“True wealth is health.” – Check out how this mindfulness exercise can make you a better investor! [Wednesdays: The Independent Investor]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Investing is an important financial activity. This will help us achieve true financial freedom in the long run.
Today, let’s talk about an activity that is beneficial for both our investment strategies and overall health.
Every Wednesday, we publish articles like this with hopes to make you realize that achieving true wealth and value creation doesn’t have to be at the expense of your well-being.
Are you interested to know more about today’s tip on investing?
Keep reading the article below.
The Independent Investor
Ray Dalio – Founder and former Co-Chief Investment Officer of Bridgewater Associates…
Paul Tudor Jones II – Founder of Tudor Investment Corporation…
Michael Novogratz – CEO of Galaxy Investment Partners…
What do these giants of investing have in common?
Aside from the fact that they’re all incredibly busy, wealthy, and successful as investors, they value their overall health and well-being.
In fact, Dalio, Jones II, and Novogratz are avid meditators! Despite their busy schedules, they make sure to keep meditation a top priority and do this activity for a few minutes each day.
According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, it’s easy to forget to take care of yourself when you’re busy—you don’t eat quite well, and you don’t get much sleep or time to exercise.
In short, your most foundational needs get pushed to the side.
… but is it truly worth being busy and achieving great wealth at the expense of your health?
Professor Litman says you should avoid this bad habit. In his words:
“These (basic needs) are the most important aspects of success, especially when we understand that true wealth is health.”
So… how can you maintain a healthy mind, body, and soul despite having a busy schedule?
One way is through meditation.
Photo from Openfit
Meditation is a practice in which an individual uses a technique, such as mindfulness, to train his or her attention and awareness, and achieve a mentally clear and emotionally stable state.
This exercise helps reduce stress, anxiety, depression, and pain, and enhances levels of peace, perception, self-concept, and well-being. Ongoing research is conducted to better understand the effects of meditation in other areas of life.
Did you know that aside from its positive impacts on health, meditation helps make you a better investor?
According to Professor Litman, carving out some time to meditate each day despite your busy schedule saves time because it makes you more focused and efficient.
Here are some reasons why meditation makes you a better investor:
- It reduces cognitive biases such as sunk-cost bias.
Sunk-cost bias refers to investors’ tendency to stick to a losing trade or project because of the time, energy, and money they invested in it. Instead of cutting their losses and moving on to a new, promising project, these investors choose to avoid the risk of change and continue losing money.
In a 2014 study conducted in Singapore, results showed that meditating for at least 15 minutes enabled participants to deal with sunk-cost bias better. Since meditation helped anchor their minds in the present, they obtained a clearer picture of what was no longer serving them and let go of those things.
- It reduces reward-seeking stimulations.
Allocating time for meditation before engaging in any investing activity will keep your mind open to the present facts instead of being biased to past events.
… and by focusing on the present, you’ll think and act more attentively, and avoid making your decisions based on previously created connections that might not be suitable to the trade at hand.
A 2012 study by the American Psychological Association also showed that meditation reduced participants’ stimulation when seeking rewards. This enabled them to keep their cool and not allow monetary rewards to affect their well-being and performance.
- It reduces overreactions to financial news.
When the financial media reports a falling of a stock, some investors tend to panic sell because of fear. According to an article published by L’Aquila Active, this happens when an investor overreacts to news about a stock he or she owns.
Instead of basing his or her decision on rational judgment, that investor follows his emotions at the moment. This is a BIG NO-NO in investing!
That is why it’s important to meditate first before making a financial decision. This will not only help you focus on the present moment but also enable you to control your emotions.
- It nurtures discipline, mental clarity, and emotional stability.
Many studies show that meditation enhances trading discipline. Why?
It trains investors to nurture self-discipline, which leads to greater self-awareness and self-regulated behavior!
… and by training themselves to observe and regulate their thoughts and behaviors, they are less likely to yield to impulse and disregard their investing strategies and plans.
- It improves metacognition and present-moment awareness.
An important trait that you have to develop as an investor is metacognition, or the awareness of your own thought processes. This is an imperative skill to hone when working with risks and uncertainty.
Meditation aids in separating and reducing the noise. Several studies show that investors who practice meditation report improvements in their perception of the present moment and facts.
Instead of reacting from a place of fear and worry, they respond based on present-centered awareness. They also enhance their cognitive processing skills and filter information better.
Now that you know a few benefits of meditation on investing, the next question you need to answer is:
“How can I start meditating productively?”
Here are Professor Litman’s tips!
- Sit quietly with your eyes closed.
- Breathe calmly and deeply.
- Concentrate on your breathing.
- Do that for 15 to 20 minutes—or less (whatever works for you, especially if you’re a beginner).
That’s it! After meditating, feel the positive impacts of this activity on your system. You’ll see—this will truly provide the benefits mentioned above.
According to Professor Litman, meditation can literally supercharge everything you do in life. That’s why it’s important that you take time to do this exercise no matter how busy your schedule is.
We hope you learned a lot from today’s tip on how to become a better investor!
Start incorporating meditation into your daily schedule and reap the incredible benefits of this simple yet powerful habit.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”
To best understand a firm, it makes sense to know its underlying earning power.
In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.
Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.
Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.
We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.
To help you get on that path towards the greatest value creation in investing.
Hope you’ve found this week’s insights interesting and helpful.
Stay tuned for next Wednesday’s “The Independent Investor!”
Head of Marketing
Valens Dynamic Marketing Capabilities
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