How can ideas from an ancient philosophy such as Stoicism help you become a better investor? To guide you, we will have a brief look at Stoicism and five principles that can help you create a profitable portfolio.
These principles are also great to know if you are a digital asset investor. Don’t rely on youtube investors; make your own rules by learning and sticking to them.
What is stoicism
Stoicism is an ancient Greek and Roman philosophy based on having a virtuous life by living in accordance with nature. Its chief aim is to have a peaceful life.
It will help you focus on yourself and look at your priorities. One of the most famous Stoics was a very wealthy man in his time. Seneca was a philosopher and advisor to the infamous Roman emperor Nero. It was, in fact, this same Nero, the one whom Seneca tutored at a young age, who ordered him to take his own life.
But what can we learn from it and what five Stoic ideas can make us better investors. Let’s have a look, and in the meantime, you’ll be able to learn a bit more about Stoicism.
What is in our control?
“You have power over your mind – not outside events. Realize this, and you will find strength.”
Epictetus was born a slave and later became one of the best-known Stoics with his own school. We can still read his Enchiridion, his handbook, today. This handbook starts with the Dichotomy of control.
Here he shows us what is in our control and what isn’t. External events aren’t under our control and everything that belongs to the mind is. When we invest in a company, we can’t control the price of the stock.
The sales of the company or product are out of our reach. We can do some technical analysis to determine a better entry point or moment to sell, but it is not under our control.
Yet, we can control how we look at the price action. We can make decisions on our opinions and determine how long we should HODL. There are certain tactics, like dollar-cost-averaging, we can apply because we know that these give us more peace of mind.
Moreover, when we realize what is under our control, such as our ideas and views on the world around us, it is possible to eliminate some of the extreme emotions that might make us panic sell or FOMO at a peak.
Become consistent in our investments
“If you don’t have a consistent goal in life, you can’t live it in a consistent way.”
If you have learned some of the basics of investing, then you must know that the compounding effect is the money maker. The only way to make sure that these principle works is by being consistent.
Follow your strategy, have your goals set, and stick to them. The stoics say that one must find his nature to live accordingly. You must know who you are and why you are investing. Is it just to make money, then it will go faster than it came. Or are you here to create a better life for yourself and the people around you?
With every action, you should ask yourself whether it is true to who you are. Are you buying a particular company because you believe in the product or because it is the latest hype? Knowing what you invest in is vital if you want to stick to your plan and survive the dips that will eventually come.
Follow your nature and listen to this advice from the ancient Stoics. Set your goals and for every dollar you invest ask how it can help you get to where you want to be.
Take responsibility: become a better digital asset investor
“Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility.”
Okay, this is not a Stoic quote, but it is the best to bring home the point. If you wish to create financial freedom, then it is up to you to take responsibility for it.
No one will help you and if they do you should always check for yourself whether it is correct or the right timing. It is all up to you. Investing is fast and easy and you can do it all alone. That means that if you make money or you lose it, it falls on your shoulders.
Take this responsibility and learn from your actions. If you give up after your first bad buy, then you’ll never make it. Or if you celebrate too hard after a major profit, it will be of short joy. Remind yourself that you need to take charge.
The Stoics tell us to rely on ourselves and to examine our actions. There is no need to blame anyone else or to give away our power to others. Pointing your finger at others will not help you grow as an investor and it will not improve you as a person.
Besides, any of the gains will feel like hollow victories, ones that came far too easy. Make this decision now, it is up to you to do proper research and stick to what you believe in.
Believe in yourself
“To stand up straight – not straightened.”
Building on the previous Stoic idea to be a better investor, it is important to believe in yourself. The first investment you make is in yourself. Wisdom is one of the Stoic virtues which they consider to be the highest good. Use this in your investing and even more in your life. Investing isn’t only about making money, it is about keeping it as well.
To become a better person and investor you need to study, learn, and listen to everything around you. That’s where the money is made in the end. You control the buttons, but you need to know what buttons to press.
If you want to rely on yourself, you need to train yourself. Like the old gladiators in the arenas, you are stepping into the feisty battlefield called finance. You must learn how to take a punch and keep moving forward. Sometimes it is smart to pause and analyze the best path ahead.
Find a mentor or read books. Learn the basics of technical analysis and understand your financial means. Once you are the master of your own situation, you can walk into any market and make the best decisions.
Why did this happen to me?
“Whatever fate one man can strike can come to all of us alike.”
During your time as an investor, you will make money, but you will also lose money. How you deal with that second aspect will decide whether you are here to stay or get to join the masses who gave up. What we must remember as we can learn from Stoicism is that nothing is personal.
Money doesn’t care in which pocket it sits. It doesn’t like to be idle and prefers to move to those who are active. The same with fate, things happen to us because they happen. Not because the universe decided to give you a hard time.
There is no time to feel sorry for yourself. We have seen from the previous points what you can control and how you should act. Whatever happens to you then is neither good nor bad.
That is what you make of it. A massive profit can be worse than a big loss. It all depends on how you deal with it. Don’t lament and ask yourself: “Why me?” But better tell yourself: “Why not me,” and move on.
We have gone over five powerful stoic ideas to guide you to a profitable portfolio. There is more to Stoicism than what we have seen here, but so there is to investing. What goes for both is that you must use your head and follow your nature. Stick to your goals and learn what you can control. In the end, if you want to strive for financial freedom, then that falls completely on your shoulders. You either stand straight yourself or let everyone else keep you upright. The choice is yours, make the best of the opportunities you have right now.
Very interesting approach to investing and on the application of stoic principles. I can’t make an investment if I don’t understand the basics of it and if it doesn’t make sense from a more moral point of view, but there are of course different types of investors and there are many personality types. Thank you for sharing!
Hi Benny! Thanks for this. I love this connection you are making to the Stoic approach. And you are so right, I can see the similarities. As an investor and Stoic myself. It is good to read this and take into account while investing. All the best.
One of the things that stood out to me here was the idea of Nero ordering Seneca to take his own life. In a way that’s similar to investing. If you don’t follow a plan or rules to invest by, you end up losing your investments.
That’s a great point and analysis Joe. For me, when investing, rules are everything because they are the difference between making money and going broke.