However, last Sunday I was genuinely surprised by a question, which was of the type I’d jokingly call an ‘out of syllabus’ one. A reader from Kolkata asked if spirituality helped in investing! Now, I can hardly pretend to be an expert on the matter. As a matter of fact, there are very few people who are. After protesting my lack of expertise, I did point out something that occurred to me at that moment based on personal experience and that of a few people who are close to me. Having what might be called a spirituallybalanced outlook towards life definitely helps one deal with those times when your investments are not doing well.
There’s nothing unexpected in this. People who are spiritually grounded and are thus self-aware can face any kind of tough circumstances with greater equanimity. As it happens, over the last two years many people faced a huge amount of personal stress and sorrow because of covid. This has made some of them psychologically tougher, while it has had the opposite effect on some. The difference could well be because of how spiritually aware they are. My sense is that investors are the same. Every investor goes through bad times sometime or the other. When those times are over, some get scared into quitting and/or become panic-prone. Others learn their lessons, both about the external circumstances and about their own attitudes and actions.
Even if you are the sort of person who actually would not self-classify as spiritual, self-awareness leans in that direction. In fact, thinking of investing decisions as external problems versus problems whose solutions lie within oneself is a big differentiator. When I look at the kind of investment questions that people ask—on the internet generally, there’s an interesting pattern that can be observed. There are savers who think that investing is about investments and there are those that think investing is about themselves.
I’ll give a pair of contrasting examples to demonstrate what I’m talking about. Here’s one real question: ‘Is it advisable to invest in mid-cap and small-cap mutual funds in the current situation in the stock market? How long will the conditions remain like this?’ It sounds like a perfectly reasonable thing to ask. However, contrast it with this question: ‘I am 40 years old but haven’t started saving for retirement, apart from the EPF deduction. When I retire, I will need Rs.75,000 a month….’, and then there are personal details that I’ll omit here.
Do you see what I’m talking about? While these are just questions that the two savers asked in an email, I think it would reflect their attitude towards thinking about investment in general. The first questioner thinks investing decisions are to be based on what’s happening in the outside world while the second one sees saving and investing as a way to find solutions to the problems of one’s own life.
There’s another, even deeper, more spiritual aspect that requires you to know yourself. Different people seem programmed to suffer different levels of stress and anxiety when they are faced with hardship. Investment advisers are fond of asking their clients their ‘risk tolerance’, but the answers are useless unless someone has had a real life experience of facing losses. This is equivalent to many other life situations. Are you going to be brave when faced with a terror attack? If you get a terrible disease? No one knows the true answer till it happens.
(The author is CEO, VALUE RESEARCH.)