Faith and investing have many common denominators.
Investing is a counterintuitive action. In order to succeed, you have to be greedy. In order to survive, you have to be patient. Only in restraining your passions and lusts can you truly realize the goals those passions aim to fulfill.
Why do so many smart people fail at investing? Why are there so many Harvard MBA's who are crying in their martinis because, while their report on corporate restructuring got them promoted to senior Vice President, their stock portfolio just collapsed? Aren't they supposed to be smarter?
It took me over ten years to figure it out, but successful investing has little to do with intelligence.
Investing is about buying low and selling high. It takes patience to wait and "not buy" the stock until it hits a comfortable bottom. It takes poise to hold onto the stock as you are making money. It takes vigilance to resist the urge to borrow against your life savings to buy more shares. It takes faith and gratitude to be content with what God has just blessed you with and to sell while the price is still high.
Unfortunately, we all get overemotional about stocks. Instead of staying calm and acting with our heads, we act recklessly. We do it in the hopes of becoming the next Warren Buffett -- by week's end.
When I see my stock investments are rising or falling rapidly, the first thing I feel is raw emotion. All I can think about is either buying more stock on borrowed money, or cutting these holdings loose as quickly as possible. Before I act on my emotions, I remember to detach myself from the "urgency" of the current situation. I do this by utilizing simple faith.
Judaism doesn't simply require a Jew to believe God exists. The Torah demands that we recognize how God exists in everything that we do. Nothing exists or happens without His active will. Every action in the world is His Divine work. Every beat of my heart is a Divine gift directly from the Almighty.
Every second God is making sure my brain, eyes, blood vessels, nerves, and organs are all working in perfect order.
God is also the moment-to-moment source of my livelihood.
Whenever I need to clear myself of too much emotion, I remember two basic principles of faith:
1) The amount of money I will make this year has already been determined on Rosh Hashana. The rest of the year is about God executing His judgment -- and not changing it. (Of course I need to put in my effort and earn it.)
2) Nobody in the world can take away a cent of what was predetermined for me by God (except for myself).
3) If you look at the history of stock markets, you will find that markets behave the same way today as they did centuries ago when the first stock was issued. The reason for this is that human behavior, which dictates the movements of the markets, doesn't change. The same emotions, passions, and lusts that guided investment behavior during the Dutch Tulip craze in 1637 are no different than the "wild card" human factors that guided the markets through the internet and housing crazes of the last 10 years.
Controlling our passions is the key to success in both spiritual happiness and material endeavors.
Spiritual growth is about regulating oneself to better connect with Something Higher. It is about controlling your baser instincts and re-channeling them towards a more productive existence.
In the Shema we are commanded not to stray after our hearts and our eyes. When we want something, we can't lose control. We can try to attain it in a kosher manner -- as long as what we want is something Holy. However, we are not allowed to follow our hearts -- the seat of human passion -- to get what we want. We must instinctively develop an ability to keep all of our emotions in check -- especially the counterproductive ones.
When it comes to subduing ones arrogance and lust, one has to control his body, his eyes, his heart -- and even his mind. In today's world, the stimuli which encourage all of our counterproductive instincts are immense. In order to so much as keep our whole being free of impurities, we have to exert ourselves constantly.
This is the tremendous opportunity of today's world. In having to resist so many temptations to stray after our hearts, the behavior to police ourselves and control our emotions is repeated hundreds of times a day. We wind up practicing our emotional refinements so much that the very act of controlling our baser selves becomes an instinct.
Gordon Gecko was right -- greed is good, as long as it is controlled and channeled. As long as one's greed remains an uncontrollable lust, then the next time we see a 'can't miss' stock, we will put everything we have into it. While the uncontrollable urge for greed can triple our money in less than a month, the reckless disregard for risk can wipe us out just the same.
If you are in control of your emotions then a 'greedy' position is one where you will appreciate the gain, but will not be wiped out by the loss. After riding the roller coaster of the past nine months, I meditate on this metaphysical reality: Faith and calm will win out over emotion and panic in this business.
Then I take a deep breath and get back to work.
David Fink writes a newsletter, RealWealthRecon.com. This August David and his family will be moving to Israel.