Buffett's 'Fajin' Moment: Unleashing Power in Investing

Welcome back to The Tai Chi Investor: Serenity in Markets!

Have you ever wondered how the greatest investors, like Warren Buffett, seem to know exactly when to strike? They don’t react impulsively—they wait, study, and then move with calculated force.

In this edition, we explore Fajin, the art of explosive power in Tai Chi, and how its principles align perfectly with high-conviction investing. Let’s uncover how mastering stillness, patience, and timing can lead to decisive and powerful investment moves.

In Tai Chi, Fajin (發勁) is the explosive release of stored energy. It is the moment when accumulated force—gathered through patience, balance, and control—is unleashed in a single, decisive movement. Fajin is not brute strength; it is refined power, directed with precision.

In investing, this concept mirrors the disciplined patience of a value investor who studies, waits, and then deploys capital with high conviction at the right moment. The difference between a masterful Tai Chi practitioner and an undisciplined fighter is the same as the difference between an experienced value investor and a reactive speculator—one strikes with clarity and force, while the other lunges in desperation.

How does Fajin apply to investing? And how can we harness its power for long-term success in the markets?

The Foundation of Fajin: Patience, Control, and Precision

To understand Fajin, we must first understand its foundation: the accumulation of energy. In Tai Chi, this means maintaining a rooted stance, feeling the energy build, and waiting for the right moment to release it. A premature strike dissipates force and weakens impact.

For an investor, this means accumulating knowledge, analyzing businesses, and building a cash reserve while resisting the urge to act impulsively. Many market participants feel the pressure to always be trading, always moving—but as Tai Chi teaches, power comes from stillness as much as from motion.

The best investors spend most of their time observing, preparing, and waiting. Then, when the market presents an extraordinary opportunity, they strike with Fajin—deploying capital with force and conviction.

Buffett’s Fajin Moment: American Express and the Salad Oil Scandal

One of the most famous displays of Fajin in investing comes from Warren Buffett’s purchase of American Express during the Salad Oil Scandal of 1963.

At the time, American Express was not just a financial services company; it was also in the business of certifying inventories for commodity traders. When a New Jersey-based company, Allied Crude Vegetable Oil, used falsified inventory certificates to secure massive loans, the scandal erupted, leaving American Express with a $60 million liability.

The market reacted with panic. American Express’s stock plummeted as investors feared the company’s reputation and future earnings were permanently damaged. Most people saw disaster—Buffett saw opportunity.

Instead of reacting emotionally, he conducted fundamental research. He observed real-world behavior, e.g. he went to restaurants and saw that customers were still happily using their American Express charge cards. The core business was intact, and trust in the brand among consumers remained strong. The financial hit was painful but not fatal.

Recognizing that the market had overreacted, Buffett deployed his capital with Fajin—investing $13 million, or roughly 40% of his fund’s total assets, into American Express stock. His conviction was absolute, and his timing was precise. Within a few years, American Express recovered, and Buffett’s investment multiplied several times over.

This was Fajin in action: patience, deep understanding, and then an explosive move when the conditions aligned.

Fajin in Crisis: Buffett’s 2008 Investments

The Fajin principle was also evident in Buffett’s actions during the 2008 financial crisis.

As markets crumbled and fear gripped investors, Buffett remained calm. He knew that panic created opportunity. While others hesitated, he struck:

• He invested $5 billion in Goldman Sachs, securing preferred shares with a 10% dividend and warrants to buy common stock at a favorable price.
• He made a similar $3 billion investment in General Electric.
• He purchased stakes in distressed companies at attractive valuations, deploying billions when others were frozen by fear.

Buffett’s actions in 2008 exemplified Fajin: he had spent years building cash reserves, studying businesses, and waiting for the right moment. When it arrived, he moved with power and confidence, ensuring Berkshire Hathaway emerged from the crisis stronger than before.

The Key Lessons of Fajin in Investing

1. Master Stillness Before Motion

Tai Chi practitioners do not rush to strike; they cultivate energy first. Likewise, great investors do not chase the market—they build knowledge, maintain discipline, and wait. Buffett spent years analyzing American Express and financial institutions before his decisive moves.

2. Control Emotional Impulses

Fajin is controlled, not reckless. In investing, emotional decisions—fear-driven selling, greed-driven buying—lead to disaster. A disciplined investor channels emotion into rational action, striking only when conditions justify it.

3. Deploy Capital with Force and Conviction

When an opportunity arises, act decisively. Buffett did not buy a small, hesitant stake in American Express; he committed 40% of his fund. Half-measures do not create Fajin—focused, high-conviction actions do.

4. Be Patient, But Ready

The best investors, like the best martial artists, do not strike often—but when they do, they strike hard. Buffett sat on cash reserves for years, waiting for the 2008 crisis. When it arrived, he acted while others hesitated.

Conclusion: The Art of Balancing Patience and Power

Fajin teaches us that power comes not from constant action but from controlled, purposeful movement. The best investors are not those who trade the most frequently but those who wait patiently, then move decisively.

In a world where financial news cycles demand immediate reactions, where markets tempt investors to act at every moment, remember the wisdom of Tai Chi: the strongest move is the one executed with clarity, control, and force—at the right time.

Master stillness. Cultivate patience. And when the opportunity arises, strike with Fajin.

Thank you for being part of The Tai Chi Investor community! If this edition sparked new insights, I’d love for you to like, share, and spread the word. Help others discover the wisdom of investing with patience and precision. Don’t forget to subscribe so you won’t miss the next edition, where we’ll dive into another timeless principle and its relevance to mastering the markets. Until next time—stay patient, stay focused, and strike with purpose!

Powerfully yours,

Oliver Müller (aka The Tai Chi Investor)