Zen and the Art of Investing

© Can Stock Photo Inc. / dimol

We’ve read that one of the central tenets of Buddhist philosophy is the idea of non-attachment. Attachment, according to the Buddhist worldview, is the root of all suffering. We want and expect certain things and become upset when we don’t get them. Freeing ourselves of our attachments to things alleviates our suffering and allows us to experience the world with a clear mind and a joyful heart.

I suspect I would make a pretty poor Buddhist in practice, but the concept resonates with some of what we do here.

Suppose, for example, that an investor watches their portfolio gain 5% in a single week. They will probably be overjoyed, but now they’re attached to the new value. If their portfolio retreats 3% the following week, many investors will be unhappy about its performance—even though they just made a very appreciable gain of 2% inside of 2 weeks.

It works both ways, too. If the market hits a bump and their portfolio goes down 5% they might be upset, even if they’ve watched their portfolio weather many such bumps and know it has a history of rebounding to their benefit. Even after they watch it rise back up, they may resent it for having dipped in the first place.

Now we’re not about to sit here and tell you that you should be happy when your portfolio underperforms—that’s not what we’re about. Non-attachment does not mean you stop caring about things, it simply means you put them in perspective. This frees you to make more effective decisions for the long haul instead of being swayed by emotions about the short term. An investor who trades in and out based on feelings about day to day performance is likely to do himself financial harm.

In the real world, of course, investing requires careful thought and analysis, not just philosophy. Thankfully, we are equipped to provide both. Give us a call or email us if you want to talk about your situation and how we can help.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

This is a hypothetical example and is not representative of any specific investment. Your results may vary.