One of my favorite things to do is listen to a podcast while taking a long walk outside. It helps me clear my mind, relax my body, and learn new ideas. This week, I took a walk (albeit a cold one!) and listened to a wide ranging conversation between two of my favorite thought leaders, Rich Roll and Arthur Brooks. The episode was entitled “Happiness is a Direction” and many aspects of happiness were discussed.

One back and forth really got my attention (around the 40 minute mark if you want to hear it live). Arthur was explaining that much of humans’ unhappiness and stress is driven by our obsession and intense focus on outcomes. We tend to direct our attention towards the end result we want to achieve and reach (whether it be a relationship status or physical appearance) or on factors outside ourselves (like the economy or an election). The main fault in this approach is that we can’t directly control outcomes. Sure, we can take steps to work towards them or do our small part, but more often than not, the exact outcome we are so fixated on never comes to pass, leading to disappointment and a fundamental lack of happiness.

Arthur believes that instead, we should be constantly distinguishing between the things we can control and those we cannot. For items within our control, this is where our attention should go and our actions should be focused. For items out of our control, this is where we need to learn to let go and surrender to the outcome (whatever it may be).

As summarized by Arthur, the “magic brew” of life is a combination of intense action and total surrender.

At this point in the episode, I hit pause and digested that concept as I continued my walk. I came up with several areas of my life where this concept could be applied – and as is my way, I also thought it would be a helpful topic to share with you this week as it relates to investing. Let’s try it out!

Investing & Outcomes

It is very easy as an investor to focus on outcomes. Pick an outcome, any outcome – a certain portfolio balance, a price level of your largest stock holding, a retirement age, a rate of return – outcomes are top of mind for all investors. After all, the outcome is how we can easily gauge our progress. An outcome is how we know it we are on track. An outcome is how we know at a quick glance if we are winning or losing. An outcome is a binary yes/no, good/bad line in the sand. Watch any financial news channel and you will be directed right to outcomes (stock market index levels flashing on the screen, stock prices scrolling on the bottom, charts of market returns for the year, etc). Outcomes, outcomes, outcomes!

Of course, having goals in mind to guide your investing journey is important (in fact I’d argue essential). You need to know where you are going in order to design and develop an investing approach and methodology that will get you there. But focusing on that outcome alone can lead to undue stress and unhappiness. Why? Because none of us – no matter our experience or acumen or confidence – can control the outcome of markets in any given week, month, year, or decade. The outcome is beyond our ultimate control. Focusing on just that can lead to undue stress and reduced happiness.

What’s a more productive place to focus our energy? Let’s look at the two items Arthur suggests

Investing & Intense Action

Fortunately for us investors, there are many actions we can take to benefit our financial lives that are fully within our control. Take a minute and see if you can come up with a few (many of which you are probably already doing). If you need some help, here are some examples

*Career choice and earnings – what career will you choose? Will you negotiate your salary to extent possible? Will you expand your skills to increase your earnings potential over time?

*Cash flow – how much of your salary will you spend versus save?

*Savings waterfall – where you will save your money (ie: in what accounts)

*Return objectives and investment allocation – what rate of return do you need to earn to reach your goals and what will your allocation as a result

*Financial monitoring – what steps and processes will you put in place to track your net worth and savings over time? What advisors will you work with? What questions will you ask of yourself and your advisors?

*Insurance – will you assess your risks and insure against them?

*Estate planning – will you review your personal situation and determine how you can protect your loved ones?

Focusing on these actions with diligence and intensity will help you direct your energy where it is best used. Further, by working on these items (which are within your control), you are far less likely to be swayed and thrown off track by any given outcome. You will feel as though you are making progress in all market environments – because you are doing just that

Investing & Total Surrender

This step is arguably the harder one (at least from my viewpoint). Recognizing all the items you cannot control on your financial journey is a bit frightening. However, for most of us, we must subject ourselves to that uncertainty as the capital we have saved will not be enough to support us in any eventuality without some level of growth/return. Investing is something we must do – so onward we must go!

While it may be hard, it’s important to be aware of the many things impacting our lives as investors that are simply out of our control (market movements, interest rate changes, global politics, global pandemics, elections, wars, our lifespans, our health spans, and many more). By acknowledging them, you can retain your awareness but also recognize your complete inability to dictate their course in any capacity. That level of surrender then gives you the ability to direct your attention elsewhere (see above intense action).

In Summary

I found this simple framework to be really helpful and I know I will come back to it as it relates to my investing journey and that of my clients – as well as other areas of my life. It’s very reminiscent of the Serenity Prayer I’m sure many of you are also familiar with:

God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.

Our financial journeys will never be easy – and they weren’t meant to be. And yet, with any luck, by reframing your financial life and focusing on items you can control, you will be able to find a little bit of serenity and a whole lot of happiness along the way. And while we can’t control it – you may just reach that desired outcome after all.

Onward we go,