Does it pay you well to be a Stoic ?
Just in case your wondering what Stoicism means , let’s look at the definition first “It is an ancient Greek school of philosophy founded at Athens by Zeno of Citium. The school taught that virtue, the highest good, is based on knowledge; the wise live in harmony with the divine Reason (also identified with Fate and Providence) that governs nature, and are indifferent to the vicissitudes of fortune and to pleasure and pain.”
Nassim Taleb describes it as follows — “A Stoic is someone who transforms fear into prudence, pain into transformation, mistakes into initiation, and desire into undertaking.”
My introduction to Stoicism happened on Tim Ferriss Show where he spoke very highly about the book “Letters from a Stoic” , a collection of letters written by Seneca more than 2000 years back. I picked up this book more than 7 years back , and till this day, this remains the best book I have ever read . I even mentioned this book in my blog post on 27th June , which was on my favourite 12 books .
But a brief description of its origins are as follows (From Orion Philosophy Blog) —
When the Stoic founder Zeno began his school of thought he did not have the money to buy a building. Plato had his academy, Aristotle had his Lyceum, but Zeno’s followers met to discuss their philosophy on the streets of Athens under the shade of the Stoa Poikile, a colonnade decorated with mythic and historical battle scenes, on the north side of the Agora in Athens. Anyone was welcome to listen and debate ideas, creating the very first group of Stoics.
For the Stoics, their practical path to happiness is grounded in a few core principles:
(1) The ability to view ourselves, the world, and it’s people objectively and accept their nature as it is.
(2) The discipline to prevent ourselves from being controlled by the desire for pleasure or the fear of pain and suffering
(3) Making the distinction between what is within our power to influence, and what is not. Using this information we act on what can be acted upon, and we dismiss what can’t.
Generations later — Stoic philosophy was used by anyone from the soldiers of the ancient world, all the way up to the emperor Marcus Aurelius himself. Growing to become one of the most prominent philosophies of Greece and Rome. In fact Stoic philosophy was only truly rivalled, and eventually overtaken, by Christianity.
Stoicism is a profound subject to discuss in detail in one blog. It may need volumes of books to scratch the surface of this school of thought. There are brilliant works by Zeno, Cato the Younger, Epictetus, Marcus Aurelius and the modern works are spearheaded by Ryan Holiday through many of his books — Ego is the Enemy being my Favourite from him.
It may sound virtuous to some, philosophical to some, impractical to some, cold hearted to some and a total lunacy to some. To me, it was the most practical school of thought I came across. It gave a fresh perspective to life, good things and bad, death and shortness of life, people’s opinions , fate , one’s own actions, desire vs outcomes, the virtue of responsibility, way of nature and the providence. It was like a mosaic of various philosophies interlaced in the most palatable manner .
Today’s blog post is ONLY about three virtues from Stoicism that stands out for me on a pedestal. And it’s these virtues that could facilitate your choices , which could be very rewarding monetarily and holistically.
ILLUSION OF CONTROL
“The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control. Where then do I look for good and evil? Not to uncontrollable externals, but within myself to the choices that are my own…” — Epictetus
NO MATTER how much you prepare , how much you plan, how much you pray, how sincere and disciplined a person you are , how much you care for your people, how much you love your family, how skilled you are in your abilities — THINGS MAY NOT GO AS YOU’D LIKE !!!
Who could have thought about COVID led shutdowns just 12 months back ?Who could have even imagined the Lebanon Blast in their wildest dreams ? Who could have thought about Technology replacing so many jobs in a span of 6 months ? Who could have imagined bankruptcies of famous brands like Hertz, Brooks Brothers, GNC, JC Penney, Aldo and so many more ? Who could have imagined downsizing across the globe ?
Future is uncertain and always will be . All one can take control of is his actions, and be at peace with having done 100% of what can be done, what needs to be done. You are guaranteed to experience misery if you try to control the outcome, people’s opinions, economic twists & turns, the job market , the shutdowns, your age, your background, your handicaps, your past circumstances.
“Be tolerant with others and strict with yourself.” — Marcus Aurelius
In Investing, you get rewarded for taking risks / bearing uncertainties . Certainty doesn’t compound your money (eg. deposits). It’s the uncertain probable future that you bet on and get rewarded for or get whacked for .
Warren Buffet has spoken umpteen times about “Circle of Competence”. Howard Marks speaks about “Margin of Safety”. Monish Pabrai talks about “Investing mistakes in elusive moats”.
These are legends in their own right. But each of them have made mistakes , lost millions (Warren Buffet lost in billions by going wrong on his bet on Airline Stocks in Q2 2020 or in Dexter Shoes decades back). Making mistakes isn’t a bad thing. You could be a very rich investor if 65% of your calls go right. Even 55% could make you loads of money.
And to get your probability of hitting a home run in excess of 50%, it needs you to get your basics right, to think in terms of probabilities and payoffs, to be well researched on the security specifics and the industry dynamics, to be well versed with value vs pricing, to be cognisant of Porter’s 5 forces , to have followed a checklist for making your decisions and to be aware of any biases inducing your decision.
These are in your control. Only your preparation, your understanding, your knowledge, your analysis is in your control. And since the outcome is not, hence the “margin of safety” , hence the “circle of competence” , hence the “elusive chasing of moats”.
Warren Buffet was entirely wrong on Microsoft by rejecting the opportunity to buy a big block in 1997. MSFT traded at $11 then. It trades at $228.91 as of yesterday. That is a 20 bagger . But does Warren Buffet regret this — NO !!! He is at peace with this decision as Tech was out of his circle of competence and he did not want to bet his or his Investor’s money (Berkshire Hathaway) on something that he didn’t understand .
If you want to compound your Wealth , are you regretting the mistakes made in the past ? Are you hoping that tomorrow will be better , without you changing yourself ? Are you hoping that someone will tip you to Financial Freedom ? Are you praying for Luck or Lottery ?
If YES, then please think again. Past, Future, Luck, Lottery, Hope — these ain’t qualify for a good strategy for the future. These ain’t in your control. Your work ethic is . Your checklist is. Your choice of peer group is. Your core competence is. Your margin of safety is. You refraining from emotional decisions is. You not comparing your wealth with others is.
“When we are no longer able to change a situation, we are challenged to change ourselves.” — Viktor Frankl
MEMENTO MORI
Memento Mori is the practice of contemplating your own mortality, or remembering that one day you will die.
If you haven’t seen this movie, it is a MUST WATCH. The trailer speaks for itself . What if you had only 25 years to live ? Would you waste it or would you do something about the time at hand ?
I have reasons to believe that you would do a lot more with your time if you knew that there wasn’t much left . In fact, there are watches/clocks sold in the marketplace that show the no. of hours left for you to live. That would be freaky , isn’t it ? But it will be effective at the same time.
“Think of the life you have lived until now as over and, as a dead man, see what’s left as a bonus and live it according to Nature. Love the hand that fate deals you and play it as your own, for what could be more fitting?” — Marcus Aurelius
“We don’t beat the Reaper by living longer. We beat the Reaper by living well.” — Randy Pausch (1960–2008), The Last Lecture at Carnegie Mellon
Sushant Singh Rajput passed away at such a young age, for reasons not known yet. Black Panther lead actor Chadwick Boseman passed away at 43. Irfan Khan, one of my favourite Indian actors, passed away so early in his rocking Bollywood career. His movie Blackmail is one of the funniest Bollywood movies I have seen. Steve Jobs died way earlier , than the world would have liked.
Death isn’t an event happening decades later. Death is happening for sure, no one knows when . And since you don’t know when, you rather live like there ain’t much time left. You rather try out things, you have been deferring. You rather take the tough decisions that you have been avoiding. You rather express your beliefs before the world takes time out to understand you on its own. You rather play outside of your comfort zone today, instead of waiting for things to be perfect. You are READY today to start, not one day someday.
“You could leave life right now. Let that determine what you do and say and think.” — Marcus Aurelius
If you could think this way, you would act wisely today. You would insure the risks your exposed to . You will invest for the long term eg. Coffee Can Portfolios. You will build assets now instead of gamble your income away. You will save now, instead of saving later. You will invest in your education now, instead of starting later. You will be on your toes about your industry and competition, instead of taking things for granted and hoping all is well for eternity.
IT IS NOT !!! Things change. Life Happens. Disruption is the name of the game. Change is the only Constant. Tomorrow is going to surprise you. Are you geared up for it.
Warren Buffet is ridiculed / mocked / jeered for holding more than USD 120 billion as Cash in T-Bills . But he is prepared for the worst that COVID could bring. He is prepared to fund his good businesses with more funds at time when they need it the most.
He is willing to take the decision to shut down or retrench staff in loss making businesses. He just wrote down USD 9.8 billion for Precision Castparts. But it ain’t hurting Berkshire , since it has been built as a Fort Knox . He is ready to take any punches , either due to his own passing away or due to COVID or due to any other adverse scenario.
It’s this mentality, that will refrain you from making rash decision, dumb choices, impulse actions. Every Investment decision will be looked at skeptically, every chance of a major loss/wipeout will be evaluated, every bet will be a calculated one. If it is not, then the whole family or team or company or partners pay the price for not having through through the decision.
“How long are you going to wait before you demand the best for yourself?” — Epictetus
AMOR FATI
The great German philosopher Friedrich Nietzsche would describe his formula for human greatness as amor fati — a love of fate.
“That one wants nothing to be different, not forward, not backwards, not in all eternity. Not merely bear what is necessary, still less conceal it….but love it.”
Please do yourself a favour and watch this movie, if you haven’t watched it yet. It is a true story and that’s why even more remarkable. It’s about accepting one’s fate and making the most of it. It will make you cry, if you still have a heart beating within ;)
Technology is disrupting your industry, it’s GOOD. It’s a signal for you to shape up or you will be shipped out.
The competition is intense, it’s GOOD. It’s a warning for not resting on your laurels.
Your Bad Luck resulted into a huge misfortune for you, it’s GOOD. This will ensure you never get lazy or lethargic and are always on your toes to make things happen.
You lost a good friend due to a dumb mistake, it’s GOOD. You will build a character that will bring the best in you and forge relationships and partnerships that are stronger than many that came before.
You lost respect, it’s GOOD. You will build awareness about how your actions and words land on others.
You lost money, it’s GOOD. You could analyse the source of those actions, the missing pieces, the impulses at play, the emotions running you and create a checklist to be followed before making any decision again.
“I judge you unfortunate because you have never lived through misfortune. You have passed through life without an opponent — no one can ever know what you are capable of, not even you.” — Seneca
Being a Stoic builds a Character. Your Character builds your Habits. Your Habits build your Relationships. Your Relationships build your Success. Your Success builds your Wealth. Your Wealth builds your Impact on Society. Your Impact builds a better World to live in.
I’m striving to be a Stoic. And I’m happy to be work in progress.
You too can join the gang, if you choose to.
Love.
Manish