I went for a retreat for 7 days 6 nights
No talking, no looking at the phone during the retreat
Yep, no kidding. I did go for a retreat for one week without looking at my phone in Forest Island, Bali (it was confiscated at the start of the retreat). And all participants were barred from talking to each other. We are not allowed to read books and not allowed to write. Anything that is too stimulating to the mind is not allowed.
To make matters worse, you could take a guess who’s my room mate (all not intended), who I am not allowed to talk to. Go on, take a guess.
Well if you guess Budi Ryan, then you are correct 🙂
Obviously as Recompound Co-Founders, our lives are very plugged in:
to WhatsApp groups (each of our customer has their own private WhatsApp group with us)
to the markets (we have to take a look at the market when we want to buy or sell stocks)
to the internet and AI (need to read a lot, and write a bit of blogpost)
So why are Toby and Budi doing this to themselves?
The short honest answer is because we want to take a holiday (a break) from Recompound. And it is especially timely because during the Idul Fitri period in Indonesia, market is closed and it tends to be more quiet.
Another benefit that we’d like to get from this holiday is a stronger mind.
See, I believe that our mind loves to wonder around thinking about the future, and dwelling in the past. Not fully connected to what’s happening in the present moment. Especially because we are investors. We spend a lot of time thinking about what the companies we invest could become in the future. What’s the price going to be. We also unavoidably spend time dwelling about the past. We should have bought this later, sold this earlier. Hindsight bias tends to be a thing for investors. I don’t think there’s any investor who’s immune to hindsight bias, including ourselves.
So going for this retreat is an attempt to develop a stronger muscle of our mind. Exactly like going to the gym.
So why not just go to the gym to develop a stronger mind? Yes, going to the gym counts as a tool to develop a stronger mind. In the gym we have to focus on progressive overload and focus on feeling the muscle groups that we want to train (back, chest, shoulders, legs). Then a stronger mind that comes out of it is definitely a good bi-product. But I believe there’s an even more specialised tool to develop this stronger mind, which is the main focus of this retreat:
meditation
Yes, so for 7 days 6 nights, Budi and I did nothing but meditation. The retreat fortunately, is designed very nicely for us to learn about meditation step by step. Because I don’t really do meditation at all before the retreat. So it is very noob friendly.
Btw by no means is this an article to ask you to meditate every day. I think going to the gym is great for the body, but I don’t go around and force people to go to the gym. In the same spirit, I now think doing meditation is great for the mind but I will also not go around and force people to meditate ;)
If you are curious about what comes out from the retreat, you could read on. But in this article I will be talking about the core learnings of developing a stronger mind through meditation and how it is extremely related to value investing. It is so friggin related that I wonder if the Founder (Pak Merte Ada) of the meditation retreat secretly read up books on value investing and applied the learnings to the meditation course that he designed some 30 odd years ago.
Hopefully, this article would be helpful to pique your interest to get to know of a tool to actively train your mind to be stronger. Let’s get started.
Four core components of a strong mind
In the retreat, strong mind is communicated as a harmonious mind with four core components. Some people are weaker in one component and stronger in another. So you can choose which core components you would like to train. Really like going to the gym right?
Some people have weaker legs so they can do leg day and do those squats. Others want to train their back a bit more so that they can get that macho V shape look. You get the idea.
Now these 4 components that enable stronger harmonious mind to be developed, I argue, are also core ingredients to be a good long term investor.
First component
First component is focus, or concentration really. During our meditation, when we close our eyes, a key item that we have to do is focus on a single object. That object is usually our breathing. In and out, in and out. If we don’t have a strong focus, we tend to feel other things outside our breathing. For example, the itchiness on the neck. The numbness on the feet. Or the loud sound of birds chirping at the background. When we observe that our focus is scattered, we have to bring it back to our breathing. A single object that we have set our intentions on.
Now isn’t this exactly like value investing?
When we want to analyse a company A for example, we need to direct our attention and focus to one company. There will be temptations or noise from our neighbours about company B, company C and so on. Investment ideas nowadays seem to be quite scattered on social media. Influecer A will say that this stock is good. Influencer B will say another stock is good. As a good long term investor, we’d want to focus our analysis on one particular stock at a time. Because if we hop around (we are definitely guilty of this as we are never perfect investors), the quality of the analysis can get compromised.
So having focus, is ideal for us to understand a company better, filtering out plenty of noise that is circulating out there. With this ingredient developed, we can be a better long term investor.
Second component
Second component is being at the present. In the retreat, this is called being mindful. Because it is no surprise that when we close our eyes and meditate, we would think about what I look forward to eating after I come out from this jail. Or “ah darn it, have I done this or that before coming in for this retreat?”
When we feel that our mind wanders to the past or to the future, we invite it back to be in the present.
Well this is, again, exactly like value investing. We absolutely have no idea what the price of a company we invest is going to be tomorrow. But we tend to think about the future so much.
“Will the stock price plummet because of the war tomorrow?”
“Will IHSG benefit from increase of oil prices?”
“Will government policies like free meals affect foreign investors confidence in the future?”
And don’t get me started talking about thinking excessively about the past.
“Ah, I should have bought more of that stock. It should have 20% allocation instead of 10%!”
“Why did I not sell the stock when the margin of safety is already reduced?”
“I should have never diversified to foreign markets!”
You get the idea 🙂 We tend to think so so much about what will happen in the future and what we should have done in the past. So much so that we can sometimes forget that
“hey we are now invested in a good company, with good management, good product and great competitive edge. We bought it at a good price, but the price has not moved. So we wait.”
Or
“hey the companies that we invested is already priced at a premium by the market. So we can sell now. We don’t have to be greedy about the price going up further in the near future.”
That my reader, is what I learned about developing a more mindful mind which is anchored at present. By anchoring our decisions based on the present moment and the information we have today, we’d develop to be a better long term investor.
Third component
Third component is being gentle. The word that the retreat uses is developing love and kindness. This again makes so much sense because when our minds start to wander, we tend to be hard on ourselves.
“Toby, why are you so easily distracted?”
“Budi, why can’t you stay at present?”
Negative talk is real when we inadvertently fail to focus, and being gentle to ourselves is a potent antidote. Particularly for me, when I notice that my mind starts to wander, I now view it as a training opportunity to bring my mind back to the present and the area of focus.
Again I believe that being gentle to ourselves is vital to becoming a good long term investor. Because investments is never perfect. Things that happens outside of our control can happen both in good and in bad ways. In a good way, the company we invest in can suddenly be acquired by another company and the price could go up like crazy.
It is easy for us to be greedy and forget about our investment thesis when such a positive event happens to the stocks we invest. In a bad way, the company we invest can also underperform relative to our expectations and then the stock price could take a hit. Again, it is easy for us to fearful and forget about our investment thesis.
We can be harsh on ourselves and end up making impulsive decisions. But what I think is more helpful is if we could accept the things happening outside of our control as a given. Then we can treat uncontrollable events as an opportunity for us to respond in a calm and gentle way, instead of treating it as an evidence that we are foolish investors.
Do we buy more? Sell? Or do nothing. With gentleness on our minds, the answers will be a lot clearer than not. With more clarity, I believe this would help us to make better decisions and become better long term investors.
Fourth component
Fourth component is seeing the truth. A man who sees the truth as it is, without adding much salt or sugar on top, is said to be a wise man. In the retreat, there’s one universal truth that we are invited to experience. That truth is the truth of impermanence. Things are constantly changing and in flux. We could observe and experience our breath changes from inhalation to exhalation and then back to inhalation again. We could observe the heat on our chest cool off gently. We could experience the itchiness on our skin that gradually subsides. Everything on our mind and body changes.
When we see that our mind and body is in constant state of flux, we are seeing the truth as it is. We’d grow our hair, we’d grow more muscle, we’d become older and so on. That’s the truth. And when we see this truth as it is, we develop wisdom.
Relating this concept to investing for the long term, the companies we invest are also constantly changing. Their sales would grow or decline. Their assets would get sold. Their debt will get bigger or lower. Their management would change from time to time. Heck their business models can even change. Seeing that a company is like a breathing organism that is never permanent allows an investor to be wiser.
As a result, we don’t have to pretend that we have to be a shareholder of a company forever. If we don’t like the new management or if we are not satisfied with their growth, we can always sell. Or if we think that the company becomes better, gaining more market share, while the price is still well below its intrinsic value, we can always increase our ownership and buy more.
This adaptability and non-attachment, I believe, is developed overtime with a wiser mind. Therefore I believe that seeing the truth (as it is) is also, an essential ingredient to be a good long term investor.
Closing Remarks
Thank you for reading this exposition thus far. I hope that you could see how a long term investor could be better overtime through the lens of a person who practices meditation. It all starts from having a strong harmonious mind.
Are our minds perfect and are we the best long term investors? No and no. Developing our minds to be stronger and our skills to be better long term investors are always a work in progress. There are always others with stronger minds and better investing skills. But we believe that the retreat carries genuine benefit in increasing our resolve to have stronger minds and be better long term investors.
We are definitely not paid to mention the meditation retreat. But if you’d like to challenge yourself to go on for a retreat like what Budi and I did, feel free to check out Bali Usada. If you end up trying them out, I hope that you will find it useful to develop a stronger mind and a healthier body. May all beings be happy!
Cheers.