Some Zen Investing Advice

How to stay centered when you're buying and selling.

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Rob Russell
Rob Russell

Generally, we all want to find peace and happiness in life. In other words we deeply desire to find some Zen. Understand that people find Zen in different ways. Maybe they find Zen when they can retire comfortably or are debt-free. Maybe it’s doing yoga, living a more minimalist life, exploring the world, or donating time to charity. Whatever Zen looks like to you, I want to offer up some wisdom in finding Zen with your (sometimes stressful) investing or trading strategy.

Up for careful contemplation are my favorite Zen investing lessons from which even the most successful and experienced professionals can gain a little enlightenment:

Lesson 1: “If you do not change direction, you may end up where you are heading.”

Oftentimes investors and advisers are afraid to make a change because the fear of the unknown is greater than the fear of the known, which during times of crisis can lead to financial ruin. I’m not advocating making investment changes for the sake of change. I’m advocating that you be open to the idea of change. Maybe it makes sense to evaluate your investment strategy, types of investments you use, or the person or company you entrust with your life savings.

Lesson 2: “Over-thinking ruins you. Ruins the situation, twists things around, makes you worry and just makes everything worse than it actually is.”

One of the many human flaws that we all carry is the deep desire for a reason why. A reason for why the market is up or down on any given day or why a stock is down after reporting positive earnings, for example. We constantly search for the reason behind any market movement as if the cause could be accurately found. Find some Zen by turning off the financial news and stop over-thinking about why the markets are up one day and down the next. Focus on the only factor that matters…price. Investing based solely on the price of a stock, commodity, fund, etc. has everything you need to know baked in. Focusing on the why can lead to ruin, instead focus on the now, which is price.

Lesson 3: “Children are natural Zen masters; their world is brand new in each and every moment.”

Put another way, never stop learning and honing your knowledge about investing. Don’t focus on the daily chatter, rather focus on sound, technically driven methods to create and preserve wealth. Keep an open mind to new and alternative investment approaches because you may just learn that one unique strategy resolves your search for “a better way,” providing you with some much-needed Zen.

Learn new strategies with child-like awe by reading some provocatively different books on investing like Trend Following by Michael Covel, The Ivy Portfolio by Mebane Faber and Eric Richardson, and The Astute Investor by Dr. Eric Prentis.

Lesson 4: “There are only two mistakes one can make along the road to truth; not going all the way, and not starting.”

Don’t confuse searching for truth with searching for the why. Truth is undeniable, while why is subjective. Many investors and advisers accept regurgitated misconceived truths like “buy-and-hold” or “modern portfolio theory” without starting the arduous and courageous search for truth.

Many of us can’t handle the cold, hard truth because it causes us to be challenged in uncomfortable ways, but understand that the most successful investors, traders, and advisers (the ones with the most Zen) search endlessly for investment truths.

Robert Russell is the author of Retirement Held Hostage, CEO & CIO of the Ohio-based Russell & Company, a private wealth management firm specializing in helping affluent individuals ages 45 and up create and preserve their wealth. He co-hosts a radio show, authors The Rob Report blog, and is a frequent contributor to The Wall Street Journal, SmartMoney, & FOX Business.