The Financial Philosopher

Michel de Montaigne: The Renaissance Man 'Attempts' Wisdom

"I put forward formless and unresolved notions, as do those who publish doubtful questions to debate in the schools, not to establish the truth but to seek it." Michel de Montaigne (1533-1592)

Remember all those essays you were required to write in school?  Well, you can thank French essayist, Michel de Montaigne, for that!  Montaigne, an important humanist philosopher of the Renaissance period, invented the essay as a new genre of philosophical expression. 

The word, essay, means "try" or "attempt" in French and may be defined as short to medium-length pieces that draw on various ideas, including personal experience, to explain rather than prove a position or point of view on a particular subject.  Montaigne called his writings essays because he was experimenting with ideas, trying to see what he could figure out about himself and other people.

Montaigne, like all Renaissance philosophers in general, reconciled new ideas with old ways of thinking and acting.  He made it acceptable to write your ideas even if you didn't know whether they were true, which helped place philosophy on a new track by making it more speculative and less definitive.

Montaigne's views on behavior, emotion, awareness, self-acquaintance, humility, openness, and planning influenced the likes of Shakespeare, Rene Descartes, Fredrich Nietzsche, and Ralph Waldo Emerson and, still to this day, make for some useful words of wisdom applicable to all areas of life, including personal finance and investing:

Behavior / Emotion

"A man who fears suffering already suffers from what he fears."

"My life has been full of terrible misfortunes most of which never happened."

"There is no passion so contagious as that of fear."

"It is the mind that maketh good or ill, that maketh wretch or happy, rich or poor."

"A straight oar looks bent in the water. What matters is not merely that we see things but how we see them."

Awareness / Self-Acquaintance

"It is a sign of contraction of the mind when it is content, or of weariness."

"A spirited mind never stops within itself; it is always aspiring and going beyond its strength."

"Lend yourself to others, but give yourself to yourself."

"I care not so much what I am to others as what I am to myself. I will be rich by myself and not by borrowing."

"I study myself more than any other subject. That is my metaphysics that is my physics."

"A wise man never loses anything, if he has himself."

"A wise man sees as much as he ought, not as much as he can."

"We only labor to stuff the memory, and leave the conscience and the understanding unfurnished and void."

Humility / Openness

"The beautiful souls are they that are universal, open, and ready for all things."

"Stubborn and ardent clinging to one's opinion is the best proof of stupidity."

"There is no conversation more boring than the one where everybody agrees."

"It is good to rub and polish our brain against that of others."

"I quote others only in order the better to express myself."

"He who establishes his argument by noise and command shows that his reason is weak."

"I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly."

Planning

"I know well what I am fleeing from but not what I am in search of."

"Not being able to govern events, I govern myself."

"No wind serves him who addresses his voyage to no certain port."

"Every one rushes elsewhere and into the future, because no one wants to face one's own inner self."

"I write to keep from going mad from the contradictions I find among mankind - and to work some of those contradictions out for myself."

Sources

Stevenson, J.,Ph.D. (2005) , The Complete Idiot's Guide To Philosophy, Third Edition. New York: Penguin Group

Quotes from BrainyQuote

TFPAuthor, Kent N. Thune, is the President and founder of Atlantic Capital Investments, LLC (ACI), a 'fee-only' Registered Investment Advisory firm located in Mount Pleasant, SC.

Why The World Needs Philosophy

"Let no one delay the study of philosophy when young nor weary of it when old."  Epicurus (341 - 270BC)

You may be asking how I could possibly serve justice to such a blog post title and keep it a digestible length.  That's easy:  I'll do the same as any self-professed "philosopher" would do -- make some observations, ask some questions, and give you enough information to stimulate observations and questions of your own...

I consistently stress on this blog that finance is about philosophy and money is about life, rather than the opposite, as others too often infer. At its core, philosophy studies the fundamental relationship of man to existence and existence to man.  Stated broadly, it's about life and the wonder of human experience -- discovering who we are -- both as individuals and as humans...  Yet philosophy goes beyond self-acquaintance.  To know philosophy is to know history and subjects that have emanated from it, such as science, math, theology, sociology, psychology and economics.  Most importantly, philosophy promotes the notion of how to live a better life, which can be thought of as wisdom, and a branch of it's teachings, ethics.  Philosophy achieves its objectives by inspiring us, not only to think but, to think about thinking... 

To keep this post a relatively digestible length, I will briefly cover three broad areas of mankind's persistent struggles with themselves, personal finance, and with the world...

The Struggle Within

I was first inspired to write this post when I recently read the troubling news that teenage suicide rates have risen sharply.  The Food and Drug Administration apparently warned that the use of anti-depressants can cause suicidal thoughts in teenagers; therefore, some psychiatrists draw a correlation between decreasing usage of Ritalin with the increase in suicide rates.   Less drugs equals more suicide?

I have recently been drawn to the idea of "philosophy for children" and I have found no better proponent than The Institute for the Advancement of Philosophy for Children.  Here are some of their thoughts:

It is through education that philosophy can bring about a change of emotional and intellectual dispositions to prepare the next generation to think and act differently in their daily lives in light of new, broader and more satisfying conceptions of existence...

Instead of focusing on answers, such education is concerned with questions...

Philosophy helps us learn to recognize, for instance, the ethical problems and possibilities in our experience, to think through them carefully, to make sound ethical judgments and to take appropriate action.

Young people are profound examples of all of our struggles to cope with emotion.  As teenagers, they are introduced to an array of complex emotions for the first time.  Just as with adults, children need a strong coping mechanism, an adequate perception of an ever-changing world, and a foundation for knowing how to act.  Imagine a teenager, experiencing complex and overwhelming emotions for the first time, finding comfort that their "feelings" are simply part of the overall human experience and, while their experience may be difficult now, their feelings are normal and they will pass with time.  Philosophy will have already given the otherwise troubled teen a fundamental sense of self-acquaintance that includes their own given personal skills and traits but also those of being human.  Perhaps psychiatrists should "prescribe" the "I Ching" before considering anti-depressants...

Personal Finance:

As adults, our struggles within ourselves are similar to those of our children but manifest themselves in adult situations, such as personal relationships and personal finance.  Poor financial health is both cause and effect of the most debilitating of human conditions:

• A "major financial setback" is a known "trigger" for depression, which, of course, can lead to failed marriages or even suicide.
• Money may not be the primary culprit in a failed marriage but what it represents (dependency, control, freedom, security, pleasure, self-worth)  explains why money becomes a dividing wedge in 90 percent of marriages that lead to divorce.
• Those who are fortunate enough to have enough money to "invest" are not necessarily "wise" enough to manage it.  In fact, as humans, we are not wired to be prudent investors.

The simple fact that behavioral finance is gaining in popularity illustrates the demand, necessity, and ability to understand our emotional intelligence as it pertains to investing and personal finance.

World Conflict:  East Side Meets West Side

On a much larger scale, the failure (and hope) to understand and maintain our personal and inter-personal struggles extends to the international level.  Once again, a greater and wider understanding of philosophy could go far to bridge our cultural gaps.

From ancient eastern philosophy, such as Taoism, Buddhism, and Confucianism, to ancient western philosophy and the teachings of Socrates, Plato, and Aristotle, through medieval and modern philosophy, we may gain an understanding of where we are today and why we think the way we think.

Today, undoubtedly, the primary struggle of the world is fundamentally eastern versus western.  A central theme of eastern philosophical thought is "collectivism" or the idea of "the group is greater than the individual."  Western philosophy is quite the opposite, promoting the idea of "individualism," which would say that individual rights and freedoms should form the basis of society. Put quite simply and in a modern context, one can understand why China is communist and why America is a democracy.  Communism and socialism are collectivistic (eastern) while democracy and capitalism are individualistic (western).  If the knowledge and respect of these two basic philosophies were universal, do you feel the international challenges we face today would or could be different? 

Specifically, it is not surprising that more positive results have flowed out of the recent understanding and leveraging of the importance and influence of tribal culture in Iraq than any ground gained from Iraqis gaining the right to vote a few years ago.   Do you understand the fundamental and cultural differences and how philosophy is at the root of understanding? 

Furthermore, while most world citizens can recognize that the ancient Greek belief in many gods (polytheism) gave way to the belief in one true God (monotheism) thousands of years ago, many of those same people may be surprised that the middle-east, where so many of our current Geo-political tensions exist today, is the same place that gave rise, not only to Islam but, to the other great world religions of Judaism and Christianity.  What's more, many still do not know that all three religions embrace the idea of a single, all-powerful God and the belief of the philosophical views of good and evil, justice and equality, and history...

Studying philosophy will not only allow us as world citizens to understand, and potentially appreciate, our differences but can go a long way to understanding our similarities as well...

I said I would keep this to a "digestible length."  I will assume, if you made it this far, your "appetite" for philosophy has not quite been satisfied.  I'll leave you with these words from Ayn Rand:

...but the principles you accept (consciously or subconsciously) may clash with or contradict one another; they, too, have to be integrated.  What integrates them?  Philosophy.  A philosophic system is an integrated view of existence.  As a human being, you have no choice about the fact that you need a philosophy.  Your only choice is whether  you define your philosophy by a conscious, rational, disciplined process of thought and scrupulously logical deliberation -- or let your subconscious accumulate a junk heap of unwarranted conclusions, false generalizations, undefined contradictions, undigested slogans, unidentified wishes, doubts and fears, thrown together by chance, but integrated by your subconscious into a kind of mongrel philosophy and fused into a single, solid weight:  self-doubt, like a ball and chain in the place where your mind's wings should have grown...

For the entire piece, take a look at Ayn Rand's 1974 speech to West Point graduates, "Philosophy -- Who Needs It?" (hat tip to TraderFeed).  I highly recommend it...

Philosophy alone can not solve all of our personal challenges, or those of the world, but it can go a long way in understanding those challenges, which is a wonderful place to begin...

TFPAuthor, Kent N. Thune, is the President and founder of Atlantic Capital Investments, LLC (ACI), a 'fee-only' Registered Investment Advisory firm located in Mount Pleasant, SC.

Plato: The Philosopher King

"Moderation, which consists in indifference about little things, and in a prudent and well-proportioned zeal about things of importance, can proceed from nothing but true knowledge, which has its foundation in self-acquaintance."  Plato (428 - 348 BC)

If I were forced to sum up the key to a meaningul life and, specificially to investing and personal finance, in one sentence, that quote from Plato would be it.  In one sentence, the wisdom brillantly captures three absolutely necessary qualities of the prudent investor:  Moderation, Emotional Balance, and Self-acquaintance (knowing yourself)...

As the other financial blogs begin the nail biting over the Fed's next move, we'll turn our focus to timeless wisdom for strength and perspective.  This week's "focus on philosophy" features the great Plato...

Plato may be the most important of the ancient philosophers.  He was the bridge from his mentor, Socrates, to his contemporary, Aristotle and is arguably the greatest philosopher that ever lived.  His influence is enormous in Western culture.  I could dedicate an entire blog to Plato but, to whet your appetite for learning more about "the philosopher king," here are some key points to know:

• Plato, who lived in ancient Greece, was the first philosopher to take all the main aspects of philosophy -- being, knowing, and acting -- and put them together in one coherent system.
• He was interested in politics as a young man but shifted toward philosophy when he came to believe that politicians did not think clearly enough about the proper relationship between order and the ideal truth.  He became especially disillusioned with politics when Socrates was forced to renounce his philisophical beliefs or die:  Socrates chose to die.
• Plato believed that the world would be a better place if "philosophers become kings" because they are unselfish and look to the good of all people.
• He theorized a republic divided into three classes of people:  rulers, soldiers, and tradespeople.  Of course, the rulers were philosophers!  This ideal world (and much of his best-known work) can be found in Plato's The Republic.
• A key aspect to Plato's thinking is the idea of the idea.  To Plato, ideas are forms that give their shape to ordinary reality.  What's more, they are always right.  It's the physical world -- the world of becoming -- that can be mistaken.
• Plato is often called a rationalist -- someone who believes we can know true ideas without ever learning them from experience.

In my view, to know Plato, or any philosopher, is to know their words of wisdom.  Here are some of my favorite quotes from the philosopher king.  Please give them some thought -- both as applications to investing and personal finance, but also to your life as well:

"A good decision is based on knowledge and not on numbers."

"Courage is knowing what not to fear."

"Excess generally causes reaction, and produces a change in the opposite direction."

"Necessity... the mother of invention."

"One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."

"Opinion is the medium between knowledge and ignorance."

"The most virtuous are those who content themselves with being virtuous without seeking to appear so."

"To prefer evil to good is not in human nature; and when a man is compelled to choose one of two evils, no one will choose the greater when he might have the less."

"Your silence gives consent."

"We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light."

"Wise men speak because they have something to say; Fools because the have to say something."

"Wonder is the feeling of the philosopher, and philosophy begins in wonder."

If you are interested in learning more about Plato and the evolution of Philosophy itself, a wonderful place to begin is the primary source for the information in this post:  The Complete Idiot's Guide to Philosophy, 3rd Edition.

Have a nice week.  I'll be back with a narrative post on the financial markets soon...

TFPAuthor, Kent N. Thune, is the President and founder of Atlantic Capital Investments, LLC (ACI), a 'fee-only' Registered Investment Advisory firm located in Mount Pleasant, SC.