“A lot of other people are trying to be brilliant and we are just trying to stay rational. And it’s a big advantage.”
~ Charlie Munger
The Roadmap to Concentration
Continuing with some important takeaways from Erich Fromm’s The Art of Loving, this week I will focus on concentration, which has great application to investing as well all aspects of life. The roadmap to concentration is as follows according to Fromm.
- In order to be able to concentrate deeply, we need to be sensitive to ourselves.
- To be sensitive to ourselves we have to be rational and objective.
- Rationality and objectivity come from humility.
- Humility is a byproduct of deep internal faith.
- Deep internal faith comes from living productively.
- Living productively comes from courage.
Cutting to the chase requires that we all develop courage during our lifetimes. There is a huge return on investment from courage. There is no growth without courage. It is as simple as that. I will write about this in another post as I recently read another great book called The Courage To Be which discusses this subject in great detail.
The key to developing the muscle of concentration, like everything Fromm recommends, is to focus on ourselves first. How do we do this? By being sensitive to ourselves. He uses a great analogy in terms of driving a car to convey his point.
“Anybody, for instance, who drives a car is sensitive to it. Even a small, unaccustomed noise is noticed, and so is a small change in the pickup of the motor. In the same way, the driver is sensitive to changes in the road surface, to movements of the cars before and behind him. Yet, he is not thinking about all these factors; his mind is in a state of relaxed alertness, open to all relevant changes in the situation on which he is concentrated—that of driving his car safely.”
George Soros has said that when his back starts hurting him then this is a signal that something is not right with his portfolio. This is what his son said about his dad:
“I mean, you know [that] the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm and it’s this early warning sign.”
Soros has admitted to relying greatly on
“animal instincts”, saying the onset of acute pain was often “a signal that there was something wrong in my portfolio”.
His decisions, then,
“are really made using a combination of theory and instinct”.
So much for his brilliant theory of reflexivity! It all comes down to back pain. There is a lot to be said for this. The intellect is not the only thing that can give us important signals that something is awry.
We need to pay close attention to what triggers fear, anxiety, procrastination, and other non-life affirming feelings in us so that we can counteract them before they take complete hold of us and lead us to drift off course. This takes a lot of work, honesty, discipline, as well as gentleness towards ourselves since we will inevitably come up short more than we would like.what you resist, persistsClick To Tweet
I have found it highly valuable to periodically check in with my emotional and physical state to see when I am pulling away from things I should be dealing with head-on. As they say, “what you resist, persists” and most of us don’t like what we resist persisting so we might as well deal with it and move past it. One way of helping to defuse some of the power of what we may be fearing or triggering anxiety is to personify it and have a conversation with it. One of the great musical representations of this is Simon and Garfunkel’s Sounds of Silence when they sing in beautiful harmony:
Hello darkness, my old friend
I’ve come to talk with you again
Because a vision softly creeping
Left its seeds while I was sleeping
And the vision that was planted in my brain
Within the sound of silence
Taking the Simon & Garfunkel approach can allow one to form a dialogue with whatever is consuming an individual and take some of the power away from it. It may sound a bit out there but I recommend you try it. I think you’ll be surprised at how effective it can be when you’re feeling anxious, fearful, or finding yourself procrastinating and distracting yourself unproductively.
The song also touches on what the narrator has dreamt. We shouldn’t underestimate the power of dreams and what they may be telling us since they are coming from deep within our subconscious without our intellect being able to filter them or cut them off as they are forming. Fromm thought the messages from dreams (as well as myths and fairy tales) were so important that he had a series of lectures about it made into a book. He deemed these a forgotten language.
Although Fromm says we have to focus on ourselves first to be able to concentrate deeply and ultimately convey love, we can only be successful if we rid ourselves of narcissism and self-centeredness. This can only come about by being ruthlessly objective about ourselves as well as others. From an investment standpoint, this is one of the hallmarks of great investors. They are incredibly rational people and respect markets and how they can be humbled by them. They can also use the confidence and narcissism of others to their advantage by buying when others are fearful and selling when others are greedy.
Fromm also believes that seeing the world objectively, or conversely, not being narcissistic, is critical to being a loving person.
“[T]he main condition for the achievement of love is the overcoming of one’s narcissism. The narcissistic orientation is one in which one experiences as real only that which exists within oneself, while the phenomena in the outside world have no reality in themselves, but are experienced only from the viewpoint of their being useful or dangerous to one. The opposite pole to narcissism is objectivity; it is the faculty to see people and things as they are, objectively, and to be able to separate this objective picture from a picture which is formed by one’s desires and fears. All forms of psychosis show the inability to be objective, to an extreme degree.
In order to be rational and objective, it is imperative that we achieve an attitude of humility. According to Fromm,
The faculty to think objectively is reason; the emotional attitude behind reason is that of humility. To be objective, to use one’s reason, is possible only if one has achieved an attitude of humility, if one has emerged from the dreams of omniscience and omnipotence which one has as a child.”
Charlie Munger has said that one of Berkshire Hathaway’s great competitive advantages is that it is one of the most rational organizations ever designed. One can see how Munger carries this over to all aspects of his life. This is what Charlie Munger said about the importance of rationality:
“What is the central theme that the people in this room represent? I’d argue that it’s rationality rather than to make more money than other people. I’d argue that rationality is a high moral duty. It’s the idea the binds us all together. I think that is a really good idea. It requires that you avoid taking in a lot of the nonsense that’s conventional in your time. There’s always a lot of nonsense in anyone’s time. It requires gradually developing systems of thought that improve your batting average and thinking correctly.”
Fromm would have approved. He thought it was so important that it should be applied in every situation.
“If I want to learn the art of loving, I must strive for objectivity in every situation, and become sensitive to the situations where I am not objective. I must try to see the difference between my picture of a person and his behavior, as it is narcissistically distorted, and the person’s reality as it exists regardless of my interests, needs, and fears.”
And if this doesn’t sound like the hallmark of great investors, then I don’t know what does. Fromm says that objectivity comes from faith, but not an external one, but one rooted within based on one’s convictions.
“While irrational faith is the acceptance of something as true only because an authority or the majority say so, rational faith is rooted in an independent conviction based upon one’s own productive observing and thinking, in spite of the majority’s opinion.”
The best investors are able to think independently and not get caught up in groupthink. They are very comfortable operating outside of the consensus if they believe the consensus has a high probability of being wrong because they often follow their emotions and insecurities versus their intellect and independent thought. The more success one has operated independently, the more one is able to develop the confidence and faith to work from one’s own operating model. This is what Fromm says about this.
“In contrast, rational faith is a conviction which is rooted in one’s own experience of thought or feeling. Rational faith is not primarily belief in something, but the quality of certainty and firmness which our convictions have. Faith is a character trait pervading the whole personality, rather than a specific belief.”
And taken to its ultimate extent to the realm of love and relationships, having a deep faith in ourselves can allow us to become a loving individual.
“Unless we have faith in the persistence of our self, our feeling of identity is threatened and we become dependent on other people whose approval then becomes the basis for our feeling of identity. Only the person who has faith in himself is able to be faithful to others, because only he can be sure that he will be the same at a future time as he is today and, therefore, that he will feel and act as he now expects to. Faith in oneself is a condition of our ability to promise, and since, as Nietzsche said, man can be defined by his capacity to promise, faith is one of the conditions of human existence. What matters in relation to love is the faith in one’s own love; in its ability to produce love in others, and in its reliability. Another meaning of having faith in a person refers to the faith we have in the potentialities of others.”
I have always been impressed by people and organizations who clearly have an advantage but choose not to exploit their power either because it’s the right thing to do or they have concluded it is the best long-term strategy to meet their objectives. Fromm says that we generate rational faith by living productively and not by using or believing in power.
“The basis of rational faith is productiveness; to live by our faith means to live productively. It follows that the belief in power (in the sense of domination) and the use of power are the reverse of faith. To believe in power that exists is identical with disbelief in the growth of potentialities which are as yet unrealized. It is a prediction of the future based solely on the manifest present; but it turns out to be a grave miscalculation, profoundly irrational in its oversight of the human potentialities and human growth. There is no rational faith in power.”
Finally, the road to concentration requires that it begins with courage. I will wrap this post up with the very inspiring words from Fromm about the importance of courage in one’s life.
“To have faith requires courage, the ability to take a risk, the readiness even to accept pain and disappointment. Whoever insists on safety and security as primary conditions of life cannot have faith; whoever shuts himself off in a system of defense, where distance and possession are his means of security, makes himself a prisoner. To be loved, and to love, need courage, the courage to judge certain values as of ultimate concern—and to take the jump and stake everything on these values.”
Ultimately we all come to those forks in the road where we finally decide that the pain of the status quo is no longer bearable and that it now outweighs the anticipated pain of making the difficult decision and the risk that we may fail or hurt someone. When we do something “in spite of” that is when we become courageous and take the actions that lead to growth and positive change, even for those you were fearful of hurting.