Equanimity

Equanimity: Mental calmness, composure, and evenness of temper, esp. in a difficult situation.

Everybody loves March Madness. 68 college basketball teams from all over the country, big teams, little teams, deserving team, and undeserving teams all get a shot at the national championship in a one loss and you’re done tournament. In a 5 or 7 game series, usually the best team will win. In one game anything can happen, especially in college basketball, a game in which one player on a hot streak can change everything. Every year some unknown team of nobodies knocks off a couple of the big boys, advancing to the Sweet Sixteen. Office pools are running all over the nation, as workers waste time choosing their brackets and putting their money down. Even the President of the United States selects his own bracket. I don’t know if he puts his $5.00 down but it would not surprise me to learn the White House has its own office pool.

As the tournament progresses, people holler and yell as their teams win or lose. For a few days every year it seems like the entire nation is on an emotional roller coaster fueled by the performance of 68 college basketball teams. It reminds me a lot of how we react to the stock market. We choose our positions then thrill as they advance, proving our amazing perspicacity or wailing in agony as the fickle finger of fate strikes down our holdings. It couldn’t be we made a bad decision, could it?

Since the dark days of late 2008, early 2009 the market has been on a hell of a run. This increase has been primarily fueled by the Federal Reserve printing money to bail out the banks and driving the interest rates to near 0%. Except for a couple of months of an insane carnival ride last summer after the U.S. lost its AAA credit rating we have been on an outstanding three year run. I find myself cheering my stocks as they reach new highs, as though they were one of my sweet sixteen selections. I find myself tempted to buy something I shouldn’t as my bonds and cash return nearly nothing. People are leaving conservative sectors, like regulated utilities and consumer staples, for more speculative ventures. This is a traditional sign of an impending market top, a time to sell not to buy.

Do I know what the market is going to do? No! My crystal ball isn’t telling me a thing. Equanimity is what we need in investing as well as in other aspects of life. The pagan Stoics understood equanimity was a virtue, as well as the Hindus, Buddhists, and Christians. Why is equanimity so lacking in human behavior? Choose a proven investment style, yes discipline that matches your personality and life condition. Then stick with it. Don’t give in to greed or fear. Just keep on doing the right thing with faith there will be a reward for those who persist. Accept where you find yourself in the present moment even as you work towards a better future, always remembering there are many things that are more important than money.

Philippians 4: (NIV)

11 I am not saying this because I am in need, for I have learned to be content whatever the circumstances.
12 I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.
13 I can do all this through him who gives me strength.