People often learn about Abacus Wealth Partners through Lion’s Roar, a publication that focuses on the benefits of mindfulness and meditation practice. The readers of this magazine who contact us are usually seeking a financial planning and investment management firm that shares a genuine connection with the Buddhist philosophy. I usually fumble in my attempt to explain how this philosophy can be applied to a person’s investment strategy.
Dang Hippie Advisors
Portfolios like ours are not socially conscious enough to satisfy the demands of the socially responsible investment (“SRI”) devotees. And to folks on the other end of the spectrum, the mere mentioning of words like “sustainability” or “impact” are tantamount to using tarot cards to make investment decisions and meditating as a response to bad market days (the latter isn’t such a bad idea).
I like to think that ours is the “middle way” of investment strategies. The Middle Way in Buddhism came from Buddha’s realization that his self-denying and strict lifestyle had gone too far, much like his time living in a palace had been too sheltered and luxurious, and that a path that encompassed both extremes would lead him to his goal of enlightenment.
With the Abacus brand of impact investing, we avoid the pure path of 100% denial of “bad” companies, and instead, tilt our clients’ portfolios towards companies that are more environmentally conscious than their industry peers.
My Buddhist(ish) Guide to Financial Nirvana
Wisdom: I’ve always loved the serenity prayer, which directs us to accept the things we can’t change (like the markets, the economy, or the tax code), have the courage to change the things we can (like how you earn, spend, give, and invest your money), and the wisdom to know the difference. If one can master this art, Wall Street’s shenanigans will have less power over the investor’s peace of mind and may just lead to equanimity (see below).
Awareness: Brent Kessel’s book, It’s Not About the Money, introduces eight financial archetypes and a financial archetype quiz to help discover which ones are dominant in you. This is a tool that helps people to recognize their dominant and dormant tendencies with money, and teaches them how to change their relationship to it by cultivating more balance. People who have a tendency to move to cash in a market correction, are afraid to spend, or don’t save enough would benefit greatly from this book.
Simplicity: Investing doesn’t need to be complicated to work well. No magazines, CNBCs, or blogs (except mine) are required – reasonable goals, the discipline to save, the patience to stay put, and a low cost globally diversified sustainable portfolio is likely all you need to end up with financial sufficiency.
Generosity: Carve out time, energy, and money for the causes that touch your heart every year, no matter what. Be a bold giver this year.
Equanimity: A little fear is ok. It’s the panic that worries me. Investors who are able to control their fear and aren’t reactive during market corrections tend to do better over the long haul. Jumping out of the market during a correction is the single biggest recipe for disaster.
Non-harming: What about socially responsible investing (SRI)? Currently, the only way to have a portfolio of companies that is perfectly integrated with a person’s values is to build it with individual stocks (as opposed to, say, mutual funds). Such a portfolio is likely to suffer from poor diversification and increased costs. And it’s arguable that disowning a “bad” company stock won’t affect their revenues or change their behavior.
Consumers, however, can change the world through their spending choices, petitions, boycotts, and more. Take Sea World (no really, please). The marine life theme park saw a sizable drop in attendance in 2013 as a result of the passionate response to the Blackfish documentary and all that it entailed. Heck, my mom, a once die-hard Sea World goer, is done with them. And recently, some well-known music artists have canceled their Sea World performances. Time will tell what this does to benefit marine life, but for 2013, their stock has gotten clobbered. And my instincts tell me that this will have happened because of consumer, not investor, behavior.
If you own thousands of companies, your ownership in any one of them will be tiny. I encourage my clients to shift from a strict vision of a portfolio with no “bad” stocks, to the middle-way approach we take at Abacus, and the good that can be done with the potentially higher returns.
May all beings be happy. May all beings be free. May all beings have a great investing experience.
The opinions expressed are those of the author and are subject to change without notice in reaction to shifting market conditions. This blog is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.