Stoicism & Investing

| August 09, 2018
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I may get a bit wonky with today’s entry but there are many similarities to how Stoics modeled their behavior and how investors can work to optimize their underlying strategies.

Stoicism is also where my Investor/Character Equation (ICE) was developed.

The purpose of Stoicism is to teach you how to become indifferent to the pains and pleasures that enslave other people. From an investment perspective, we try to be as unemotional, apolitical, direction agnostic and data driven as possible. We all know that EMOTIONS are UNSTABLE and DATA are FACTS.

In this indifference lies happiness and joy, because it makes one independent to everything but the present moment. A Stoic still gets cold when it’s snowing, would still go into shock if they were gravely injured, still gets a pit in their stomach when the stock market plummets and endures struggles outside of their control. And guess what? That’s ok. Because they are human. However, it is essential to a first admit we are emotional creatures. We must then develop a process to recognize when our emotions begin to percolate and have a PROCESS to manage these emotions.

You’re a human. You have limitations. We all do. What matters is what we do within those limits. In short, this is the R in the ICE Equation of S+R=O: how you RESPOND to STIMULUS will drive the OUTCOME.

What is your desired investment outcome?

Speaking of Response, here is a snippet on Warren Buffett’s side-kick: Charlie Munger.

Li Lu on Charlie Munger’s Greatest Influence:

I’ve witnessed him recovering from such hard blows one by one. Yet throughout all these blows, I’ve never seen him being pessimistic or desperate. He’s never complained about those terrible blows either. His attitude towards them is to take them as graceful and competent as he can. He’s objective and rational in everything. 
There is a Chinese saying that goes, “One should neither be pleased by external gains, nor be saddened by personal losses.” Charlie is one of those people who can achieve such a state of mind.

This certainly is a difficult task and really is a process. You have the ability to work on this daily, not only in regards to your investments but also your daily life.


Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O


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