Stoicism and Investing
I recently had the chance to attend a financial conference where Ryan Holiday, the author of The Obstacle Is the Way, was a guest speaker. If you're unfamiliar with the book, it takes the ancient philosophy of Stoicism and makes it practical, showing us how obstacles aren’t roadblocks, they’re actually the path forward. Holiday’s talk provided wisdom, especially for investors, and it got me thinking about how his insights could help navigate today’s volatile market.
As he discussed core principles of Stoicism, he broke them down into three key disciplines: Perception, Action, and Will. Each one is beneficial for dealing with the emotional rollercoaster that often comes with investing.
Perception was the first one he tackled, and it’s all about how we interpret events. Stoics believe that external events are neutral, it’s how we respond to them that makes all the difference. For investors, this is a powerful lesson. A market downturn isn’t inherently a bad thing, it’s just an event. How we perceive it, either as a crisis or as an opportunity, can dramatically affect our decisions. The volatility we've seen this year doesn’t have to be a sign of doom. It’s a chance to reassess and look for opportunities.
Action, is the idea that, while we can’t control external events, we can control how we respond. For investors, it’s about focusing on what’s within our control: asset allocation, savings rate, where and how we invest. It’s easy to get caught up in the ups and downs of the market, but putting your energy into what you can control helps you stay grounded. Instead of obsessing over the market’s swings, this discipline encourages investors to take calculated, deliberate actions that serve their long-term goals.
The last discipline, Will, is all about endurance, how we maintain focus when things get tough. Holiday shared that sometimes, the worst thing we can do is let a bad situation get worse by overreacting. For investors, this means resisting the urge to panic or make hasty decisions based on fear. It’s easy to sell off assets in a market dip, but more often than not, this is a reactionary move that derails long-term plans. Practicing willpower, in this case, means staying calm, sticking to your plan, and not letting emotions drive your choices.
I enjoyed listening to Ryan Holiday speak, and the principles of Stoicism that he shared are timeless, especially when it comes to investing. If we can learn to keep our heads level when the market is volatile, we’re better positioned to capitalize on opportunities rather than make decisions that only create more obstacles for ourselves.
