Reflections on the History of the Jin Dynasties and the Lessons from "Reminiscences of a Stock Operator"

“Sit quietly in leisure, do not compete with others or myself. A hundred years of life pass in the blink of an eye; what achievements have been gained? Yesterday, the Guo drum urged the flowers; this morning, the sparse willows cry out to the crows. Swallows in the Wang and Xie halls, I wonder which family they fly into.” [Taogu Ba]

The cycle is the most commonly mentioned term among investors, and history is the greatest cycle. Everyone knows to learn from history, but repeated history shows that few have gained from it. When insiders are confused, shortsightedness is human nature. To break free from constraints and gain higher perspectives and visions, one must learn from history to overcome human nature. China’s 5,000-year history is long; if we must pick a segment to compare with the stock market, the most representative might be the Two Jin Dynasties, because they were chaotic, rotten, and highly volatile.

The 156 years of the Two Jin are the most turbulent chapter in Chinese history. The War of the Eight Princes, the Yongjia Disturbance, the Five Barbarians invading China, Wang Dun’s rebellion, Su Jun’s rebellion, and Huan Xuan’s usurpation… imperial power flickered like a candle in the wind, and aristocratic clans rotated like a revolving lantern. But this precisely forms a holographic sample of an extreme market environment—information asymmetry, liquidity exhaustion, black swan events, and collective irrationality. Reading this history, I see not only rise and fall but also cycles, and it is also a “Reminiscences of a Stock Operator” written 1,700 years ago.

Cycles and Trends: The Clans’ Political Rotation in Sector Rotation

On the political stage of the Two Jin, there is no eternal king, only cycle shifts.

In the early Western Jin, Sima clan sought to consolidate aristocratic power, establishing a pattern of “King and Horse, ruling the world together.” The Wang family of Langya was at its peak, with Wang Dao in central governance and Wang Dun holding heavy troops—this was the pinnacle of blue-chip value. But every dominant force has its lifecycle. The decline of the Wang clan was not due to external enemies but internal entropy—Wang Dun’s two uprisings exposed利益裂痕 between “Zhuang stocks” and “public companies,” and the market (aristocratic groups) began seeking new narratives.

Thus, sector rotation appeared: the Yuan family of Yingchuan took over, then the Huan family of Qiao, and finally the Xie family of Chenjun. Each switch was not a smooth transition but a fierce reallocation of stocks. Huan Wen launched three northern expeditions, essentially as thematic speculation—using military victories to support valuations and maintain the high P/E ratio of the Huan family in the power market. But when he tried to “shell company listing” (usurp the throne), liquidity had already dried up: aristocratic groups collectively sold off, and institutional funds like the Northern Army refused to take over.

Most intriguing is Xie An. Historical records about him are somewhat distorted; his true nature was that of an ultimate lucky person. The Battle of Fei Shui was both Xie An’s luck and a trend aligned with the heavenly way! The internal structural fragility of the Former Qin (ethnic conflicts, overexpansion, liquidity tension), serious chip issues, ultimately led to a full-scale top-out, allowing the lucky Xie An to reap the benefits. In fact, every investor has a shadow of Xie An—pretending to be calm in the face of storms, lucking into the right nodes for big gains, but ultimately lacking ability and losing everything through skill.

Insight: The essence of trend recognition is identifying the dominant force, not predicting specific points. Wang Dao, Yu Liang, Huan Wen, Xie An—like market leaders at different times—traders do not need to love any particular stock but must recognize who is the main line and who controls the pricing power (style).

Risk Control: Position Management in Turbulent Times

The history of the Two Jin is a textbook on survivor bias. Those who survived were not the strongest but those who understood risk management best.

Case 1: The War of the Eight Princes and the destruction of leverage

In early Western Jin, Emperor Wu of Jin heavily favored the royal family, granting real power to princes. This was typical high-leverage operation—using kinship as collateral to control a vast empire. But leverage is a double-edged sword: when Empress Jia (equivalent to malicious short-sellers) incited princes to fight each other, system volatility soared. Prince Lu of Zhao, Prince Jiong of Qi, Prince Yi of Changsha… every aristocrat attempting full-margin long positions was eventually liquidated. The sixteen-year chaos of the War of the Eight Princes caused a sharp decline in central China’s population—not due to war, but due to a cascade of forced liquidations.

Case 2: The Yongjia Disturbance and strategic stop-loss

In 311 AD, the Xiongnu Liu Yao captured Luoyang and seized Emperor Huai of Jin. This was a critical moment for Western Jin. But noteworthy is that, a decade earlier, some aristocrats had already begun to “stop-loss”: Wang Dao advised Sima Rui to manage Jiangdong, the Zhang family carved out their territory in Liangzhou for self-preservation, and the Xianbei Murong clan accumulated strength in Liaodong. These actions essentially established hedging positions independent of the main holdings. When Luoyang’s main market collapsed, the startup board in Jiankang gained liquidity premium. The southward migration was not fleeing but reallocating risk budgets.

In contrast, Wang Dao’s calm stabilization was a model of position management. During the War of the Eight Princes, he remained patient and restrained, ultimately backing Sima Rui, creating the legendary “Wang and Ma rule the world.” He never sought a one-hit kill but gradually built positions in the east: rallying Wu aristocrats (diversified investments), maintaining contacts with northern aristocrats (hedging risks), and refusing to participate in Wang Dun’s rebellion (stop-loss discipline). Wang Dao served three emperors—Yuan, Ming, Cheng—and maintained central authority for over twenty years. This was not luck but ancient wisdom of living longer than earning fast. A recommended read about Wang Dao is the book “Clans,” which left a deep impression: “Great achievements are made half a beat slow.”

Another positive example is Huan Weng, the Grand Marshal. Huan Weng’s life was characterized by cautious, step-by-step strategies—never reckless, always deliberate, calm and unhurried, to the point of chilling. Even at the end of his life, he remained rational and restrained, knowing his eldest son was insufficiently capable, so he entrusted his younger brother Huan Chong as successor, and his five-year-old son inherited titles—ensuring both present stability and future layout. Throughout his life, from entering the world to passing away, he held the initiative almost flawlessly, never making a wrong move.

Insight: Never rush into a position or go all-in; great achievements come from being a half beat slow. Short-term retail traders tend to overtrade, but true alpha comes from survival—Wang Dao, Huan Wen, building step by step over thirty years, steady and sure. The account curve resembles a life curve, shaped by repeated decisions. What is compound interest? Just a series of correct decisions.

Emotions and Expectations: Market Psychology of the Battle of Fei Shui

The Battle of Fei Shui is the most classic case of expectation reversal in Chinese history. Before the battle, the Former Qin’s Fu Jian unified northern China, with a million troops, unstoppable. This was an extreme optimism within a strong trend. But from a hindsight perspective, its trend was fragile: the Former Qin’s ethnic composition was complex (Di, Han, Qiang, Xianbei), unification was too short (lacking trend confirmation), internal opposition was strong (main factions divided). More importantly, Fu Jian was overly confident—within ten years, he went from poverty to a top financier, and his arrogance caused cognitive bias—he only received support for southern campaigns, dismissing opposition from figures like Fu Rong and Murong Chui as noise. Overconfidence always invites downfall.

On the day of the decisive battle, Zhu Xu’s cry of “Qin army defeated” triggered a collapse of the entire army. This was not a military failure but a liquidity crisis—mass killing, stampede, and exit. Fu Jian’s “every tree a soldier” and “cries of the wind” were perfect expressions of panic-driven self-fulfilling prophecy. When the market (army) realized (the dealer) could not control the situation, morale (valuation) instantly plummeted to zero.

Xie An’s brilliance lay in expectation management. His pre-battle calm was a facade, but his deep preparation was in place: well-trained Northern Army (solid fundamentals), the Jianghuai defense line maintained for years (ample safety margin), alliances between high and low classes (healthy chip structure). When these conditions were met, he did not need frequent in-battle maneuvers; holding positions steady was the best strategy. Traders often fail not because they see the wrong direction but because they cannot clearly understand the market and their own emotions. Fu Jian’s million-strong army, like leveraged capital, could crush everything under normal circumstances, but when faced with liquidity black holes like Fei Shui’s narrow terrain, size itself became a risk.

Extreme market volatility often results from sudden expectation reversal rather than fundamental change. Xie An’s “youngster’s great victory” was active filtering of overload information; his retreat into the inner chamber with broken shoes was an instinctive respect for risk. Traders need to maintain this dual awareness amid the noise of K-line charts—calm externally, vigilant internally.

Conclusion

In 420 AD, Liu Yu replaced Jin. The last representative of the Xie family of Chenjun, Xie Hun, was forced to surrender his title. He did not gamble everything like Wang Dun but chose to reduce positions to preserve his life. The continuity of the Wang and Xie clans depended on crossing cycles, not single-year gains.

Reading the history of the Two Jin, what shocks me most is not the drama of the Fei Shui battle but Xie An’s broken shoes. In that moment, 1,700 years collapsed—turns out, ancient and modern face the same fears and need the same discipline. The circuit breakers of 2020, the geopolitical conflicts of 2022, the quantitative crashes of 2024… markets will always have the War of the Eight Princes, always have the Five Barbarians invading China. Traders cannot control external environments but can control their positions, emotions, and expectations.

In turbulent times, there is always a fixed star. That star is not on the K-line chart but in the trader’s heart—respect for risk, humility toward trends, and persistence in survival. The Two Jin Dynasty had no century-long peace, markets have no eternal winning method. But Wang Dao’s calm, Huan Wen’s step-by-step strategy, and Xie An’s calm in motion—through the dust of 1,700 years—still serve as the North Star guiding traders.