Photo: Flickr / Tom Mooring
The pursuit of yoga is all about building up a toolbox of tactics to better deal with everyday challenges, and at a greater level, to help us lead a life of integrity.Investing – more on the practical side – is about building up a pool of funds to help us achieve the things that matter in life.
Both pursuits focus on turning ourselves into allies, and avoiding behaviours that don’t serve us well. You see – humans are prone to irrational behaviour. We react to instincts that may feel good in the short term, but are unlikely to benefit us in the long term.
Irrational behaviour is not all we’re capable of, of course. When we harness our minds and bodies we can achieve great things. Much of yoga practice is dedicated to this idea and it offers up many lessons for investors.
Here are four:
1. Patience: When I started yoga I wanted it all. I wanted to be able to put my feet behind my head, I wanted to be able to leap up into a handstand, I wanted to take on the craziest of arm balances. Heck – I even wanted to teach the class.
It’s been 10 years since I attended my first yoga class and I’ve since learned to count the inches. Yoga practice is full of subtleties. You realise that if you want to stand on your head, you need to start by building strong core muscles.
It’s the same with investing. We set these arbitrary goals like saving two million dollars by retirement, when it’s more prudent to focus on tangible goals – like 15% of every paycheck, or a down payment on a house in two years.
2. Calm: Why do yoga teachers launch into long anecdotes the moment you come into a challenging pose? We’ll have one arm wrapped into an intense stretch, our torsos twisting, our breath heavy, and our muscles singing, and our teacher wants to tell us about her recent vacation. It’s incredible to feel the emotions bubble up – anger, fear, defeat – and hopefully as we practice more – calm, control, and acceptance.
Reacting to emotions is all some of us know. It feels great in the moment, but it’s not going to get us any closer to that headstand, or two million bucks for that matter.
A volatile market is a challenging yoga pose – only much scarier. If we can keep calm, breathe, and focus on the end goal when the going gets tough, we have a higher chance of improvement than if we just react to what feels good in the short term.
3. Risk: Risk is a necessary part of investing. If you don’t take on risk, your savings will barely keep up with inflation – and if you don’t push yourself in yoga you will ever build up strength, flexibility, or the ability to meditate.
But it’s easy to take on risk when you only think about the reward. Earlier last year I decided to up the ante in my yoga practice. I would force myself into forward bends to get my head closer to the floor. Without realising it, I was forcing the disks in my lower spine. I most certainly did realise it the day one popped out through the weakened part of the disk, hitting nerves and causing huge amounts of pain.
I still practice to improve, but I accept that some postures aren’t available to me. It’s just not worth the risk.
I liken this to individual stock picking, market timing, or taking on a high stock percentage for a relatively short-term goal. The rewards may be huge, but there’s a high chance you will suffer financially. If you can’t afford the loss, it’s probably not worth the risk.
4. Identifying problems and making change: Numerous yoga sequences require you to repeat the same action over and over. We often fall into habits without realising it, making it more pronounced every time. For example, when I used to push up into full wheel I would favour my right arm. I’m right handed and have greater strength in the right side of my body. It makes sense… but the more I would favour my right side, the harder it became to build up the strength in my left. Once I identified the problem, I was able to focus on the parts that actually needed the exercise.
It reminded me of this sketch from The behaviour Gap
Image Source: The behaviour Gap
When we react to our instincts we allow them to strengthen. We develop patterns of behaviour that don’t help us to improve.
If you keep finding yourself back in the same old place – buying high through greed and selling low through fear, or not saving enough each month for example, you may be repeating patterns of bad behaviour. You won’t change immediately (see #1) but identifying the problem will help you make change in the future.
So, tell me yogis, how has yoga made you better with your money?