number of potential customers to market his products, only a limited number of products to offer to his customers, only a limited number of executives to help him run the corporation, and only a limited number of employees to assist in its production (or offering of its services). In general terms, there is an abundance of natural resources, but the CEO must choose a limited number for the corporation. He must turn the general into the specific.

2) Limitations to his managerial capacity. A CEO who pursues many ideas or buys many companies, in effect wastes the corporation’s as well as his own personal resources. He can easily lose his focus. There is an entire universe of corporations and the undisciplined CEO will buy all he can regardless of whether such union would create synergy. Why are there some CEOs who feel there are no limits to their managerial capacity? When a CEO takes on a job, he should do so with the understanding his first responsibility is to the shareholders, to add value to them, to make them wealthier. He must preserve corporate resources. The CEO, who wastes the corporations’ assets in the wrong investments, takes value away from the shareholders and fails to do his duty, that same duty, which he freely accepted.

3) Limitations to his influence. He must accept that sometimes he will find opposition to his plans from different parties. For instance, he might find opposition to his expansion plans from the Board of Directors, from the shareholders or from the government.

4) Limitations to his power. He must accept that not doing is as important as doing. This is the issue of Bill Gates and Microsoft trying to buy Intuit with the resistance of the DOJ, which put a stop to it. Bill Gates realized he could not beat the DOJ, so he pulled back and continued to do what he does best, accumulating more wealth for his shareholders. Then when the time was the proper one, he pursued other takeover candidates.

5) Limitations to his strength. He must feel the strength of his opponent and pull back if the times require it. This would avoid wasting the same energy and resources required for a future take over.

6) Limitations to his knowledge. He must stay within his area of expertise continuing to do what he does well. This will allow him to create wealth which, in turn, he will need in the future. Such accumulation of wealth will provide him with the financial muscle to make his move on another corporation at a future time.

7) Limitations to communications. He must keep quiet about his moves. This is the case of Larry Ellison. If he wants to buy a corporation without any initial interference from the DOJ, he will do so quietly. The investor should watch what both the CEO as well as the corporation’s executives say in public.

8) Limitations to expenses. He should remain focused on budgeting efforts.

9) Limitations to time. He must seize the moment even if it means pushing the limitations. He must act quickly upon any opportunity that might present itself where there are doubts over regulations or restrictions. This is the case of Sandy Weil of Travelers / Salomon Smith Barney and John Reed of Citicorp. They both seized the opportunity to merge before obtaining the eventual blessing of the DOJ. If the CEO fails to move, the corporation will lose market share and might even disappear completely if it cannot compete with those who moved first. Let this be a warning to those corporations failing to move or moving too late in creating synergy amongst various corporations. Oracle has been doing an excellent job as to proper timing.

10) Limitations to bending the law. He must accept all government limitations or restrictions where there are no doubts about the law. Only the acceptance of the law of the land will bring harmony out of chaos. However, when restrictions or regulations are perceived to be harmful for the business, an eventual correction must take place, such as the elimination of the Glass Siegel Act. Once the correction takes place, it is the duty of the CEO to move quickly for the benefit of the shareholders.

11) Limitations to the Limitations. The Superior CEO understands there are limits to the limits themselves.

The I Ching says:

· If a man should seek to impose galling limitations upon his own nature, it would be injurious.

And

· if he should go too far in imposing limitations on others, they would rebel.

Therefore

· it is necessary to set limits even upon limitations

INVESTMENT ADVICE:

For the investor, the Limitations represents in general terms a favorable Time-Space to invest.

By itself (no lines) the Limitations Time-Space points to success provided the CEO implements both: limits and limits to the limits:

LIMITATION.

Success.

Galling limitation must not be persevered in.

Limitations are troublesome, but they are effective. If we live economically in normal times, we are prepared for times of want. To be sparing saves us from humiliation. Limitations are also indispensable in the regulation of world conditions. In nature there are fixed limits for summer and winter, day and night, and these limits give the year its meaning. In the same way, economy, by setting fixed limits upon expenditures, acts to preserve property and prevent injury to the people.

But in limitation we must observe due measure. If a man should seek to impose galling limitations upon his own nature, it would be injurious. And if he should go too far in imposing limitations on others, they would rebel. Therefore it is necessary to set limits even upon limitations

The lines include two good investment possibilities: Success in the fourth line and Good Fortune in the fifth line. The rest are negative or extremely negative.

The following are cases of corporations under the Limitations Time-Space:

· Cerner Corp. CERN under CEO Neal L. Patterson

· Regeneron Pharmaceuticals, Inc. REGN under CEO Leonard S. Schleifer

· AT&T, Inc. T under CEO Randall L. Stephenson

· The St. Joe Company JOE under CEO Wm. Britton Greene

· Flextronics International Ltd. FLEX under CEO Michael McNamara

· Vodafone Group plc VOD under CEO Vittorio Colao

(Read at the end of the Hexagram)

THE LINES

NINE IN THE FIRST PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations – at a time of overwhelming limitations both external and internal.

Managerial Lesson: Be discreet.

Managerial Warning: At the first stage of the Limitations Time-Space, the CEO “would like to undertake something and finds himself confronted by insurmountable limitations”.

Managerial Advice: The Superior CEO knows that when dealing with overwhelming limitations he must follow two basic rules:

· First, he must know when to move and when to stand still. He must try and find the boundaries, how far can he go? How far can he push the envelope? And

· Second, he must know when to speak and when to be silent (applied to himself as well as to all employees). Words create limitations but also create challenges to break those limitations.

The Superior CEO:

Understands that both rules (knowing when to move and knowing when to speak) apply to economic as well as moral issues. For instance, was the CEO of IBM putting a limit on himself as well as his corporation when he initially put down the newly born PC industry by sneering at Apple? Did the CEO of Hewlett Packard needlessly challenge herself when she bought Compaq? Was she thinking about the shareholders or was she thinking about herself? Did Bill Gates impose a limitation on Microsoft when he showed skepticism about the Internet? As for the CEOs of Texaco and Ford, did they place any limitation on women allowing sexual harassment and sexual discrimination to become corporate standard practice?

Knows that the only way to avoid further damages caused by failing to set up limitations is for the CEO to realize the mistake, recognize it publicly as his own, and correct it immediately. The CEO of Texaco publicly accepted his mistake and moved quickly to defuse an explosive discriminatory issue. The CEO of IBM refused to recognize his mistake and paid for it. The CEO of Merrill (Komansky) recognized his mistake of feeling disdain for the internet and moved quickly to make amends by creating in barely a year the technical support and the culture to fight off Charles Schwab. The Superior CEOs knows that the worst thing a CEO can do is to avoid the blame. And yet that is almost the norm.

Investment advice: Do not invest

NINE IN THE SECOND PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations – when to move decisively and when to stop.

Managerial Lesson: Be humble.

Managerial Warning: At the second stage of the Limitations Time-Space, the CEO either might fail to remove obstacles or might hesitate to act once he removes the obstacles.

Managerial Advice: The Superior CEO understands two conditions:

1) The CEO who starts with a great idea in accordance with his natural talent. He finds it easy to develop such idea because no one can resist an individual with talent. Everyone wants to help, to be touched by his talent. Everyone loves a winner until the winner loses his humility. Here the CEO loses touch with reality and fails to place limitations or a strict budgeting discipline on himself as well as others.

2) The CEO who begins to think that because he has a talent for something very specific, he can have talent for anything he sets out to do. And so he goes into a line of business where he knows nothing about. He begins to waste resources and the original business starts to suffer. The business world is full of such cases. Mossimo had great talent for beach wears and was very successful at it, until he decided to expand into business wear, watches, and perfumes. The same goes for Donna Karen. The world of design is not the place to look for humility. The corporate world is littered with the "I can do whatever I please" type of CEOs. The shareholders usually pay dearly for such delusions of grandeur on the part of the CEO.

Investment advice: Do not invest

SIX IN THE THIRD PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations - setting up no budgeting discipline or limitation.

Managerial Lesson: Be disciplined.

Managerial Warning: At the third stage of the Limitations Time-Space, the CEO risks losing his sense of limitations by overindulging in pleasures and enjoyment and by blaming others for his own mistakes.

Managerial Advice: The Superior CEO knows that:

· Discipline in budgeting must start with the CEO himself as well as his inner circle before the CEO can pretend to impose it on others. If he can adhere to a strict discipline, then the CEO can have the moral right to impose it on others. This can only bring success to the corporation. But if he continues to waste resources while asking others to sacrifice, then he can only generate contempt from his employees. It is an all too common event to see CEOs traveling in luxurious jets or limousines while firing 10% or 20% of the personnel and asking everyone else to travel tourist class or take taxis to “save costs”.

· Conquering others must begin with conquering himself. Warren Buffet has always spoken against the abuse of CEOs. About their madness to go about buying companies only for the sake of increasing the assets they manage. Buffet holds that their primary responsibility is to add value to the shareholders.

Investment advice: Do not invest

SIX IN THE FOURTH PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations - discerning the good from the bad ones.

Managerial Lesson: Be fair.

Managerial Warning: At the fourth stage of the Limitations Time-Space, the CEO must implement natural limitations rather than limitations that require persistent effort.

Managerial Advice: The Superior CEO understands:

· A good limitation is one in which the corporation gets a positive advantage, such as a limitation based on skills; while the opposite will be true for a negative limitation.

· No employee can withstand too tight a limitation such as an extremely tight budget. Merit must be recognized, salaries must be increased, bonuses must be paid, executives must travel, clients must be taken out to lunch, and even decent toilet paper must be purchased for the office.

· He must establish firm rules both moral and financial for the corporation to work properly. Only when the rules are clear and applicable to everyone and he communicates them properly so that everyone knows them, will the corporation prosper.

Investment advice: Invest.

NINE IN THE FIFTH PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations – the right way.

Managerial Lesson: Be honest.

Managerial Warning: At the fifth stage of the Limitations Time-Space, the CEO risks imposing restrictions on others while evading them himself.

Managerial Advice: The Superior CEO knows that to be successful he must:

· Apply the limitation first to himself.

· Demand little from those associated with him. And

· Manage to achieve something with modest means.

The Superior CEO:

· Establishes realistic goals. Investors take a corporation seriously when it meets its projected EPS. Therefore, there is a real urgency for corporations to put order on its expenditures and expenses.

· Understands it is crucial to know one's limitations so as not to overreach – for instance, going on a buying spree only to get into a business about which he knows nothing. Success consists in knowing what one knows and not knowing what one does not know.

Investment advice: Invest

SIX IN THE SIXTH PLACE

Managerial Issue: The CEO – managing to establish the corporation’s Limitations – striking a proper balance in limitations.

Managerial Lesson: Be balanced.

Managerial Warning: At the sixth stage of the Limitations Time-Space, the CEO risks imposing too severe Limitations. This is one of the key lessons for the CEOs as well as for the investors.

Managerial Advice: The Superior CEO:

· Establishes cost controls – there must be an urgent need to reduce variable costs and constantly review fixed costs. Budgeting puts the CEO to the test in terms of how fair he is with his employees. Payrolls tend to grow almost by inertia during times of prosperity and so do the limousines, gifts, travel, and entertainment. A CEO who keeps his costs within budget will not be forced to make drastic changes when the corporation goes through a drop in earnings. He will not have to go through the embarrassment of having to lay off thousands of employees during a recession. He will also not be obliged to put the employees through the agony of guessing who will stay and who will go, because this, in turn, only serves to demoralize the rest of the employees and reduce productivity.

· Knows budgeting is applicable to both financial issues (matter), as well as emotional (spiritual). Not only does Limitations apply to production and expenses but also to affection, admiration and trust. The Superior CEO “budgets” his emotions towards his employees to be able to judge them fairly and equally. That is quite a challenge.

· Applies balance when limiting the budget. He knows the Limitations can neither be too big nor too small.

· He knows that:

o To prepare an extremely tight budget is as bad as to prepare an extravagant one.

o To impose stringent goals on the executives is to constraint their range of action and their capacity to expand.

o To allocate too few resources to managers is to force them to openly question the CEO’s judgment as well as his authority.

Investment advice: Do not invest

MANAGERIAL CASES

Cerner Corp. CERN under CEO Neal L. Patterson

Neal Patterson’s Performance: ROI= 2,173.36% Annualized Return= 18.16%

SPY’s Performance: ROI= 176.00% Annualized Return= 5.57%

Neal L. Patterson has been in charge of Cerner during the last 31 years. He is one of the founders.

Since 1993, he has been able to outperform the SPY substantially proving he is a superior CEO.

Because he has been CEO for almost three decades, we asked the Oracle once more about his future. His new hexagram is Limitations – (see article below to know why he must have limitations on limitations).

Points the investor should consider:

The Hexagram – 60 Limitation is favorable provided there is a limit to the limitations:

Success.

Galling limitation must not be persevered in.

The Advice for him is:

· the superior man

o Creates number and measure, And

o Examines the nature of virtue and correct conduct.

The lines: There is one moving line: which is positive.

Six in the fourth place means:

Contented limitation.

Success.

The Moving Hexagram: 58 The Joyous which is positive.

THE JOYOUS.

Success.

Perseverance is favorable.

Laughing at Yourself Pays Off

by Steve Adubato, Ph.D.

Last year, this column highlighted a really dumb use of e-mail by Cerner Corporation CEO Neal Patterson. Patterson was growing increasingly angry with his employees for what he perceived to be a lack of effort. He thought he was saving time by sending a mass e-mail out to over 400 employees, which in part stated the following:

"We are getting less than 40 hours of work from a large number of our 'employees.' The parking lot is sparsely used at 8:00 a.m.; likewise at 5:00 p.m. As managers, you either do not know what your employees are doing; or you do not care… Hell will freeze over before this CEO implements another employee benefit in this culture. I am tabling the promotions until I am convinced that the ones being promoted are the solution, not the problem. If you are the problem, pack your bags. I think this parental type action SUCKS. However, what you are doing as managers, with this company makes me sick...Something is going to change. I am giving you two weeks to fix this. My measurement will be the parking lot. It should be substantially full at 7:30 a.m. and 6:30 p.m. The pizza man should show up at 7:30 p.m. to feed the starving teams working late...You have two weeks. Tick-tock."

Patterson's e-mail created immediate chaos both within the company and among investors. Some angry employees posted his e-mail on the Yahoo message board. Over two days Cerner stock dropped 25 percent. Patterson tried to retract his original e-mail saying it was taken out of context, but it was too late..

It was easy at the time to blast Neal Patterson. His e-mail was a disaster. Both he and Cerner paid the price. Yet we all know that countless corporate managers and executives make similar mistakes that have serious consequences. But the Cerner story doesn't end here. Instead of continuing to defend his initial reaction, Patterson decided to make a joke of it.

At a highly attended annual Cerner conference, Patterson was the scheduled keynote speaker. Before he addressed the audience, comedian Mark Russell told lots of jokes about Patterson's e-mail. The audience roared. Cerner employees made references to the company store selling cardboard cars to put in the parking lot in an effort to fool their CEO. Right before Patterson addressed the audience, a pizza man arrived and delivered five pizzas, poking fun at Patterson's pizza line in the original e-mail. None of this corporate hijinks could have happened without Patterson's O.K.

Here's the point…While all of us make mistakes, not everyone has the character and confidence to take responsibility to poke fun at themselves. Real leaders know how to get past such errors in judgment and let others know that they are aware they've made a mistake. Relax, have a good laugh at your own expense, and move on. Most people will appreciate your candor. It will create a more comfortable and productive work environment. The longer you refuse to admit the obvious, the longer the issue or controversy lingers.

In business as in life, it's not only what happens that matters, it's how you handle it. Neal Patterson chose to take responsibility and apologize for his actions. He allowed himself to show his vulnerability to his employees and the outside world. His company and his reputation are better off for it. What was the last big or small mistake you made at work? How did you handle it? Thinking back, how would you handle it if it happened today? Write to me.

Points the investor should consider:

1) THE HEXAGRAM

HEXAGRAM 60 – Chieh - Limitation

A lake occupies a limited space. When more water comes into it, it overflows. Therefore limits must be set for the water. The image shows water below and water above, with the firmament between them as a limit.

The Chinese word for limitation really denotes the joints that divide a bamboo stalk. In relation to ordinary life it means the thrift that sets fixed limits upon expenditures. In relation to the moral sphere it means the fixed limits that the superior man sets upon his actions - the limits of loyalty and disinterestedness.

THE JUDGMENT

LIMITATION.

Success.

Galling limitation must not be persevered in.

2) THE ADVICE

Water over lake: the image of LIMITATION.

Thus the superior man

Creates number and measure,

And examines the nature of virtue and correct conduct.

A lake is something limited. Water is inexhaustible. A lake can contain only a definite amount of the infinite quantity of water; this is its peculiarity. In human life too the individual achieves significance through discrimination and the setting of limits. Therefore what concerns us here is the problem of clearly defining these discriminations, which are, so to speak, the backbone of morality. Unlimited possibilities are not suited to man; if they existed, his life would only dissolve in the boundless. To become strong, a man's life needs the limitations ordained by duty and voluntarily accepted. The individual attains significance as a free spirit only by surrounding himself with these limitations and by determining for himself what his duty is.

3) THE LINES:

Six in the fourth place means:

Contented limitation.

Success.

Every limitation has its value, but a limitation that requires persistent effort entails a cost of too much energy. When, however, the limitation is a natural one (as for example, the limitation by which water flows only downhill), it necessarily leads to success, for then it means a saving of energy. The energy that otherwise would be consumed in a vain struggle with the object, is applied wholly to the benefit of the matter in hand, and success is assured.

4) THE MOVING HEXAGRAM

HEXAGRAM 58 – Tui - The Joyous, Lake

This hexagram, like Sun, is one of the eight formed by doubling of a trigram. The trigram Tui denotes the youngest daughter; it is symbolized by the smiling lake, and its attribute is joyousness. Contrary to appearances, it is not the yielding quality of the top line that accounts for joy here. The attribute of the yielding or dark principle is not joy but melancholy. However, JOY is indicated by the fact that there are two strong lines within, expressing themselves through the medium of gentleness.

True joy, therefore, rests on firmness and strength within, manifesting itself outwardly as yielding and gentle.

THE JUDGMENT

THE JOYOUS.

Success.

Perseverance is favorable.

The joyous mood is infectious and therefore brings success. But joy must be based on steadfastness if it is not to degenerate into uncontrolled mirth. Truth and strength must dwell in the heart, while gentleness reveals itself in social intercourse. In this way one assumes the right attitude toward God and man and achieves something. Under certain conditions, intimidation without gentleness may achieve something momentarily, but not for all time. When, on the other hand, the hearts of men are won by friendliness, they are led to take all hardships upon themselves willingly, and if need be will not shun death itself, so great is the power of joy over men.

THE IMAGE

Lakes resting one on the other: The image of THE JOYOUS.

Thus the superior man joins with his friends

For discussion and practice.

A lake evaporates upward and thus gradually dries up; but when two lakes are joined they do not dry up so readily, for one replenishes the other. It is the same in the field of knowledge. Knowledge should be a refreshing and vitalizing force. It becomes so only through stimulating intercourse with congenial friends with whom one holds discussion and practices application of the truths of life. In this way learning becomes many-sided and takes on a cheerful lightness, whereas there is always something ponderous and one-sided about the learning of the self-taught.

Regeneron Pharmaceuticals, Inc. REGN under CEO Leonard S. Schleifer

Leonard Schleifer’s Performance: ROI= 437.69% Annualized Return= 8.60%

SPY’s Performance: ROI= 178.95% Annualized Return= 5.16%

Leonard S. Schleifer has been CEO of Regeneron Pharmaceuticals since 1988. He is one of the founders.

Since 1991, he has been able to outperform the SPY substantially proving he is a superior CEO.

Because he has been CEO for almost more than two decades, we asked the Oracle once more about his future. His new hexagram is Limitations.

Points the investor should consider:

The Hexagram – 60 Limitation is favorable provided there is a limit to the limitations:

Success.

Galling limitation must not be persevered in.

The Advice for him is:

· the superior man

o Creates number and measure, And

o Examines the nature of virtue and correct conduct.

The lines: There is one moving line: which is negative.

Nine in the second place means:

Not going out of the gate and the courtyard

Brings misfortune.

When the time for action has come, the moment must be quickly seized. Just as water first collects in a lake without flowing out, yet is certain to find an outlet when the lake is full, so it is in the life of man. It is a good thing to hesitate so long as the time for action has not come, but no longer. Once the obstacles to action have been removed, anxious hesitation is a mistake that is bound to bring disaster, because one misses one's opportunity.

The Moving Hexagram: 03 Difficulty at the Beginning which is positive provided he does not implement grand projects and looks for able helpers:

Furthering through perseverance.

Nothing should be undertaken.

It furthers one to appoint helpers.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Nine in the second place means:

Not going out of the gate and the courtyard

Brings misfortune.

4) THE MOVING HEXAGRAM

HEXAGRAM 03 – Chun - Difficulty at the Beginning

The name of the hexagram, Chun, really connotes a blade of grass pushing against an obstacle as it sprouts out of the earth hence the meaning, "difficulty at the beginning." The hexagram indicates the way in which heaven and earth bring forth individual beings. It is their first meeting, which is beset with difficulties. The lower trigram Chen is the Arousing; its motion is upward and its image is thunder.

The upper trigram K'an stands for the Abysmal, the dangerous. Its motion is downward and its image is rain. The situation points to teeming, chaotic profusion; thunder and rain fill the air. But the chaos clears up. While the Abysmal sinks, the upward movement eventually passes beyond the danger. A thunderstorm brings release from tension, and all things breathe freely again.

THE JUDGMENT

DIFFICULTY AT THE BEGINNING works supreme success,

Furthering through perseverance.

Nothing should be undertaken.

It furthers one to appoint helpers.

Times of growth are beset with difficulties. They resemble a first birth. But these difficulties arise from the very profusion of all that is struggling to attain form. Everything is in motion: therefore if one perseveres there is a prospect of great success, in spite of the existing danger. When it is a man's fate to undertake such new beginnings, everything is still unformed, dark.

Hence he must hold back, because any premature move might bring disaster. Likewise, it is very important not to remain alone; in order to overcome the chaos he needs helpers. This is not to say, however, that he himself should look on passively at what is happening. He must lend his hand and participate with inspiration and guidance.

THE IMAGE

Clouds and thunder: The image Of DIFFICULTY AT THE BEGINNING.

Thus the superior man

Brings order out of confusion.

Clouds and thunder are represented by definite decorative lines; this means that in the chaos of difficulty at the beginning, order is already implicit. So too the superior man has to arrange and organize the inchoate profusion of such times of beginning, just as one sorts out silk threads from a knotted tangle and binds them into skeins. In order to find one's place in the infinity of being, one must be able both to separate and to unite.

1. A different translation is possible here, which would result in a different interpretation:

Difficulties pile up.

Horse and wagon turn about.

If the robber were not there,

The wooer would come.

The maiden is faithful, she does riot pledge herself.

Ten years-then she pledges herself.

AT&T, Inc. T under CEO Randall L. Stephenson

Randall Stephenson’s Performance: ROI= (27.45%) Annualized Return= (7.07%)

SPY’s Performance: ROI= (18.85%) Annualized Return= (4.66%)

Randall Stephenson became CEO of AT&T in June of 2007.

Since then, his performance has been very poor compared to the SPY’s.

Points the investor should consider:

The Hexagram – 60 Limitation is favorable provided there is a limit to the limitations:

Success.

Galling limitation must not be persevered in.

The Advice for him is:

· the superior man

o Creates number and measure, And

o Examines the nature of virtue and correct conduct.

The lines: There is one moving line: which is negative, and includes a warning from Confucius himself:

· Nine at the beginning means:

Not going out of the door and the courtyard

Is without blame.

Often a man who would like to undertake something finds himself confronted by insurmountable limitations. Then he must know where to stop. If he rightly understands this and does not go beyond the limits set for him, he accumulates an energy that enables him, when the proper time comes, to act with great force. Discretion is of prime importance in preparing the way for momentous things.

Concerning this, Confucius says:

Where disorder develops, words are the first steps. If the prince is not discreet, he loses his servant. If the servant is not discreet, he loses his life. If germinating things are not handled with discretion, the perfecting of them is impeded. Therefore the superior man is careful to maintain silence and does not go forth.

The Moving Hexagram: 29 The Abysmal (Repeated) which tends to be negative and holds a warning:

The Abysmal repeated.

If you are sincere, you have success in your heart,

And whatever you do succeeds.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Nine at the beginning means:

Not going out of the door and the courtyard

Is without blame.

Concerning this, Confucius says:

4) THE MOVING HEXAGRAM

HEXAGRAM 29 - K'an - The Abysmal (Water)

This hexagram consists of a doubling of the trigram K'an. It is one of the eight hexagrams in which doubling occurs. The trigram K'an means a plunging in. A yang line has plunged in between two yin lines and is closed in by them like water in a ravine. The trigram K'an is also the middle son. The Receptive has obtained the middle line of the Creative, and thus K'an develops. As an image it represents water, the water that comes from above and is in motion on earth in streams and rivers, giving rise to all life on earth.

In man's world K'an represents the heart, the soul locked up within the body, the principle of light inclosed in the dark - that is, reason. The name of the hexagram, because the trigram is doubled, has the additional meaning, "repetition of danger." Thus the hexagram is intended to designate an objective situation to which one must become accustomed, not a subjective attitude. For danger due to a subjective attitude means either foolhardiness or guile. Hence too a ravine is used to symbolize danger; it is a situation in which a man is in the same pass as the water in a ravine, and, like the water, he can escape if he behaves correctly.

THE JUDGMENT

The Abysmal repeated.

If you are sincere, you have success in your heart,

And whatever you do succeeds.

Through repetition of danger we grow accustomed to it. Water sets the example for the right conduct under such circumstances. It flows on and on, and merely fills up all the places through which it flows; it does not shrink from any dangerous spot nor from any plunge, and nothing can make it lose its own essential nature. It remains true to itself under all conditions. Thus likewise, if one is sincere when confronted with difficulties, the heart can penetrate the meaning of the situation. And once we have gained inner mastery of a problem, it will come about naturally that the action we take will succeed. In danger all that counts is really carrying out all that has to be done – thoroughness - and going forward, in order not to perish through tarrying in the danger.

Properly used, danger can have an important meaning as a protective measure. Thus heaven has its perilous height protecting it against every attempt at invasion, and earth has its mountains and bodies of water, separating countries by their dangers. Thus also rulers make use of danger to protect themselves against attacks from without and against turmoil within.

THE IMAGE

Water flows on uninterruptedly and reaches its goal: The image of the Abysmal repeated.

Thus the superior man walks in lasting virtue

And carries on the business of teaching.

Water reaches its goal by flowing continually. It fills up every depression before it flows on. The superior man follows its example; he is concerned that goodness should be an established attribute of character rather than an accidental and isolated occurrence. So likewise in teaching others everything depends on consistency, for it is only through repetition that the pupil makes the material his own.

The St. Joe Company JOE under CEO Wm. Britton Greene

Britton Greene’s Performance: ROI= (31.16%) Annualized Return= (12.40%)

SPY’s Performance: ROI= (4.01%) Annualized Return= (1.44%)

Britton Greene became CEO in May of 2008 and resigned in February of 2011.

During that period, his performance was very poor compared to the SPY’s.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Six at the top means:

Galling limitation.

Perseverance brings misfortune.

Remorse disappears.

If one is too severe in setting up restrictions, people will not endure them. The more consistent such severity, the worse it is, for in the long run a reaction is unavoidable. In the same way, the tormented body will rebel against excessive asceticism. On the other hand, although ruthless severity is not to be applied persistently and systematically, there may be times when it is the only means of safeguarding against guilt and remorse. In such situations ruthlessness toward oneself is the only means of saving one's soul, which otherwise would succumb to irresolution and temptation.

4) THE MOVING HEXAGRAM

HEXAGRAM 61 - Chung Fu - Inner Truth

The wind blows over the lake and stirs the surface of the water. Thus visible effects of the invisible manifest themselves. The hexagram consists of firm lines above and below, while it is open in the center. This indicates a heart free of prejudices, and therefore open to truth. On the other hand, each of the two trigrams has a firm line in the middle; this indicates the force of inner truth in the influences they represent.

The attributes of the two trigrams are: above, gentleness, forbearance toward inferiors; below, Joyousness in obeying superiors. Such conditions create the basis of a mutual confidence that makes achievements possible.

The character Fu ("truth") is actually the picture of a bird's foot over a fledgling. It suggests the idea of brooding. An egg is hollow. The light-giving power must work to quicken it from outside, but there must be a germ of life within, if life is to be awakened. Far-reaching speculations can be linked with these ideas.

THE JUDGMENT

INNER TRUTH. Pigs and fishes.

Good fortune.

It furthers one to cross the great Water.

Perseverance furthers.

Pigs and fishes are the least intelligent of all animals and therefore the most difficult to influence. The force of inner truth must grow great indeed before its influence can extend to such creatures. In dealing with persons as intractable and as difficult to influence as a pig or a fish, the whole secret of success depends on finding the right way of approach. One must first rid oneself of all prejudice and, so to speak, let the psyche of the other person act on one without restraint. Then one will establish contact with him, understand and gain power over him. When a door has thus been opened, the force of one's personality will influence him. If in this way one finds no obstacles insurmountable, one can undertake even the most dangerous things, such as crossing the great water, and succeed.

But it is important to understand upon what the force of inner truth depends. This force is not identical with simple intimacy or a secret bond. Close ties may exist also among thieves; it is true that such a bond acts as a force but, since it is not invincible, it does not bring good fortune. All association on the basis of common interests holds only up to a certain point. Where the community of interest ceases, the holding together ceases also, and the closest friendship often changes into hate. Only when the bond is based on what is right, on steadfastness, will it remain so firm that it triumphs over everything.

THE IMAGE

Wind over lake: the image of INNER TRUTH.

Thus the superior man discusses criminal cases

In order to delay executions.

Wind stirs water by penetrating it. Thus the superior man, when obliged to judge the mistakes of men, tries to penetrate their minds with understanding, in order to gain a sympathetic appreciation of the circumstances. In ancient China, the entire administration of justice was guided by this principle. A deep understanding that knows how to pardon was considered the highest form of justice. This system was not without success, for its aim was to make so strong a moral impression that there was no reason to fear abuse of such mildness. For it sprang not from weakness but from a superior clarity.

Flextronics International Ltd. FLEX under CEO Michael McNamara

Michael McNamara’s Performance: ROI= (33.29%) Annualized Return= (6.42%)

SPY’s Performance: ROI= 6.55% Annualized Return= 1.04%

Michael McNamara became CEO of Flextronics in January of 2006.

Since then, his performance has been extremely poor compared to the SPY’s.

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

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Nine in the fifth place means:

Sweet limitation brings good fortune.

Going brings esteem.

The limitation must be carried out in the right way if it is to be effective. If we seek to impose restrictions on others only, while evading them ourselves, these restrictions will always be resented and will provoke resistance. If, however, a man in a leading position applies the limitation first to himself, demanding little from those associated with him, and with modest means manages to achieve something, good fortune is the result. Where such an example occurs, it meets with emulation, so that whatever is undertaken must succeed.

4) THE MOVING HEXAGRAM

HEXAGRAM 19 – Lin - Approach

The Chinese word Lin has a range of meanings that is not exhausted by any single word of another language. The ancient explanations in the Book of Changes give as its first meaning, "becoming great." What becomes great are the two strong lines growing into the hexagram from below; the light-giving power expands with them. The meaning is then further extended to include the concept of approach, especially the approach of what is strong and highly placed in relation to what is lower. Finally the meaning includes the attitude of condescension of a man in high position toward the people, and in general the setting to work on affairs. This hexagram is linked with the twelfth month (January-February), when, after the winter solstice, the light power begins to ascend again.

THE JUDGMENT

APPROACH has supreme success.

Perseverance furthers.

When the eighth month comes,

There will be misfortune.

The hexagram as a whole points to a time of joyous, hopeful progress. Spring is approaching. Joy and forbearance bring high and low nearer together. Success is certain. But we must work with determination and perseverance to make full use of the propitiousness of the time. And one thing more: spring does not last forever. In the eighth month the aspects are reversed. Then only two strong, light lines are left; these do not advance but are in retreat (see next hexagram). We must take heed of this change in good time. If we meet evil before it becomes reality - before it has even begun to stir - we can master it.

THE IMAGE

The earth above the lake: The image of APPROACH.

Thus the superior man is inexhaustible

In his will to teach,

And without limits

In his tolerance and protection of the people.

The earth borders upon the lake from above 1. This symbolizes the approach and condescension of the man of higher position to those beneath him. The two parts of the image indicate what his attitude toward these people will be. Just as the lake is inexhaustible in depth, so the sage is inexhaustible in his readiness to teach mankind, and just as the earth is boundlessly wide, sustaining and caring for all creatures on it, so the sage sustains and cares for all people and excludes no part of humanity.

Vodafone Group plc VOD under CEO Vittorio Colao

Vittorio Colao’s Performance: ROI= (6.86%) Annualized Return= (2.14%)

SPY’s Performance: ROI= (1.03%) Annualized Return= (0.31%)

Vittorio Colao became CEO of Vodafone in July of 2008.

Since then, he has not been able to outperform the SPY’s.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

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 is the Judgment.

LIMITATION.

Success.

Galling limitation must not be persevered in.

It is interesting to note the Nuclear Hexagram.

NUCLEAR HEXAGRAM

HEXAGRAM 27 – I - The Corners of the Mouth (Providing Nourishment)

This hexagram is a picture of an open mouth; above and below are the firm lines of the lips, and between them the opening. Starting with the mouth, through which we take food for nourishment, the thought leads to nourishment itself. Nourishment of oneself, specifically of the body, is represented in the three lower lines, while the three upper lines represent nourishment and care of others, in a higher, spiritual sense.

THE JUDGMENT

THE CORNERS OF THE MOUTH.

Perseverance brings good fortune.

Pay heed to the providing of nourishment

And to what a man seeks

To fill his own mouth with.

In bestowing care and nourishment, it is important that the right people should be taken care of and that we should attend to our own nourishment in the right way. If we wish to know what anyone is like, we have only to observe on whom he bestows his care and what sides of his own nature he cultivates and nourishes. Nature nourishes all creatures. The great man fosters and takes care of superior men, in order to take care of all men through them.

Mencius says about this:

If we wish to know whether anyone is superior or not, we need only observe what part of his being he regards as especially important. The body has superior and inferior, important and unimportant parts. We must not injure important parts for the sake of the unimportant, nor must we injure the superior parts for the sake of the inferior. He who cultivates the inferior parts of his nature is an inferior man. He who cultivates the superior parts of his nature is a superior man. 1

THE IMAGE

At the foot of the mountain, thunder: The image of PROVIDING NOURISHMENT.

Thus the superior man is careful of his words

And temperate in eating and drinking.

"God comes forth in the sign of the Arousing" 2: when in the spring the life forces stir again, all things come into being anew.

"He brings to perfection in the sign of Keeping Still": thus in the early spring, when the seeds fall to earth, all things are made ready.

This is an image of providing nourishment through movement and tranquility. The superior man takes it as a pattern for the nourishment and cultivation of his character. Words are a movement going from within outward. Eating and drinking are movements from without inward. Both kinds of movement can be modified by tranquility. For tranquility keeps the words that come out of the mouth from exceeding proper measure, and keeps the food that goes into the mouth from exceeding its proper measure. Thus character is cultivated.