Yoga and Investing
Is there alignment between meditation and investing?
As Patanjali's Yogasutras describes, true yoga is the cessation of all thought. That does not mean you should aspire to be an unassuming, mindless log, not worried about anything that comes your way. Perhaps this quote helps: "The conjunction between the seer and that which is seen is the cause [of suffering] to be avoided." Yoga is about stopping this misidentification of the seer (your true self) and the seen (fleeting events, emotions, etc. that we inherently identify with). It’s about moving away from thoughts like I am my anger.
How do you separate the things we typically consider to be part of our life with this true consciousness? I'm honestly not too sure. The Yogasutras have been a very difficult read so far, and as I read more, I get more questions than answers to current questions. What I can tell this whole practice is getting at thematically, though, is the ability to separate what we so conventionally consider part of our lives – part of us. Get rid of the anger you hold at someone for hurting you, the jealousy you hold at someone who considers you a friend for doing better than you, etc. I never really thought about it, but it is our perception of these emotions that forms part of us. Well, it is our perception and perhaps also our intent to act on them – to respond, or to continue to feel a certain way. If you seek the end goal of yoga, then you don't understand yoga itself. You achieve yoga through dispassion – almost disconnecting yourself from these things that historically you have spent so much time associating with and, by product, identifying with.
To most (myself included), much of this is almost a touch too unrealistic. Let's think about this in terms of public markets then. Markets are inefficient because people are emotional, impatient, and often wrong. This leads fundamental investors to learn information that they do not believe is priced in and invest (or not) accordingly. Investors have some idea of how long they think that information will take to be priced in, at which point they ideally exit their position. I view public investing in the market in a similar way to someone trying to learn the practice of yoga.
The market is full of distractions. It really is an aggregation of [identifications and] misidentifications people and firms have about the information on a company. This makes it very easy for teams to read a stream of news, for instance, and mistakenly adjust a view on a company. The analogy to yoga comes from learning how to clear out the noise. This may almost sound too cliche – everyone knows that your alpha comes from differentiating between useful information and noise. If you start with the philosophy of yoga (understanding how difficult it really is), then you can visualize how difficult good investing is. I think there are several orders of magnitude between the perception of good investing and true good investing.
As I mentioned earlier, aspiring to a specific end goal in yoga is almost antithetical to yoga itself. How do you reconcile this with the fact that investing has a clear goal? Find the information that changes this company's story for the market. I think the right answer is the purpose of investing may not be to chase outcomes, but to pursue understanding. It's through exploration that you naturally learn a company's story. When you understand the story of the company, then you can see if the market believes that story or not. This is very much Expectations Investing-esque. In practice, this seems almost identical to how I first described investing (finding a source of alpha). Here, the most meaningful difference is actually the whole framing of the problem. Investing is a truth-seeking process. That seems far more like yoga, a truth-seeking process of the mind and the body.
Companies are just teams of people. What patterns do they have? How do they like to operate? Why do they respond to challenges in the way they do? If you seek to be an investor, then maybe you can't be a great one in the first place. I think that even great investing careers can have enough embedded luck where it genuinely becomes hard to tell if someone got lucky, was smart, or was truly smart enough. If you want to seek truth as a ground rule, then maybe you can be a great investor. This is like how seeking enlightenment never gets you there. I'll have to look into it, but I would be surprised if many of the best public investors of the last 2–3 generations had very different initial plans about their lives.