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Investing is often compared to war. But what specific advice can the art of war give you as an investor? For this I go to my two favourite books on military strategy. Both were written, oddly, by a Maurice.

The first is the Strategicon, written around 700 AD by the Byzantine emperor Maurice; the second, Reveries on the art of war, written in the early 1700's by Count Maurice de Saxe. Both make superb reading in their own right, but also have lessons for investors.

For instance, both Maurices stressed economy of force: Use only the minimum required to do the job (plus a bit in reserve).

Why the parsimony? If you recruit more soldiers than the task requires, you must feed them and deal with their extraneous problems, and so have less time to devote to the business of winning.

In investing, the principle of parsimony translates into buying only the minimum number of securities necessary to accomplish the twin jobs of growth and diversification. Don't buy 50 to 100 stocks (which is what mutual funds do) when a well-selected 15 or 20, from different industries and regions, can give you most of the diversification you need.

Several academic studies, including one by Prof. Meir Statman of Santa Clara University, have concluded that the benefits from diversification drop off quickly once a portfolio exceeds 16 stocks. And this conclusion is more than academic theory: when Warren Buffett started his investment partnership, he rarely held more than a score of stocks.

Once you have your 15 to 20 stocks, be cautious in adding additional investments. Every new stock you add takes time and attention away from following your existing investments. Your attention, like ammunition, is a finite resource. Focus, don't waste it. Of course, if you find a flaw with one of your current holdings, sell it and buy another you like more. But don't just ladle more and more stocks into your portfolio because of momentary enthusiasms.

If successful investing is like waging a long-term campaign, frequent trading is like fighting a pitched battle. Investors who trade incessantly have to make critical decisions on the fly without the benefit of long reflection, while being subjected to the risk of ongoing bleeding through trading costs. No wonder, then, that both Maurices recommend that generals avoid pitched battles if they can. Such fights involve too much uncertainty and risk - the same reasons why an investor should avoid trading.

But does this mean you should bypass tempting opportunities and act only on plans? Not necessarily. Even de Saxe agrees that once in a while splendid opportunities do present themselves, and the smart general should then wade in and grab them - as did de Saxe's commander, Prince Eugene of Savoy, when he attacked the Turkish army just as it was crossing a river and so was momentarily defenceless.

Military opportunities are like are equivalent to Mr. Buffett's famous concept of waiting for "fat pitches" - moments when for transient reasons a stock is available at deep discounts. Mr. Buffett bought into Geico insurance while it was seemingly bankrupt but really had splendid assets, he invested in American Express when it was in temporary trouble but still retained its excellent franchise, and he put money into GE (via preferred stock) in March, 2008, when the world was seemingly ending. At such moments, you too can wade in and grab the opportunities. But in normal times, it's best to stick to a long-term plan.

But a plan based on what? Here I come to the finest advice of both these old warriors: A general must know everything about his opponent's plans so as to leave as little as he can for chance. To do this, he should use spies, patrols, deserters, and physical observation - any means to get the physical facts.

For someone like me who advocates physical sleuthing of the companies you invest in, this is sheer music. Physical investigation is what can help you truly reduce risk, by finding out facts before they have become public knowledge. In the market, as on the battlefield, the real pairing is not risk versus reward, but ignorance versus knowledge.

You should therefore seek exclusive knowledge (but keep quiet about it when you find it), then take an example from these two master warriors. Minimize the number of your holdings but diversify them properly, and minimize your risk by knowing as much as you can about each. You then win with the least effort and the least risk - the aim of both good generals and good investors.

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