THE POWER OF STOICISM IN INVESTING
Kenny Korngold, International Director at Intercontinental, was recently quoted in this WealthManagement.com article called "The Stoic’s Guide to Financial Management", and wrote this blog post as a follow-up piece with his full thoughts:
If we reflect on the words of famous Roman Stoic philosopher Epictetus, “There is only one road to happiness, let this rule be at hand, morning, noon and night, stay detached from things that are not up to you”. As humans, we would find it quite liberating if we could eliminate our sometimes-obsessive desires for pleasure and rewards and rid ourselves of ill-found fears that bring unwarranted pain. Similarly, when investing, individuals often tend to fixate on daily asset movements or become overly agitated at the prospect of heightened volatility. The Stoic philosophers believed external events were beyond our control and that we should accept whatever happens calmly and dispassionately in the present moment. In so doing, we can enlighten how we address our clients’ hopes, fears, and aspirations, and also how to best embrace prudent investing.
Although many investors may have lost hope during the darkest hours of the pandemic, almost all crises are transient in nature. Stoic philosophy – or as similarly expressed in contemporary society in the framework of mindfulness – can serve as an anchor that enables the required clarity needed in order to successfully navigate turbulent episodes. As most of us know, at the outset of the pandemic, global financial markets experienced an unprecedented vertiginous decline. It was during this period that the asset management team at Intercontinental Wealth Advisors enacted an equity acquisition rebalancing strategy. While others may have questioned our reasoning at that crucial point in time, that moment, more than anything, demanded a heightened degree of objectivity and discipline. Our ability to act without succumbing to emotions allowed a formal discipline honed to prevail.
I apply these guiding principles throughout my mindfulness meditation and yoga practices on a daily basis and find that they not only provide greater focus while on the job, but also have practical applications with respect to how you interact with your coworkers and personal relationships, and that they overall translate to an overall higher quality of life. Yoga, for instance, tests your own limits and helps you address those challenges with greater equanimity “on and off the mat.”
Although the Stoics came up with these concepts of thinking over two millennia ago, human nature remains exactly the same. Today, these teachings and meditations are backed by science. They also provide important insights into behavioral finance, shedding light on how we can circumnavigate pitfalls embedded into the ancient hardwiring of our minds. It is important to note that the pursuit of greater consciousness living will allow us to increase our understanding of how our minds work, thereby harnessing the wisdom required for steady financial stewardship. At Intercontinental, while we recognize that the breadth of experience of our skilled professionals and the analytical ability to select managers that generate alpha are key factors to be considered, Stoicism and greater mindfulness are without a doubt complimentary attributes that, to borrow the words of Jon Kabat-Zinn, need to be implemented “as if your life depended on it, and it does.”
International Director at Intercontinental Wealth Advisors
For further reading on these topics, please check out the books below:
- Full Catastrophe Living: Using the Wisdom of Your Body and Mind to Face Stress, Pain, and Illness by Jon Kabat-Zinn
- Lives of the Stoics: The Art of Living from Zeno to Marcus Aurelius by Ryan Holiday & Stephen Hanselman
- Thinking, Fast and Slow by Daniel Kahneman