I’ve written about mental models to follow such as the punch card when making investment decisions. In this post, I’ll be writing about a school of philosophy that I believe will help your investing journey. And life in general. Stoicism.
The Philosophy of Indifference
Stoicism originates from the Hellenistic period of Ancient Greece. Life was short and ruthless. The philosophy was a way to survive its turbulence. The Daily Stoic is an excellent resource to get yourself familiar with the philosophy, and I’ll quote them in describing its teachings.
Stoicism has just a few central teachings. It sets out to remind us of how unpredictable the world can be. How brief our moment of life is. How to be steadfast, and strong, and in control of yourself. And finally, that the source of our dissatisfaction lies in our impulsive dependency on our reflexive senses rather than logic. The philosophy asserts that virtue (such as wisdom) is happiness and judgment should be based on behavior, rather than words; that we don’t control and cannot rely on external events but instead, only on ourselves and our responses.
The subheading has the word “indifference”. Don’t confuse indifference with lack of empathy or emotion. Indifference means that you are in control of your response to life’s situations. Since you cannot control markets, the only thing you need to control is your response to its moods.
Emperors and Holocaust Survivors
Marcus Aurelius
Marcus Aurelius reigned as Roman emperor from 161 to 180 CE and is best known as the last of the Five “Good” (A title given by Niccolo Machiavelli) Emperors of Rome. The others were Nerva, Trajan, Hadrian, and Antoninus Pius. Aurelius is the author of the work “Meditations”. He wrote these texts during his military campaigns, which are short sayings from a few sentences to longer paragraphs. These meditations were originally written by the man for himself, but to the benefit of humanity we have access to them. The texts were reminders designed to make him humble, patient, empathetic, generous, and strong in the face of whatever he was dealing with. Here’s a few great excerpts:
“The happiness of your life depends upon the quality of your thoughts.”
“Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.”
“Look back over the past, with its changing empires that rose and fell, and you can foresee the future too.”
I believe the last quote can be applied to firms and thus investing. The average lifespan of a corporation has shortened dramatically over time. This is why having a long-term perspective is crucial in investing.
Meditations is widely avaliable, and you can read it for free here.
Viktor Frankl
Viktor Emil Frankl (26 March 1905 – 2 September 1997) was an Austrian neurologist and psychiatrist as well as a Holocaust survivor famous for his book “Man’s Search For Meaning”. Here’s a summary of the work by Goodreads:
“Psychiatrist Viktor Frankl’s memoir has riveted generations of readers with its descriptions of life in Nazi death camps and its lessons for spiritual survival. Between 1942 and 1945 Frankl labored in four different camps, including Auschwitz, while his parents, brother, and pregnant wife perished. Based on his own experience and the experiences of others he treated later in his practice, Frankl argues that we cannot avoid suffering but we can choose how to cope with it, find meaning in it, and move forward with renewed purpose.”
Frankl is known for writing on the oldest question in the world: the meaning of life. Much of his work relates to human happiness, but I chose the following quotes because they are applicable to markets:
“If there is a meaning in life at all, then there must be a meaning in suffering. Suffering is an ineradicable part of life, even as fate and death. Without suffering and death, human life cannot be complete.”
“But there was no need to be ashamed of tears, for tears bore witness that a man had the greatest of courage, the courage to suffer.”
“Forces beyond your control can take away everything you possess except one thing, your freedom to choose how you will respond to the situation.”
“It is not freedom from conditions, but it is freedom to take a stand toward the conditions.”
Think of market downfalls, and the discomfort it brings, as the price you pay to participate in the game. If you cannot control your response to it, you should index your savings with a set-and-forget mentality.
Conclusion
Stoicism is about being in control of your emotions. Do not waste worry into things you cannot control. It seems so simple, yet most people tend to worry the most about things that are out of their control. Thankfully, we are not ancient plebeians doomed to die in battle or prisoners walking into our final shower. If people before us could adapt their minds in the most hellish of conditions, surely, we can train our brain to be more rational. Be a stoic when it comes to the stock market.
-IGTSKasimir
Further Reading
Warren Buffett – The Partnership Days (1956 – 1969)
Philip A. Fisher – Lessons From The 15% Man
The Best of Ben Graham – Security Analysis
Phil Town – The Compounding River Guide
Margin of Safety – The Most Important Thing
Intelligent Investing = Thinking In Probabilities
The Emotional Stages of a Value Investor
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