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June 21, 2019

Mindful Investing

To be mindful when investing is to be aware of the impact of your emotions on the investment decisions and also consider the impact of your investment on the world around you.

If you feel fear, joy, hope, impatience, or obsessed when making an investment decision it’s probably a red flag that is signaling that you have not done your homework. It’s probability best to hold off and keep learning.  You should have a complete understanding of the risk reward by having a deep understanding of the business or person you are investing with. As I wrote this a friend sent me an article that does a much better job then I was doing explaining our emotions around money. A must read for everyone. Money: A Love Story.

It’s hard to argue with the fact that human consumption behavior has shaped the world and is the root cause of most of today’s challenges. Every purchase has an incomprehensible effect on the supply chain. A butterfly effect. Certain things are more destructive then others. The level of destructiveness is determined by the resource needed, it’s recyclability and the mindfulness of the person who makes and moves the product.

Our consumption has shaped the world as we know it. Only our consumption can change it.

All business’s respond to demand. The most prosperous ones also create demand. The bad news is we live in a time when the nature of being in business, especially a publicly traded company makes it almost impossible to be socially and environmentally friendly. Every business is dependent on us buying more than we need.  Investors are not likely to buy shares in a company that isn’t consistently trying to grow.  The best we can do is to find the companies that are trying the hardest.

It can be hard find fund managers that are aligned with ones ethics and values.  If you find yourself in that predicament here are a few things to consider.  Buy an ESG (Environmental and Social Governance) index fund.  We all have a little disassociation in our lives so be ok with any imperfections the ESG fund might have.  Also know that the supple chain is interconnected and somehow a company you hate depends on a company you love and vice versa.  If that’s unbearable then buy individual stocks of those companies you know from personal experience are doing the right thing. And if you don’t have the stomach for that then invest in real estate.

The most impactful investment we can make is to buy less and buy higher quality long lasting goods.  In the long run we will have more money a smaller footprint.

Driving around, flying on planes, buying food at the market, ordering fun stuff online, heating and cooling our houses —- our day to day behaviors and decisions encourage a chain of events that effects the environment and shifts wealth to some and away from others.  The greatest effect we can have is through our consumption. Not only are you effecting demand but are starting a powerful domino effect in this age of social media.

“ When you make something, when you improve something, when you deliver something, when you add some new thing or service to the lives of strangers, making them happier or healthier, or safer, or better, and when you do it all crisply and efficiently, smartly, the way everything should be done but so seldom is — you’re participating more fully in the whole grand human drama. More than simply alive your helping others to live more fully, and if that’s business, all right, call me a businessman.” – Phil Knight (Founder of Nike)

We can hold business people accountable to this kind of business!

Despite the short term feeling of inconvenience and the missing surge of dopamine, spending less – beyond our basic needs – ends up being more prosperous and healthy for us, while improving the well being of the world around us.

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Tim Thomas  |  Contribution: 240