"The Stoic Path to Wealth: An ancient investing strategy for the modern World" 

by Sean Lawlor

21TreeFinancial.ca

In today's tumultuous financial landscape, where market volatility and economic uncertainty reign supreme, the wisdom of ancient philosophies offers a beacon of stability. Stoicism, an ancient school of thought founded in Athens by Zeno of Citium around 300 B.C., provides timeless principles that can guide us toward financial prosperity and tranquility. You hear stories of people striking it rich overnight with the latest get rich investment. But let's face it, those stories are like winning the lottery – rare.

Consider this: Investing in public markets has historically proven to be one of the most reliable paths to building wealth over time. Yet, the fear of market volatility and the emotional rollercoaster of investing often deter many from taking the plunge.  Investing isn't just about numbers and theories; it's primarily about mastering your emotions. In fact, I found that 90% of investing success boils down to emotional management.

Stoicism provides invaluable wisdom for navigating the tumultuous seas of finance. Stoicism teaches us to focus on what we can control and accept what we cannot. This mindset shift is transformative, especially in a realm as unpredictable as the financial markets.

Stoicism doesn't shun wealth. Instead, it encourages us to pursue prosperity while maintaining our integrity and values. As Epictetus, a renowned Stoic philosopher, aptly put it, "If you can make money remaining honest, trustworthy, and dignified, by all means do it."

This mindset frees us from the relentless pursuit of wealth for its own sake. Instead, it empowers us to align our financial goals with our core values, fostering a sense of fulfillment beyond mere monetary gain.

So, can you achieve wealth and live like a Stoic? Absolutely. By adopting Stoic principles in your approach to investing, you can cultivate resilience, discipline, and a deeper understanding of what truly matters in life. Join me as we explore how Stoicism can pave the way to financial abundance and inner peace.

Here’s my Stoic roadmap:

1. Generate Wealth

Investing begins with earning more than you spend on essentials. In history, many successful investors embarked on their journeys by honing income-generating skills. Take Warren Buffett, who commenced his career as a securities analyst at Graham-Newman, leveraging his financial acumen to later establish his own partnership. Similarly, George Soros, after pursuing various academic degrees, ventured into the financial realm by working as a clerk at a small investment bank. These individuals exemplify the importance of acquiring valuable skills to create income streams. By focusing on what they could control, they laid the groundwork for their investment success.

2. Embrace Loss

An often overlooked aspect of wealth accumulation is the inevitability of setbacks. Throughout history, even the most renowned investors experienced losses that shaped their strategies and ultimately contributed to their triumphs. Consider Berkshire Hathaway, initially a failed textile company under Warren Buffett's stewardship, which evolved into a cornerstone of investment success. Likewise, Bill Ackman faced significant losses, such as his short position against Herbalife. George Soros encountered setbacks too, notably losing 22% on British government bonds in 1981. Yet, these setbacks proved instrumental in their eventual victories.

Embracing the possibility of loss is crucial in navigating the investment landscape. Just as in sports, where even championship-winning teams endure defeats, investors must recognize that losses are part of the game. However, the key is to mitigate risks and avoid substantial losses. By adhering to a disciplined approach and safeguarding against excessive risk, investors can weather downturns and position themselves for long-term success."

3. Grow money

Growing Wealth: Stoic investors make informed decisions based on rational analysis rather than emotional impulses. They prioritize assets that appreciate in value or generate cash flow, while diversifying their portfolios to manage risk effectively.

4. Command What You Can

Stoics distinguish between what is in our power (our actions and beliefs) and what is not (external events). Focus on your savings rate, investment choices, incurred costs, and risk management, rather than the unpredictable markets.

Develop and stick to a financial plan tailored to your goals and risk tolerance, regardless of market swings.

"You can be happy if you know this secret: some things are within your power to control and some things are not."

Epictetus

5. Rationality Over Impulse

Stoicism values reason over emotion. Emotional reactions to market volatility can lead to poor investment decisions. Use reasoned analysis to inform your choices.

If tempted to make an emotional investment decision, pause and revisit your reasoning when you are in a calmer state of mind.

6. Embrace the Unknown

The Stoic practice of ‘premeditatio malorum’ involves contemplating potential adversities. Accept the inherent risks of investing and prepare for them without fear.

Diversify your investments to manage risk and be mentally prepared for the possibility of financial loss.

"Everything we hear is an opinion, not a fact.  Everything we see is a perspective, not the truth."

Marcus Aurelius

7. Resilience Through ‘Amor Fati’

Stoics encourage loving one’s fate. View market downturns and financial setbacks as opportunities for growth rather than misfortunes to be endured.

In the face of losses, seek the lessons to be learned and consider the potential of undervalued assets.

8. Continuous Reflection. Stoicism promotes regular self-examination. Reflect on your investment decisions to learn and improve your strategies.

Keep an investment journal to record decisions and outcomes, and review it periodically to ensure alignment with your goals.

9. Indifference to Wealth

While Stoics are not against wealth, they advocate for an indifferent attitude towards it. Wealth is a ‘preferred indifferent’ — valued but not essential for a good life.

Focus on achieving financial security and living a fulfilled life, rather than accumulating excess wealth.

10. Community and the Common Good. Stoicism also emphasizes the importance of community and working for the common good. In investing, this can translate to socially responsible investing (SRI) and considering the broader impact of your investment choices.Align your investments with your values, considering not just personal gain but also the welfare of others and the planet.

11.  Don't let fear hold you back. Do proper preparation, research, ideintify and manage your personal risk levels start taking action. As Epictetus wisely said, "Your relentless pursuit of wisdom postpones your actually possessing it." Quit chasing after the latest trends and gurus. Instead, take a leap and invest your own money.

Stoicism isn't just about growing wealth — it's about cultivating a mindset that remains steady in the face of market volatility. By applying Stoic principles to your investment strategy, you not only safeguard your finances but also build resilience for life's ups and downs.

"In a little while you will have forgotten everything;

in a little while everything will have forgotten you."

Marcus Aurelius

By integrating Stoic principles with sound financial strategies, investors can navigate the uncertainties of financial markets with confidence and poise. Ultimately, true wealth lies not in the accumulation of material possessions, but in the cultivation of virtue, resilience, and inner peace — a wealth that endures long after the markets have closed.