Merrill’s Marauders – an inspiration for the retail investor!

Some time back I subscribed to a military history publication from the United States known as ‘Armchair General‘. Being a military history buff (geek), I recall that I would regularly engross myself with the print magazine sent to my house whenever I found the time to.

magazine cover

Among the many issues I’ve read, the January 2011 issue stood out to me till this day due to a particular episode that was featured in its pages which fascinated me.

The section in that issue was written by Gary Bjorge, and it was titled: Sun Tzu in Burma: Merrill’s Marauders, 1944. 

It was an article that highlighted an incredibly tough but eventually successful campaign by the Allies back in the dark and turbulent days of the Second World War.

And it’s lessons got me thinking about how an individual retail investor can have his/her lunch in today’s financial markets…

Known today as Myanmar, Burma was a colony of the British Empire back then, and came under intense and gruesome fighting when Japanese forces attempted to advance into India after the fall of European colonial territories such as British-held Malaya and the Dutch East Indies in Southeast Asia, which are the present day Malaysia and Indonesia respectively.

This front in the epic struggle during WWII was known as the Burma Theatre.


Situated strategically between China and India, the Japanese wanted control of Burma as it would allow them to seal China off from resupply and isolate the Chinese heartland away from the Allies, and also give them a base by which to threaten the British Raj and move westwards into India.

Despite knowing the strategic importance of Burma, both the Americans and the British prioritised other theatres of operations (Pacific, North Africa, Europe) due to a chronic lack of available resources in the earlier years of World War II. This meant that Allied forces there were left under-resourced and under-supplied for most of the war, which brings us to the legendary Merrill’s Marauders.


Known as the 5307th Composite Unit (Provisional), they were a regimental-sized American unit under the command of General Joseph “Vinegar Joe” Stilwell in Burma. General Stilwell’s operations officer, Brigadier General Frank Merrill, took command of the unit in January 1944, and war correspondents subsequently nicknamed them as “Merrill’s Marauders”. Here’s a badass wartime picture of Merrill (left) and Stilwell (right) together:

Merrill and Stilwell.jpg

Due to their chronic lack of resources, General Stilwell scrambled for what he could get, and mobilised a combined American and Chinese force in order to eject the Japanese out of Burma. He would also enlist the help of local resistance fighters later on in the war.

Through a combination of intensive training, sheer determination, and clever manoeuvring, Stilwell’s forces managed to fight their way across the rough terrain and disease-ridden jungles of northern Burma, prevailing against stiff Japanese resistance. Their exploits became legendary, as the troops often had to fight under terrible conditions alongside under-supplied conditions. In fact, attrition rates were really high, and both sides lost men not just in battle but to the natural elements. My utmost respect to those who had to fight back then.


Merrill’s Marauders were the American answer to the British Chindits, after the American High Command was inspired by British commander Orde Wingate’s presentation in 1943 about the deployment of well-trained assault forces that would operate deep behind enemy lines.

While I would not go into too much detail over the actual fighting, there are some lessons that individual investors can learn from this episode in history and from Merrill’s Marauders.

As active investors, one may wonder how we could still have our lunch in the financial markets, particularly given the rapid democratisation of information as the world becomes increasingly digital, and given the dominating presence of well-resourced and equipped professional investors – the ‘big boys’.

The truth is that as a retail investor, one is akin to a guerrilla fighter in a warzone.

One has less ammunition, and perhaps less intelligence and resources than the ‘big boys’.

This is where we could learn from Merrill’s Marauders.

General Stilwell studied the Japanese forces, their tactics, as well as their positioning intensely. He dedicated time to make sure his troops were well trained, and he would also study the environment and terrain well, looking for any areas which he could exploit to gain an edge over the Japanese in Burma.

Stilwell was proficient in Mandarin, to ensure that he could synergise with his Chinese troops well, and Merrill took the time to pickup Japanese to understand the enemy. In fact, there was an instance once when a signal set broke down, and Merrill would repair it personally and outwit the Japanese listening in by telling them a fairytale in their own language, confusing them and buying time to send out a message in English.

The Marauders used secret paths and unconventional routes to coordinate with their Chinese counterparts to repeatedly outmaneouvre the Japanese forces throughout the campaign in 1944. Often, they went through rugged ranges and inhospitable jungles. They avoided areas of strength and attacked areas of weaknesses, hitting hard and yet staying nimble and mobile whenever possible.

These various actions can be summarised into the following:

  • Study the enemy inside-out in order to understand his objectives and motives, and hence positioning
  • Analyse the enemy’s strengths and weaknesses
  • Look for areas where you have an edge
  • Stay nimble and mobile as possible

Thus, to survive in the global financial markets, one can essentially follow the framework above. Take the time to objectively analyse so that you can become that effective guerrilla fighter. Is my strength my nimbleness? Could I exploit an opportunity faster than someone else? Or is my strength my time horizon: could I lengthen my investment horizon such that I don’t have to compete with the high-frequency/short-term systematic players? Adapt your investment strategy to account for these various factors.

Understand who you are up against.

For example, if one is trading the global commodity futures market, one has to know the players of the game. There are the commodity producers who use futures contracts to hedge their production, and there are the large speculators who are in there just to make money (managed futures/hedge funds). In the global bond markets, it is in institutional-dominated segment as real money entities like pension funds and sovereign wealth funds as well as central banks often buy and sell tranche-loads of debt securities. Take the time to understand their various intentions and motives. Like General Stilwell, he may not have all the intelligence he desire for, but he made sure he understood as much as possible, the intentions and motives of the enemy. By understanding as much as you could about them, you also have a better chance of identifying their mistakes. Knowing this, ask yourself how you could exploit this to your advantage.

In the asset management industry, many fund managers have to maintain somewhat similar exposures to their various respective benchmarks that they are mandated to follow. Additionally, their performance is measured on a relative basis, which means that it is very difficult for them to be effective contrarian investors over a long period of time lest they ruin their careers (they are under pressure to outperform their benchmarks and peers all the time). However, as an individual investor with no pressure to perform well in the short term, one can become an effective contrarian with the right temperament and skill, beating the big boys at their own game.

This also works for positioning and trade management. The ‘big boys’ are often constrained in terms of how much of their capital they can put into opportunities they see. Whereas as an individual, you are only constrained by the rules you operate by. You can size your positions in any way you desire and in any format/manner that will help create a favourable risk/reward for the good opportunities that come your way. This is why famous American investor Warren Buffett said that its easier to double his capital when managing a smaller amount of money as compared to a gigantic multi-billion portfolio. Additionally, some of the ‘big boys’ are not allowed to use leverage for regulatory reasons. As a small player, you can press your advantage and employ a judicious use of leverage in specific opportunities to juice up your returns.

Like the Marauders traversing through areas where they could effectively outflank their enemy, look for areas of opportunity that the ‘big boys’ avoid. Choose your battlegrounds wisely, and be ruthless and nimble at the same time. The mega and large-cap equity markets are dominated by professionals and institutional investors, and an individual retail investor may not have an edge in determining quarterly earnings numbers or a better intrinsic value estimate as compared to the ‘big boys’ and their sophisticated army of analysts and multiple streams of information sources. However, the small and micro-cap stock markets are totally different. A mutual fund manager would find it difficult to navigate the space as a small percentage of his equity would move prices too much due to lesser liquidity conditions, effectively negating any potential opportunity that he or she sees.

Additionally, there is also less coverage and scrutiny in this space by sell-side analysts, which implies that there exists an inherent level of inefficiency, which means opportunity for the shrewd and diligent investor. The chart below exemplifies this point, in which it shows the average amount of sell-side buy/sell calls on individual constituents of various large and small-cap equity indexes.

small cap large cap.JPG

A retail investor would have no issues exploiting wonderful opportunities in this area of the equity markets, particularly if one has an edge over other small speculators in this area as well…

To End Off…

Remember, it’s all about understanding your own situation, the big players you are up against and their various motives and strategies, as well as the environment, and adapting along the way to carefully pick your battles.

Adopting this framework could help you to become an effective guerrilla fighter, able to take on the ‘big boys’ at their own game and like Merrill’s Marauders, punch above one’s own weight and make a real difference to your financial well-being.

*image credits to,*

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