From Ray Dalio to Bill Gross – the most famous people in the management of investment funds practice meditation.
At the conference, which was held in Washington last week, Dalio told how his meditation practice improved the results of his investment activities. Jortune University, at the same conference, announced that he would offer this discipline as a semester lecture at his business school.
Investment managers often joke that the biggest obstacle to profit is customers themselves, because they make emotional mistakes. The truth is that all investors, big and small, have common features that become an obstacle to the right choice.
Meditation, which uses breathing and relaxation exercises in an attempt to bring peace and clarity to our usually chaotic minds, can bring some help.
“Meditation in my life was the most significant factor in my success,” said Dalio, founder of the $ 130 billion hedge fund from Bridgewater Associates, in an interview in Georgetown in October. “(Meditation) allows me to focus, it gives me the opportunity to look at things without the influence of ego and emotional bias, which gives me some clarity.” The king of bond trading Bill Gross of Pimco also said that he leaves the trade hall every day for yoga and meditation.
Dalio says that the practice has benefited him in generating creative thoughts and in evaluating and responding to a huge number of stimuli that put pressure on the money manager every day.
Some financiers engaged in meditation, believe that it helps them cope with information overload, not only in the sense of maintaining calm, when events get out of control, but also able to show the most significant pieces of information in such a maelstrom. p >
Zen, Ego and Behavior
The attraction that some investment managers find in meditation is that it creates a state of mind in which they are less at risk of falling into expensive and doomed patterns of thinking.
The so-called “confirmation bias”, the tendency of a person to confirm the information that corresponds to his beliefs / prejudices, regardless of their truth, is one of the most common mistakes made by financial managers. Confirmation bias is partially derived from the ego, the desire of a person to be right in a publicly supported position. A person begins to identify with his ideas and assumptions personally, and it is too difficult to refuse them, even if it is clearly seen that they are wrong.
At the same time, one of the statements of meditation is that it allows people to accept reality as it is. This probably reduces the pain of accepting one’s own fallacy.
“Meditation helps with prejudice,” says Jason Voss, a former investment manager who has written a book on meditation and investment and who now works at the CFA Institute. “You are trying to remove all the filters from your thinking so that you can see reality as clearly as possible.”
Philip Yim Kwon Chen of an Australian Catholic university suggested in a 2010 article in the Journal of Behavioral Finance that unconscious thinking, which meditation is meant to ease, can help limit self-confidence, a feature that is common among financial managers and that leads to wrong financial decisions. The results of meditation are difficult to quantify. On the one hand, many practitioners say that meditation increases creativity, but on the other, it is almost impossible to prove. Creativity has tremendous significance in a world filled with funds that do more or less the same and have more or less the same results, but it is much more difficult to demonstrate the direct connection between meditation and creativity. This may be because calm people are more capable of creativity than excited ones, or in turn it may be that meditators erroneously attribute their good ideas to this practice.
The lack of data is probably the biggest obstacle to assessing the impact of meditation on investment performance. In addition, this is likely to be the reason that we probably will not see meditation as a common marketing strategy among fund managers in the near future.
Meditation is likely to continue to spread among investment managers in the same way that it spreads in the rest of society — from hand to hand — like what people find useful.
James Saft for Reuters, ACFX Translation