(Forbes) - What the heck does meditation have to do with being a great investor or even a better investor? Studies have shown that it could ease anxiety and help you better manage stress. But do not take my word for it.
Search Google and read one of the approximately 17 million posts. How you handle stress in the stock market could relate to your success as an investor.
Investors were harshly reminded of that during the turmoil in the stock market at the end of 2018. How you, as an investor, handle stress can drastically change your reaction to hysterical headlines about the economy or even small volatility in your investment accounts.
Investing is not just about picking the best investments. It is about how you handle the investments and use them to reach your various financial goals. Those could be things like making work an option, buying a home, sending your kids to college without crushing student loans and taking a vacation.
In his book, The Behavioral Investor, New York Times and USA Today bestselling author Dr. Daniel Crosby aims to provide “the most comprehensive guide to the psychology of asset management ever written.” Crosby is dreaming big and has come a long way towards reaching his goals.
As a money nerd and financial planner, I love this type of book. For the typical person who hates to think about money, this may be a bit tough to get through.
Here are three ways meditation man help You make better investment choices:
- Avoid Rash Decisions
Crosby claims, “Bad news in the stock market is more common than your birthday.” After reading a bad headline about a company, it may seem smart or rational to run out and sell the shares of stock you own. However, if you were a meditator, your reflexive and reactive thinking would likely be slower. You would likely be more responsive than reactive. Instead of immediately reacting to a headline and making an emotional choice that might negatively affect your financial future, you might have more space between the time you read the news to making a decision. For example, you would likely respond, instead of immediately react, to the headline by carefully considering your options and then making the best decision for you and your financial goals.
- Reduced Anxiety
Investing can be stressful, but it does not have to be. Logging into your accounts numerous times a day certainly will not make your investments grow, but it will likely increase your anxiety and odds of making dumb investing mistakes. That is where being a meditator could help. Meditation has been shown to help reduce anxiety, lessen depression and even decrease pain. Plus, if you are busy meditating, you will be unable to constantly check your investment performance.
- Reduction in Greed
This was one of the most surprising revelations to me. Greed has led many people to make terrible financial decision over the years. According to research profiled in his book, Crosby claimed “the parts of the brain associated with greed, expecting and anticipating reward, are actually less active in the minds of those who meditate.”
Crosby asserts that meditating can reduce your desire to make poor financial choices. Think of falling into the trap of investment bubbles or making risky investments with the hopes of receiving better, and larger, investment returns.
You do not need to be some hippy-dippy person in order to meditate. The list of famous and successful people who meditate might surprise you. People like Madonna, Oprah, Hugh Jackman, Lady Gaga, Jerry Seinfeld, even most of the Beatles, sit regularly. The list of powerful and successful billionaires, and mere multi-millionaires, is quite impressive as well.
Beyond the financial benefits, there is a growing list of research that indicates meditation has many health benefits. That is beyond my scope of expertise, but I will leave you with this re-quote from the book.
“If it’s (meditation) good enough for Ray Dalio, Paul Tudor Jones, Blackrock, Goldman Sachs (all of whom have meditation programs in place for employees) and literally billions of practitioners worldwide, maybe it’s worth considering.” – J. Voss in Meditation for Investment Professionals
