Build Your Investing Philosophy With Stoicism

“The more we value things outside our control, the less control we have.” – Marcus Aurelius, Meditations

If there’s been one theme to my writing as of late, it’s been economic volatility, be it real estate prices skyrocketing, coming back down, rents skyrocketing then falling like a rock, rampant inflation, banks failing, the office real estate market falling apart, or the specter of another 2008-like real estate collapse and deep recession. Volatility has been the name of the game since at least the beginning of the pandemic.

Indeed, most economists have been predicting a recession for some time in 2023, while consumer confidence is significantly below where it was in early 2022. Even prior to Covid, rates of anxiety had been increasing substantially in the United States. One paper found that whereas 5.12% of American adults experienced persistent anxiety in 2008, 6.68% experienced it in 2018. And that was before Covid. The American Psychological Association found that in 2022, “Inflation was reported as a source of stress for the vast majority of adults (83%), and the majority of all adults also said the economy (69%) and money (66%) are a significant source of stress.”

It shouldn’t be a surprise then that even after Covid has abated and the lockdowns and mandates mostly removed, the United States is experiencing all-time highs in drug overdoses and other “deaths of despair.”

Obviously, there are political issues at play here that this article will make no attempt to resolve. However, for each of us as individuals and more particularly as real estate investors trying to invest in a volatile market, much of this stress and uncertainty can be alleviated by turning to a philosophy first elucidated in Hellenistic Greece some 2300 years ago, namely the philosophy of Stoicism.

Ancient Stoicism vs. Modern Stoicism

“There is only one way to happiness and that is to cease worrying about things which are beyond the power of our will.” – Epictetus, Enchiridion

Today, when someone says the word “stoic,” they are generally referring to having a stiff upper lip or showing no emotion whatsoever. This is a complete mutilation of what the Stoics actually taught, however. Stoicism is not about showing no emotion but is instead about how you choose to process what is happening in your life, what happened in the past, and what may happen in the future.

Stoicism was founded by Zeno of Citium in the third century BCE. However, most of his writings have been lost. The most prolific and influential Stoic philosophers whose works have come down to us are Cicero, Seneca, Epictetus, and Marcus Aurelius, all from Ancient Rome.

The last two men show how wide-ranging the utility of Stoicism is. Epictetus grew up a slave, and Marcus Aurelius was the emperor of Rome. Marcus Aurelius summed up Stoicism as well as possible in his personal diary, which later became one of the most famous and influential books of all time and is still well worth reading today: Meditations.

“Two points in the Stoic system deserve special mention. One is a careful distinction between things which are in our power and things which are not. Desire and dislike, opinion and affection, are within the power of the will; whereas health, wealth, honour, and other such are generally not so.”

The Will in Stoicism is the only thing we actually control. We can make wise choices, of course, but we cannot necessarily control the outcome. Indeed, this anticipates modern research on the benefits of process-oriented thinking versus goal-oriented thinking, a subject I’ve touched on before. As one study found regarding college students, “Results indicated that process simulation enhanced studying and improved grades.”

Of course, the goal of process-oriented thinking is to do what’s right and let the results fall where they may. The Stoics themselves inculcated this type of thinking by emphasizing the importance of mastering the four virtues: Wisdom, courage, justice, and moderation. Mastering these virtues is all that matters. As Matthew Van Natta explains in his book The Beginners Guide to Stoicism,

“When Stoics say, ‘virtue is the only good,’ they mean it. Stoics place everything else, everything that isn’t a moral opinion, thought, or action, into a category called the ‘indifferents.’ This isn’t an emotional category to be confused with ‘indifference’; you are never asked to disengage from life. Categorizing everything outside of our control as an indifferent says you recognize that such things, in themselves, can’t provide lasting happiness. Still, you live life and have to make decisions about how to live your life. Stoicism says that there are things that, all being equal, it would make sense to prefer over others. Health and physical well-being over illness, for instance. They call those things that usually benefit us preferred indifferents and things that are often detrimental to people as dispreferred indifferents.

Here’s a list of indifferent things given by Epictetus:

your body
your property
your reputation
your job
everything else that isn’t your own doing”

Yes, even your body is “indifferent.” We cannot will ourselves to be healthy if we are sick, nor will a broken leg to be healed. And while such conditions may make it more difficult to be truly happy, it doesn’t prevent it.

In the end, it is within the power of our own will to decide how we choose to feel toward such challenges. And as the quote from Epictetus that began this section shows, happiness can only come if we “cease worrying about things which are beyond the power of our will.” Even if those things include losing our job, going bankrupt, going through a breakup, or becoming disabled.

For Stoics, the goal is to train the mind to choose happiness and tranquility, whether your circumstances are good, bad, or in between. It’s not to be blind to however dire your situation may be but to learn to find happiness regardless. This is a skill to be learned that can greatly improve everyone’s mental health, happiness, and outlook. Again, from Matthew Van Natta,

“I have asked you many times to divide things into what is in your control and what is not in your control. That exercise separates you from indifferents. As you grow in that practice, you will understand the things you do not control also don’t have to control you: Your opinions, thoughts, and actions are yours to choose, and no one and nothing can influence them without your consent. This will change your relationship to indifferents; you’ll find that their value isn’t found within them but is based in how you choose to use them.”

It may sound difficult to learn to find happiness despite your circumstances, but as with all things, it is a skill to be learned and honed. Even a marginal improvement in focusing on your will—for example, what you control—instead of what you can’t control and choosing to act virtuously will prevent circumstances from controlling you and dictating your state of being.

For an extreme example of this, take Diogenes, a contemporary of Zeno and the founder of the Cynic school of philosophy. Ancient Cynics had as much to do with the modern word “cynic” as ancient Stoics with the word “stoic.” Instead, the Cynics practiced a more extreme and rather flamboyant version of Stoicism by forgoing virtually all material comforts to prove happiness came from the will alone. This was a point Diogenes made rather succinctly by sleeping in a large clay jar each night in Athens.

Compared to that, who could complain? Indeed, we should remember that when we compare our lives to just about everyone who’s lived before us in human history, probably just about everybody reading this article falls within the top 1% in terms of freedom, wealth, and the benefits of modern technology.

Yet despite the wealth of our modern age, the rates of depression and even suicides are on the rise. Certainly, wealth and technology are not enough to create human flourishing.

Inner vs. Outer Locus of Control

“Well-being is attained little by little, and nevertheless is no little thing itself.” – Zeno of Citium

Even for those who haven’t read the Stoics, this concept may sound familiar. More modern thinkers such as Viktor Frankel noted in his classic Man’s Search for Meaning that “between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”

This concept was picked up by Stephen Covey and made famous in his book The Seven Habits of Highly Effective People. In that book, Covey discussed the importance of staying within your “circle of influence” and less so with our “circle of concern,” where we have no real influence.

Indeed, it shouldn’t be surprising that Covey himself noted modern success literature “was superficial.” In the past, it had focused on a “Character Ethic” that showed there were “basic principles of effective living, and that people can only experience true success and enduring happiness as they learn and integrate the principles into their basic character.” But in more recent times,

“…the basic view of success shifted from the Character Ethic to what we might call the Personality Ethic. Success became more a function of personality, of public image, of attitudes and behaviors, skills and techniques, that lubricate the processes of human interaction.”

Fortunately, recently there has been a shift back in the other direction to see one’s character as centermost. Studies have found that those with an inner locus of control (versus an outer locus) who believe they are responsible for their life’s outcome (instead of, say, luck, fate, “the man” holding you down, etc.) are happier, healthier, and wealthier. The Stoics take that concept one step further by removing the importance of outcomes entirely.

Modern research has also shown the importance of being present and not focusing too much on the past or future (both of which are “indifferents” to the Stoics). Studies have shown that focusing too much on the past has negative psychological consequences. As Marcus Aurelius said, “give yourself a gift, the present moment.”

All of this ancient wisdom has been integrated into cognitive behavior therapy, which quite literally was inspired by the ancient Stoics and has become “the gold standard of psychotherapy.”

Applying Stoicism to Real Estate Investing

“We suffer more often in imagination than in reality.” – Seneca, Letters from a Stoic

Real estate investing, like all investing, is fraught with risk. Risk inspires fear in even the most stalwart among us. Furthermore, many investors, particularly new investors, struggle mightily with paralysis by analysis. And almost all of us live with many regrets, both personally and professionally. In real estate, you will always eventually buy a deal you shouldn’t have or screw up in some way, shape, or form. You will lose money and perhaps a lot of it.

Regrets, analysis paralysis, and fear in general are all indifferents, though. When you make peace with the fact that you cannot know the future and cannot know if a deal will go poorly or if the market will crash—anxiety and fear fade away.

When you accept that you can choose how you will respond to such events if they come to pass, that you can choose to be happy and act virtuously even if your fears become a reality, such fears take a backseat in your mind.

Yes, it takes practice, and no one will ever master it completely (other than perhaps Diogenes and his jar). But every step closer make life all the more pleasant and you all the more courageous.

We moderns don’t do ourselves any favors by ignoring the wisdom of the ancients. And there’s no better place to start in regard to such wisdom than by studying the Stoics and integrating their philosophy into our lives.

For those interested in learning more, several modern books are worth reading:

And, of course, the ancient classics:

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