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Stoic’s Guide to Investing

Years ago I had a teacher call me stoic.  I think he felt it was an insult, but it really didn’t phase me at all as I thought it relatively accurate, plus I don’t think he really understood the definition.  And just so you understand, the definition of stoic is it is related to a philosophy where people should be free from passion, unmoved by joy or grief, and basically submit without complaint to unavoidable necessity.

 

Over the years I have had plenty of people comment about my lack of emotion at times.  Heck, someone wanted to fight me at a high school football game because he thought I should have been cheering more (ah, the genius of teenage boys).  I’ve always viewed my stoic attitude as using it when it really mattered, but not everyone shares this view and that is fine.  Fortunately, when it comes to investing I have learned being stoic is very valuable.  Let me share some thoughts.

 

  • “You shouldn’t give circumstances the power to rouse anger, for they don’t care at all.” – Euripedes. I hate to break it to you, but the market could really care less if you want it to go up or down.  Staring and screaming at CNBC will have no effect on the performance of your investments.  Doing this will take your time, energy and emotion with no results for you to show.

 

  • “Every situation has two handles.” – Epictetus. In life you can react by saying “Why me?”  Or, you can respond by saying “Why Me? Why am I so lucky?”  Maybe you started investing in your company’s 401k plan and stocks dropped double-digits.  Every statement you see is lower than the one before.  Or, you realize you want the market down as low as possible while you are buying.  Also, while the world may seem chaotic right now we are dealing with historical lack of volatility in the markets.

 

  • “We don’t control the world around us. We control only how we respond.” – Epictetus. Again, no one has control of the market. More importantly, some of the things that have the most significant impact on your investment success are completely within your control, should you choose to act on it.  You have control over the fees you pay your advisor, the fees you pay for investment products, and the ability to control for taxes as much as legally possible.  You also have the ability to design your investment portfolio any way you want. The question is whether you will take control of something within your control.

 

  • “Anything can have meaning if it changes you for the better.” – Viktor Frankel. If you don’t know the name, Google it and then go read his book.  I heard years ago the market has never taken longer than 7 years to recover from any pullback.  Knowing the market has more than completely recovered from the Great Recession, what will your reaction be next time?  Or, the next time your candidate is not elected President, will you get out and stay out of the market?  I tell my kids all the time it is not a mistake as long as we learn from it.  Have you?

 

I’m not advocating you switch to a stoic philosophy for your life.  However, as I outlined above, it is important to realize some of the most effective things you can do to improve your investing success coincide with a stoic philosophy.  In the meantime, enjoy the things that matter, recognize what you can control, and do your best to make sure you are not your own worst enemy when it comes to investing.

About Dan Johnson, CFP

I am the President and CCO of Forward Thinking Wealth Management, LLC, which is the flat-fee financial planning firm located in Akron, OH, and set up to work virtually with clients across the country. I charge clients a flat fee of $4,800 regardless of asset size. My firm is a solution to what I feel is a broken system where clients pay advisors based on something out of their control - the performance of the market.
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