(upbeat music) - Welcome to the "Bogleheads Chapter Series." This episode was jointly hosted by the New York City and San Antonio Bogleheads Chapters and recorded August 24th, 2022. It features a discussion on the philosophy of stoicism and concepts of behavioral finance. Bogleheads are investors who follow John Bogle's philosophy for attaining financial independence.

This recording is for informational purposes only and should not be construed as personalized investment advice. (upbeat music) - What we're showing here, is that clear to everybody? Great, great. Well, thank you for the introduction, Miriam. And also thank you, Jim, Lady Geek for the help and getting this all set up.

So yeah, what we'll be presenting on today is stoicism and behavioral finance, right? So one of the first questions is, how can stoicism benefit your personal finance goals, right? The connection between stoicism and finance concepts can help us achieve our personal finance goals and peace of mind, right? So this is kind of why we're here, right?

And why we're presenting on this topic. So one of the ideas behind this is framing to help us make good financial decisions, even in turbulent markets. And one of the key ideas here is the idea of framing, right? Another big concept within stoicism is the idea of focusing on what is in your control and differentiating between what we can change and what we cannot.

You'll hear what is in our control, that's something you'll hear a lot when people are talking about stoicism. Another idea here, which is kind of related to framing, right, is appreciating what we have more than feeling of misery over what we don't have, right? So learning appreciation. Another is focusing on putting in our best efforts rather than defining success by the outcome.

So the idea here being focusing a little bit more on the process rather than explicitly on results, right? Another idea here is kind of learning to control your reaction rather than letting the outcome define our experience and our reaction. And then also in finding strength and tranquility through objectivity and rationality.

So a lot of these ideas you'll kind of hear us reiterate throughout this presentation. And then another idea is to identify biases to help us make better choices. And then another big idea is understanding loss, aversion. Next, Guri is gonna walk through the agenda. - Fantastic, thank you, Luke.

And similarly, thanks to the many people who helped make this possible. - Guri, could you raise your volume, please? - Sure, sorry, my mic was far away from my mouth, thanks. So similar to Luke's comments, many thanks to the team of people who helped make this possible. So as Luke mentioned, I'll cover the agenda.

He just covered item number one here, which is how stoicism can benefit you with your personal finance decisions. Following this slide, I'll cover three early contributors, three Roman contributors to Stoic philosophy. Luke will cover some similarities between Stoicism and Boglehead philosophy. He'll also cover a metaphor of a greyhound and a rabbit and the takeaway lesson to that.

And Luke will also cover, interestingly, Seneca, one of the early Roman contributors and a prolific writer, wrote to his friend a letter called "On Retirement." And so Luke will cover that. We'll cover an intro to Stoicism really high level for folks who aren't yet familiar with it. Luke will cover mental impressions and objectivity and through a working diagram, walk through a practical application of a lot of what we're talking about.

Luke will then cover some of Jack Bogle's overlay on emotions and reason. And then I'll cover five slides on the philosophy of Stoicism in a little more detail. There's so much depth to Stoicism, but we want to keep it somewhat digestible. So we'll cover some foundational concepts there. And from that, we'll transition to behavioral finance.

Specifically in the invite, a lot of folks would have seen the link to the wiki. There's a comprehensive summary of behavioral finance pitfalls. So we'll touch on a few of those. We'll specifically highlight some of the work of Daniel Kahneman, who won a Nobel for his work in applying psychology to behavioral finance.

Then we'll close with some quotes. We'll post some additional resources like books, and then we'll turn Q&A over to the audience. And with that, we'll begin with three early Roman contributors. So they're not in chronological order, starting with Marcus Aurelius. He's one of the more famous because a work of his indirectly got published.

So for context, he was Roman emperor for 20 years. That's a big deal. He was the most powerful man in the world, given how sprawling the Roman empire was. And he was considered the last of the five good emperors. What does that mean? So many emperors were brutal, self-serving, and destructive.

Marcus, on balance, was very good for his community and the empire. And what we know from him as it relates to Stoicism is he kept a private journal to himself. These weren't notes meant to be published, but academics compiled them, translated them, and it came to be called "Meditations." So folks interested, and I'd highly recommend it, it's worth reading.

His insights are timeless and super practical. You'll find, if you choose to read it, how relatable it is. He went through so many struggles, as you can imagine, as emperor. And he just had these profound insights and practical tools to approach his obstacles. And with that, his guidance is still empowering 2,000 years later.

So that's Marcus. Next, Seneca the Younger. He's the most prolific writer of these three. He was a playwright, and he was also one of the wealthiest people in Rome at his time. The equivalent, he would be a billionaire for his time. He was an advisor to Nero, and for which he was ultimately exiled.

But he was, as a playwright and prolific author, much of his work survives, and he was such a good writer that his contributions to Stoicism are longstanding. And the last that we'll cover here is Epictetus. Epictetus was born a slave, but he earned his freedom. And he became a philosophy teacher.

He studied philosophy and became a teacher. And although he didn't write directly, one of his students transcribed his teaching. So his work survives and contributes to us today. So that's some context for the Stoicism that we have access to via original sources or semi-original sources. And I say that to differentiate from academics who write about it.

Okay. - Great. Next, we'll be discussing some philosophical similarities between the philosophy of Stoicism as well as the Boglehead investment philosophy. Which kind of funny story when I was building this slide, originally I'd planned on talking about things that were strictly Stoic and things that were strictly Boglehead, and then just kind of talking about some similarities.

But what was interesting, I actually had a very difficult time finding something that could fit into this category. So I kind of was forced to revise how we did this slide. I thought that was kind of interesting since the Boglehead tends to be applications and prudence. So the first, right?

So within the philosophy of Stoicism, the founder of this was actually Zeno of Sidium, who founded Stoicism during the Hellenistic era of Greece, right? So he was in Athens when he founded this school, which is one of the many schools in Athens at that time. And then of course, the Boglehead investment philosophy, which is based on Jack Bogle, the founder of Vanguard, who of course is a proponent of index funds, who lived from May 8th, 1929 through January 16th, 2019.

One other thing I would note about Zeno is he lived somewhere around 334 to 262 BC, right? So we're talking about 2,300 years ago. So quite a while ago. And some of the other folks that we had mentioned earlier, some of the Romans, right? That was 100 plus years AD, right?

So we're talking about hundreds of years of the school of philosophy thriving within the Greek and Roman eras. A couple of similarities, right? We're talking about applications and prudence, right? Wisdom, applied wisdom. These are things that you find similar between the Boglehead and the philosophy of Stoicism. The idea of focusing on what you control, right?

A lot of the wisdom that you find within Jack Bogle and his philosophy is really focusing on the things that you control. And then also there's the idea of recognizing human psychological tendencies and then changing your opinions through rationality based on recognizing some of your own self behaviors, right?

And then there's also strategies to replace certain unhealthy and possibly irrational emotions and try to replace those by healthy and rational ones. And then another idea that these two groups tend to think similarly is spending time on forethought and preparation, as well as learning from the past, right? What can the ancients teach us?

Or if we look at history, what can we learn? A couple of things that we are not gonna, well, I guess one idea that I do want to address is the word stoic, right? If you look it up in a dictionary, it actually kind of means cold and emotionless, which is actually a bit of a misinterpretation.

And sometimes you have to, that's basically that that word throughout time has changed its definition. But really, so when you're talking about stoic philosophy, a lot of times how they make this distinction is with a capital S is stoic. And this is in reference to the school of philosophy versus stoic with a small S, which is cold and emotionless.

And what's actually interesting is practicing stoic philosophy actually has the exact opposite effect of being cold and emotionless. It actually, there's recent studies that have shown that it actually makes people more warm and empathetic. So it's actually interesting how the definition of the word stoic can be completely misrepresentative of the stoic school of philosophy.

And then, oh, one other thing, the word stoic, what that means, that came from the Greek word porch, right? So they used to practice their philosophy on the porch of the stoapokile, which forgive my mispronunciation of that, but it's basically where they went and practiced philosophy. So really they were the group of folks that would go talk on the porch.

All right, so next we're gonna touch on a metaphor that Jack Vogel, he actually used during a March 23rd, 2007 commencement speech at the New York NYU Stern School of Business. And this is a story originally by Reverend Fred Craddock. And interestingly enough, it's between the Reverend and a Greyhound.

So of course it's a true story. So it started off, so the Reverend asked, "Are you still racing?" To which the Greyhound says, "No." The Reverend asked, "Well, what is the matter? Did you get too old to race?" "No, I still had some race left in me," said the Greyhound.

"Well, what then, did you not win?" "I won over a million dollars from my owner." "Well, then what was it, bad treatment?" "Oh no, they treated us royally when we were racing." "Well, did you get crippled?" "No, didn't get crippled." "Well, then why?" "Why, I quit," said the Greyhound.

"You quit?" "I quit." "Why did you quit?" And then the Greyhound responds, "I just quit because after all that running and running and running, I found out that the rabbit I was chasing wasn't even real." Right, so what's kind of the idea here, right? So we'll kind of pose a question, right?

So, you know, what rabbit are you chasing, right? Is the rabbit you are chasing real, right? And so kind of the idea that we maybe wanna highlight here is, you know, perhaps it's worth considering if what you pursue is real and really worth that pursuit. And that kind of gets into the idea of priorities.

So next, we're gonna come into some sayings from Seneca, right, which this is on saving for retirement. And this is kind of a couple of ideas here is discussing financial wealth versus wealth of mind. So the first idea here, right? For many people, the acquisition of wealth is not the end of troubles, but only a fresh start.

So no surprise there. The fault is not in one's surrounding, but in the mind itself. Will you wait for interest to accrue, for ventures to pay off, for some fat inheritance, when you could become rich right away, right? Wisdom pays off immediately. It's wealth is bestowed on all to whom wealth has come to seem irrelevant.

So trust me, you should make philosophy your out advocate. It will persuade you not to linger over your balance sheet. And so just to kind of keep in mind, this is around 62 AD, right? So this is, you know, just under 2000 years ago that we're talking about. And he's talking about these ideas, right?

So kind of highlighting the idea that the, you know, the human condition, you know, it extends quite a bit into the past. And some of this wisdom that, you know, the ancients can teach us, it's applicable to us today. But there's an idea here, right? A distinction between financial wealth and the idea of a wealth of mind, right?

The idea of, you know, peace of mind, your character, that sort of thing. And so the Stoics, they actually don't deem financial wealth as either virtuous nor vicious. It's something that it depends on how you use it, right? So you can use wealth in a virtuous way or it can be used in a vicious way, right?

So it is treated in that way that dependent on how you use it, which depends on your mind, depends is basically how they would view wealth. So the next slide, we'll, Gauri is gonna talk about intro to Stoicism. - Great, thanks Luke. So again, we'll get into detail with some foundational Stoic concepts after a few slides.

So the next two slides will be really high level. There's some debate in academia about the primary purpose of Stoicism. So we're keeping it pretty general here. One of the main concepts is to live virtuously, just like Luke was talking about how folks spend money. Money itself is objective.

It's neither good nor bad. So virtue is the potential to pursue virtue is within each of us. And the Stoics focused on four cardinal virtues, those being courage, justice, temperance, and practical wisdom. Temperance meaning moderation and practical wisdom meaning not just intellectual knowledge, but to put what you've learned into practice.

They felt so strongly about this. They felt that just learning something and not practicing it was almost as good as not learning it. Another core foundational concept to Stoicism is that we can avoid unnecessary negative emotions. And I'll differentiate as Luke did that it's not about being emotionless, but Stoicism and even as Luke mentioned how it survived 2000 years, folks familiar with CBT or Cognitive Behavioral Therapy, which is rooted in Stoicism finds that we don't need to suffer through our negative emotions.

We may experience them reflexively for a variety of reasons, but we don't need to stay in that state. Moving on. So again, academia debates is it about happiness, contentedness, some say tranquility, but the idea is similar enough that through Stoic philosophy, contentedness and tranquility are within us and the overlay to personal finance or behavioral finances, obviously the substitutes of the market, how your portfolio performs.

So we'll go into more detail later on that. But the immediate practicality is you are able to empower yourself with tools that help you reduce worries and anxiety. And as mentioned earlier, the converse of what Stoicism, we should talk about what Stoicism isn't. So it doesn't say that you shouldn't enjoy positive things.

You certainly can. You can enjoy positive emotions and positive possessions, experience happiness, but not define yourself, your contentedness, your self-worth on these things. So you can enjoy a big house or a fancy car, even though bogleheads may be less likely to define themselves with those things. Stoicism says our character and our virtue, our core and other things are, we'll get to a phrase called preferred and different so that it's absolutely okay to enjoy things.

So that's an important clarification for folks who are attached to the kind of lowercase Stoic. And then Stoicism allows us to meet challenges with calmness and reason. So we'll discuss a tool for that, which is preparing for catastrophes in advance so that when they finally present, you're empowered to deal with them.

And this will come up over and over again because it's so fundamental and it's focusing on things within your control. And part of that is how you respond to things. So in retrospect, we may regret having done something or having said something. And Stoicism reminds us that we're not defined by what happens to us.

We're more defined by how we meet those things. So the path to that is pausing, reflecting and being thoughtful and intentional about how you respond and also separating yourself from those external events. And Stoic philosophy tells us that most things in the world are things external to us have an objectivity and we often assign our own judgments to them.

We often label them as positive or negative, but many of these things in fact are neutral and minus our own judgments, they exist in that neutrality. So next slide. In summary, again, Stoicism is meant to be a practical toolkit. You can use it throughout the day, whatever challenges, and you can find equanimity and contentedness and tranquility by practicing a lot of it.

It does get easier with practice like many things. And again, it's not intended to just be intellectual knowledge. And we'll leave off this slide with a quote from Seneca or a concept from Seneca. He says, "The outside world will not give us happiness or unhappiness. Our character is the only guarantee of everlasting carefree happiness or tranquility." And with that, I'll turn it back to Luke.

- Great. So now we're gonna touch on a couple of ideas within Stoic philosophy. This idea of mental impressions and the idea of objectivity. And these fall within, they have the Stoics, they have different, they call them different disciplines. And this is the idea of discipline of ascent. And a high level way of thinking about this would be to only accept and act on objective mental impression, right?

So what on earth does that mean? So let's kind of walk through that a little bit. So there's the idea of something, there's an impression on your senses, right? You hear something, you see something, that sort of thing, right? So for example, the news media says, sell, sell, sell.

So this is, by the way, this is gonna be a financial example. So we tried to make this a little bit practical to kind of give an idea of what we're talking about, right? So then you'll kind of have a mental impression, right? So something outside of you and then an impression on your mind, right?

And that's kind of where, for example, the idea enters your mind that you may consider selling some of your assets in a downturn or something. And so here, what we're gonna show here is you have the external, things that are kind of external to your mind, and then you have what's happening internally, within your mind, right?

And then there's this other aspect of it, right? So this is kind of a certain aspect of it, right? But then you kind of have your judgment and your will, right? Some of your more conscious ideas, right? That, so for example, you may have studied historic market resilience. You kind of understand market behavior, right?

So then basically these two things kind of combine and result in this idea that you can either accept or reject this mental impression, right? So this is basically your judgment and your will evaluates this. And then you can accept or reject that idea, right? So for example, you may reject the idea of selling based on your knowledge of historic market resilience, right?

So then you may take action or inaction, right? So in this case, right? Do nothing and you'll stay the course, which of course is, as Bogleheads know, is a very Boglehead saying, right? And then there's some type of outcome, right? And history has shown that this is, you're more likely to achieve your financial goals.

Or at least that's one of the core tenants of Bogleheads, right? And that's, so the Stoics would overlay another idea here, right? So they're gonna say, well, guess what? When you think about this whole process, what aspects of this are in your control versus what things are outside of your control, right?

And so what they say is your judgment and your will and its interaction with things that are outside of your control is really what you need to focus on, right? So their whole idea is to focus on things that are in your control. And all the practices, so Gorey's gonna, he's gonna talk about various practices that'll kind of help.

They're all kind of intended to impact your judgment and will with the intent of allowing you to have better ascent, right? So an example that the Stoics often use was the idea of an archer, right? So what things is the archer in control of, right? So he's in control of how much he practices, where he's aiming, how hard he's pulling the string back.

So like that's basically his angle of launch. So, and his steadiness, some of those things are the things that he's in control of. But at the end of the day, he has to release the arrow, right? And at that point, it becomes outside of his control and things in life can have its own influences, right?

Wind, that sort of thing. And so where it ends up hitting on the target, right? Is that this is where the Stoics would say you are not in control of, right? You can do your best, but at the end of the day, there are still things that you do not control.

So what the Stoics say is focus on the things that you control and then do your best, right? And don't focus necessarily on the outcome. And then a couple of labeling, a couple of things on this diagram here, right? So the Stoics would say, you wanna focus on your center of rationality, right?

This is kind of your virtue. This is where virtue is. This is where it lies. This is where your character lies, right? So this is where you wanna spend your time improving, right? And then the idea of the discipline of ascent, right? Is to be objective, right? In what the things that you object and reject, right?

And so a more modern way of thinking about this would be maybe some of your biases, right? You want to use objectivity to help eliminate some of these biases. And Gorey's gonna explain some more on biases here a little bit later. A couple of other examples of things that are in our control and outside of our control.

For example, and these are like Boglehead type examples, right? Your asset allocation, that's something that is in your control. Your investment policy statement, right? Typically you're gonna write that when you're in a rational state, not in a hyper emotional and reactive state, right? There's within the idea of lifestyle creep, right?

So as you get older or as you basically your desires kind of creep up, you want a bigger house, a bigger, fancier car, that sort of thing, right? So this kind of ties back into the idea of desire, right? So there, and the Stokes believe that a large portion of your desires are under your control, right?

And so that part of the practices would aim at trying to keep some of your desires in check, right? Some things that are outside of your control, right? And this is relevant to the personal finance that we're talking about here, right? Is market performance, political events, interest rates, inflation, right?

These aren't things that you can control, right? So you can take action to mitigate these things, but you have to recognize that at the end of the day, you do not control these things. And so Jack Bogle recognized a lot of these ideas, right? And in his article, "Clash of Cultures," he kind of touched on a lot of these ideas.

Jack was always very good with words and articulate, right? So he said that intelligent investors try to separate their emotions of hope, fear, and greed that separates the volatile market of short-term expectations from the real market of long-term intrinsic value and trust in reason to prevail over the long-term.

And the last sentence here, he says, "In this sense, long-term investors must be philosophers rather than technicians," right? So here, you see Jack highlighting the idea of reason and trying to separate out your emotions, which is pretty on par with a lot of the things that the Stoics say and try to practice.

So next, we'll hand off to Gauri, who's gonna touch on the philosophy of Stoicism. - Excellent, thanks, Luke. So again, we'll keep it somewhat high level, but go into a little more detail with some foundational concepts. Again, the key purpose can be debated within academia, so we'll keep it pretty general here.

Stoicism offers tools for a life of meaningful equanimity, reduced anxiety, and heightened virtue, which we spoke about, avoiding unnecessary negative emotions. And what is unnecessary negative emotions? So on the spectrum of emotions, Stoicism maintains that worry, envy, and regret are overall avoidable and destructive. So they have a purpose, and folks can say, "Well, I worry, so I prepare for things, or I preempt things, and I solve things." But again, to stay in a sustained state of worry is often unnecessary, and Stoicism helps us with that perspective.

Another purpose of Stoicism is to enjoy positive things, but not rely on them with such a dependency that it affects your self-worth, so that you can enjoy these externalities, as we mentioned, but the phrase they have for these external things is preferred and different. So that can be good health, wealth.

But while you'd say good health is fundamental to a content life, Stoicism argues that even without good health, you have your character. So as long as you have your character, and you can pursue virtue, you can do without good health. And it's easy to expand on that with wealth.

Sure, having money is great, but even without money, you have your character. So it would take a lot to have your character removed from you. And there are many examples of this. John's Admiral Stockdale, his plane got shot down, and he was parachuting, and he knew that he was gonna be a POW for a while, and he said, "I'm entering the world of Epictetus." And he was the highest-ranking officer while he was in captivity, and he maintained his character, and through Stoicism, practiced leadership that also inspired the men who were also imprisoned with him.

Moving on. Satisfaction in life comes from overcoming challenges and benefiting society. This last piece, "Benefiting Society," is also foundational to Stoicism. They were encouraging of being active in community, active in politics. So it's not about being apathetic, and we'll talk about that more. It's about taking action to affect, I'll say noble outcome.

There's a lot of subjectivity in that, but it wasn't to resign yourself and accept the world around you. It was to cause change where it was in your ability to do so. And when we say satisfaction comes from overcoming challenges, if you think about in our own lives, it's often something we overcame that was super difficult in whatever it is, personal, or career, or sports.

Those things, we derive a lot of satisfaction from those. This next one, "Building Habits and Practices," it's a reference to Seneca. He said, "How great is it to have a disposition to good?" So what does that mean? What if in modern day life, so many things that we enjoy are bad for us, or to a certain extent, bad for us.

And so many things that are good for us take a lot of effort or a lot of time. And you could argue saving and investing is more of a marathon. It's delayed gratification. But within stoicism and within Boglehead philosophy, there are many things that are easily accessible to us that are entirely enjoyable, and also not particularly expensive.

So listed here are some nurturing habits, like a lifestyle, where your natural preferences are satisfying and healthy. And examples of that are healthy eating, preparing your own food, right? You can derive a lot of satisfaction from that, and it happens to be good for you. Taking walks in nature, hosting a game night amongst your friends, right?

These things cost very little, and they're super satisfying. Pursuing self-improvement. Stoics were big on journaling. We mentioned Marcus Aurelius kept a journal earlier. Meditation, not necessarily in the modern sense of meditation, but reflecting on the day's events in advance, as well as when I say reflecting. So looking at what you expect from the day ahead of you, and then reflecting on it at the end.

These were common stoic practices. We'll end this slide with a quote. It is not death a person should fear, but never beginning to live, Marcus. And so we'll go to the next slide, dichotomy of control. Again, you'll hear about this throughout, determining what's in our control and what's not.

We each, whether it's ourselves, or family, or friends, or coworkers, people are frustrated by all these things, but if they, or we, can separate, okay, here's a situation. What can we affect? What's in our control and what's not, right? It could be global politics. It could be something so much broader than ourselves and beyond us.

If you're able to effectively separate what's not within your control, as Luke mentioned, market performance, we'll get more specific with examples like that. The concept is so foundational, and it's not exclusive to stoicism, obviously. The serenity prayer, which a lot of people know, grant us the serenity to accept the things we cannot change, courage to change the things we can, and wisdom to know the difference.

The serenity prayer is directly rooted in Stoic philosophy. And again, stoicism is not about resigning yourself to just accepting the world around us. It's separating, okay, this frustrates me, or this brings me joy. What's within my control? So local politics, you can obviously vote, you can write letters, you can start a campaign, you can affect your community, you can affect your relationships.

And to a large extent, you can affect your health. But stoicism reminds us that our health is not entirely in our control. So separate the two and take action where you can. And then you find comfort that you took action. And for those things that are out of your control, try to let them go.

And stoicism will come easier and naturally to a lot of folks. Like some people have a natural affinity for it. Some people were practicing stoicism without knowing that term or that label for years or decades. Like you can go an entire lifetime living aligned with Stoic philosophy, just not knowing that label.

And then there are other folks who will hear this and say, yeah, that sounds nice, but that's not really me, or that's not possible. So I would say, know that these tools are within you, are within your reach, but some people it'll come much more naturally to, and some people, if it interests them, will find it'll take a little more work, but they really are practical, effective tools.

Another core, don't tie your contendedness to the outcome. So we take action. Lucas mentioned the Archer example. I'll reiterate it on the next slide, I think, just because it's so important, but know that you did everything within your control the best you could, and the outcome is not necessarily within your control.

So we just accept the outcome. And you could apply that to portfolio construction. That's within your control. Withdrawal rate is within your control. Market performance, obviously, not within your control. So if you know that you aligned your goals, timeframe, risk tolerance with your portfolio construction, and you stayed the course when appropriate, if you find your asset allocation wasn't appropriate, that's within your control to change it.

So those are practical applications of this core foundational concept. Another one, people think like, oh, so much of my finances aren't in my control, but to some extent, you can increase your savings rate. You can try to increase your income. A lot of people will say, oh, that's not within my control.

You can often reduce your expenses. Fogelheads are completely adept at this. In terms of, I'll revisit the income for this last bullet. A lot of people think, oh, I'm paid what I'm paid, but you can negotiate a raise, obviously. You can work towards a promotion, and you can say that those things aren't in your control, and it's true, but you can influence them, and you can learn negotiating techniques.

There's tons of YouTube videos or books or blogs, and a technique is at your mid-year review or end of year review, you meet with your manager, and you say, okay, X, Y, Z happened, and I expected this, and it may or may not have occurred, but can we agree on our approach for next year that if I accomplish X, Y, and Z and do it really well, that I'll be considered for a raise or promotion?

So that's an example of something that is in your control applied to influence something that largely, like a promotion or a raise, can be seen conclusively is not within your control, but you can learn what tools are in your control to affect it. And with that, we'll go to the next slide, focusing on process and systems, not outcome.

So we kind of touched on this, and Lucas mentioned the example of the archer. I'll reiterate it. So the choice of arrow is within your control. The quality of the arrow may or may not be, but you'll get the best arrow you can. The tension on the bow, the direction, your focus, when to let go, to send the arrow towards the target.

A lot of these things are within your control, but stoicism teaches us that once you let go, that arrow and so many other examples that this applies to, that arrow is no longer in our control. So there could be wind, the arrow could be faulty, someone could move the target, any of these things can happen.

So why is that important? We should not tie our self-esteem or self-worth, or in a lot of cases, portfolio performance, self-worth to our net worth, right? That for the things that are out of our control, realize that you did everything you could and what's out of your control doesn't define you, okay.

So a practical application of that, and the following bullet, "Atomic Habits" by James Clear, highly, highly recommend if folks haven't read it already. It's an amazing, empowering book that helps you, whether it's going to the gym or pursuing a hobby, turning a hobby into a side hustle. So many things, they say, we overestimate what we wanna do in a short period of time, like a week or a month, but we really underestimate what we can do in a year or five years.

And "Atomic Habits" lays out, as you improve your process and your systems and your efforts, that desired outcome that we keep saying isn't within our control, you improve the odds of that desired outcome coming to fruition just by improving your systems. Another important point, don't rely on willpower or motivation.

A lot of people say, oh, I'll exercise tomorrow when I feel like it, right? We think our future self is gonna be more motivated or more agreeable to doing these things. It's just unreliable. But if you have the system, if you say, in the morning, I'm gonna do this, you're more likely to achieve these goals.

And another important concept, and Marcus is big on this, he says, let doing the right thing be reward enough. So just know that you did the right thing and that should be sufficient. What does that mean? A lot of people do things for praise, appreciation, credit, public recognition, and then those things do or don't happen, or they happen to a lesser extent than we wanted.

So stoicism empowers us by saying, those things are out of our control. Focus on what's important to you, meaningful to you, what you feel is the right thing to do. And if you do that, that is reward enough. So practical application, applying these things to your health, your finances, career, side hustle, et cetera.

With that, we'll go to the next slide. And I will try to pick up the pace. So here we'll talk about premeditatio malorum, this is Latin for, it's basically premeditating on catastrophes or evils or troubles. So it's probably self-explanatory at this point, we spoke about a market downturn. So don't just imagine it as a remote possibility.

As you adjust your lifestyle, your spending, your income, your savings, your withdrawal, your portfolio construction, think, okay, could I survive a 20% sustained downturn? What if the market tanked and remained down 20% or 30% or even 50% for X number of years, how would you handle that? So you could really play it out.

You could do the numbers and you could say, okay, I parked this much cash or whatever, or you have dividend investments or other income sources so that you are equipped if and when that terrible thing happens, that you don't have to experience the level of anxiety that other people might or that you otherwise would have.

Similarly, you can prepare for illness or adversity. This quote, sweat more in training, bleed less in war, self-explanatory. And Mike Tyson has a famous quote, "Everybody has a plan until they get punched in the face." The Stoics would say, plan to get punched in the face. And with that, we'll move to the next slide, slide five, or rather.

- By the way, credit to Gorey for that, by the way, that's great. (laughing) - Thank you, I'm sure someone else would have said that. So framing, very important here. A lot of this is probably intuitive, just that using your ability to change your perspective to your advantage can be very powerful.

So if you view obstacles as opportunities to improve, you can be strengthened by them. And you can also respond with virtue. And there are many examples of this. And I'm sure every person has some challenge they experienced in their life where they met that challenge and exited stronger. And a lot of people will say life was better on the other side of that challenge.

Marcus talks about this in meditations that are reflexive reaction. You could feel overwhelmed or you could feel self-pity. Charlie Munger will say self-pity is one of the most useless emotions. But again, these are reflexive. So we can't expect ourselves to not experience them. But the tool to apply here is Marcus would say, who better than me to handle this, right?

He was in a position of power and influence. And instead of dwelling in this feeling of being overwhelmed, he said, okay, what can I do to make this better? And who better than me to solve this? And we can each find things in our life to apply that to.

In the FIRE community, there's a well-known phrase called one more year syndrome. A lot of people who make good incomes have significant savings. They've mapped out via spreadsheets and they think with a high probability they can retire early. But then they say, I'll work for one more year, just in case.

I'll save up one more year of income for that additional buffer. And perhaps there's nothing wrong with them. Perhaps that's the right choice for them. But using framing, we could say, what's the worst that could happen if you stopped working? You could probably go back to work so that if you, and this is exhaustively studied, a lot of people say they wish they retired early.

And there are many reasons for that. But a lot of people don't act on that. And they stay working. And then when they finally retire, they say, oh, I'm not physically able or I'm not whatever, it could be capacity or family or friends. They're not able to enjoy life to the extent they would have had they retired early.

And you could apply that to many other things. I'll try to pick up the pace 'cause we still have a lot to cover. Feeling grateful for what you have. This is obviously not limited to stoicism. This is found in probably all of the world's philosophies. Realize that we take things for granted.

That seems to be human nature. But if you zoom out from your own life and see how others would see you from far away or from way up above, we each have many things to feel appreciative of and grateful for. And more specifically, I feel this is factual, it sounds exaggerated, but several billion people around the planet would probably trade their life for yours.

Your comforts, your conveniences, your access to healthcare or amenities. These are things we so take for granted we lose sight of it day to day. But other people would give a lot to have what we take for granted. And overlaying that to as recently as 100 years ago, some kings had less quality of life than we have today, be it running water or effective medicine.

So these are things that even the most powerful, the wealthiest people in the world 100 years ago didn't have that we have. And then the last, I'll skip to the last bullet, imagine you died or were severely injured or had something taken away. It could be a family member, a loved one.

Sam Harris talks about this. He says, they're around a dinner table and the family, everyone was on their phone, everyone was depressed and sullen. And he joined in that mindset. And then he kind of zoomed out and he said, you know, what if something, what if I died tonight, right?

That could happen to any of us. He would give anything for this moment to be with his family, to have a quiet basic dinner. So with that framing, that's the tool here, he was able to re-engage and appreciate what he had. So with that, we'll move to behavioral finance.

So hopefully people found philosophy of stoicism relatable, practical. There are tools that we can use throughout the day, any day throughout our lives. And the overlap with behavioral finance, hopefully people previewed this Wiki page. The link is here and it was in the invite. Listed on the screen are common pitfalls.

On the next slide, we'll talk more about anchoring and loss aversion more specifically. But these behavioral pitfalls are so embedded in us and in our daily lives that we don't realize they're going on. And what behavioral finance teaches us is, these are unconscious biases a lot of times, right?

If you ask the average person or even ourselves, are you being rational, factual, logical, objective? A lot of times we would say yes, many instances we would say no by intent. But a lot of times our decision-making, we think we're being rational, factual, logical. And it's just not the case.

So behavioral finance has studied this and teaches us about these biases in more detail. So highly encourage people to get more familiar via the Wiki page. And there are many online resources about this. Just high level confirmation bias. Search engines are a huge example of this, that we are more likely to Google something the way we phrase it, the result will more likely confirm our existing beliefs.

And we would often benefit by seeking out disconfirming evidence. So we need to be aware that sometimes, it's well-known now, especially in the political environment, a lot of us live in echo chambers. So it's important to realize that we are kind of hindering the broadening of our perspective with something as simple as a search engine.

- Yeah. Well, on the confirmation bias, Gauri, I was just gonna point out, just think, imagine the tool, the Boglehead forum is, right? In terms of challenging your confirmation bias, right? Stating, hey, these are the advantages, disadvantages, and having debate, people having healthy challenges, right? So it's, I mean, just what a wonderful resource we have in modern day life to have somewhere where you can have the internet poke holes in a lot of these behavioral pitfalls, right?

Is my logic clear? Am I reasoning properly, right? During market downturns, right? You see, there's actually more people visit the Boglehead forum during market downturns, right? Is that, basically, folks who use it as a tool to help mitigate some of these behavioral pitfalls that are known to plague humans and our behavior towards personal finance.

- Excellent point. I'll mention two others on this slide before we go to the next slide. One, framing effect. I'll share a recent personal example, and this will be less finance, but the importance of framing. So my wife and I went on a retreat a few weekends ago to a few hours north of New York City, really scenic place.

We were with a great group. It was actually on stoicism. And one of the attendees flew in from Denver and his flight got canceled. Fortunately, we exchanged info, contact info, before we parted and he ended up staying with us. His flight from Newark got completely canceled and they put him on a flight out of LaGuardia, which is closer to where we live within New York City.

So he ended up staying with us and he had time in the morning to enjoy New York City. So we went to the Metropolitan Museum of Art and we just had a nice time spending time with him. We had a healthy meal together. And he wrote that he could easily have been so upset about the canceled flight and he could have been screaming just like so many other people in the airport, but he reframed it, that he got better memories from his flight being canceled than he would have otherwise.

Okay, and the last one I'll talk about on this slide is recency bias. You see it in the third column, second from the bottom. A clear example of this is how we sometimes instinctively react to a market downturn or sometimes a bubble fueled by euphoria, right? Although we know the market's performance over decades that it keeps chugging along, despite World War I, World War II, recessions, depression, COVID, tech bubble, housing bubble, the market trends upwards.

But recency bias, if the news like Lucas's slide, the media says sell, sell, sell, recency bias is so powerful, it can override our conscious decision-making because we believe this, recency bias is so powerful, the belief can override our logic. And the same is on an uptrend, right? We can believe in this euphoric bubble and often people enter just before the peak.

So with that, again, we encourage folks to visit that, to start at least with this Wiki page. With that, we'll go to the next slide and we'll talk about Daniel Kahneman, huge contributor in behavioral finance. He won the Nobel in economics for his work, bridging psychology with behavioral finance.

His contribution, one of the foundations of his work is framing our thinking through two systems, system one and system two. And this is well written about in his book, "Thinking, Fast and Slow." So it's thinking fast and slow. And system ones basically are reflexive, call it reptilian brain. And this is evolutionarily very important, right?

On the savannas, we didn't have time to reason and think and analyze and reach the most logical decision, right? You're being chased by a tiger and you need to, a lot of tribal behavior ties to evolutionary psychology. And it makes sense why system one is so powerful. And system two complements system one.

And that is, it requires more effort, more intense focus, and it operates methodically. So his work isn't about squashing one with the other. It's not like system two is in fact better, they coexist. We just need to separate and recognize which one is being active. And then from that, we can make better decisions.

So if we go to the top two bolded questions, how often are we in control of our decisions? We would think most of the time or a lot of the time. And it's frequently, it depends how you define we, but there's so much going on unconsciously or around us.

Externally, we can be manipulated. A lot of marketers take advantage of these biases and manipulate us and even people informed get manipulated. So the second question, how often are we rational when making decisions? Frequently not, even though we think we are. So jumping to the last two. So loss aversion, this is well-studied.

Folks, and it's almost human nature to be more averse to losing than we are winning. And sometimes in this example, losing $100 hurts more than winning $150. And that's, you could argue irrational or illogical, but this is how powerful loss is to us. So that's the bias of loss aversion.

And then anchoring has many examples in personal finance. And one is, in any negotiation, an opening price will become the anchor. And so you can think about it in terms of, we were speaking on a earlier Bogleheads call, a parent has an adult child getting married and they said, here's the price per person.

And if the kid was using anchoring as a negotiation technique, they could start with a super high price, like 300 a person or 500 a person, whatever it is these days. And then the parent can react and then the kid can say the real price or a much lower price.

Oh, how about 150? And then the person writing the check feels relieved. An example of this in the retail marketplace, let's say someone puts out a high-end designer shoe, markets it for $500, right? And no one buys it, but it's marketed for 500. And then suddenly the retailer marks it down to 200.

All of a sudden people think, wow, it's on sale. Wow, it's such a discount. And they buy it. Even though they may not have bought it at 200 originally, they suddenly buy it because of anchoring bias. Another example of this, you can have a contractor give a quote and that first quote will affect how you frame that project or the cost or how agreeable you are to it.

So hopefully, oh, and a stock purchase price. I'll close with that example for anchoring. A lot of people won't sell a stock until they say it recovers, but the universe doesn't care about your purchase price and the stock may never recover. So we are anchored to this purchase price because we think we may be entitled to recoup our losses.

And it's just, I wanna say it's just not the case, but I can't say what you're entitled to or not, but it's basically an effect of anchoring. So we should close to leave enough time for Q&A. I do wanna mention a book called "Scout Mindset" by Julia Galliff. She has a TED Talk on YouTube also where she uses a phrase motivated reasoning.

And that explains evolutionarily why we hinge to these beliefs that are influenced by desires and fears and why we let those things cause us to misinterpret information. And sometimes it's because we want to win, right? Winning is more important or in tribal behavior or our evolutionary ancestors needed to exude confidence.

And so sometimes we're less likely to admit we're wrong. And so I would say in closing, just in terms of practical tools, what can we do to improve on all these biases and our unconscious tendencies? And one approach is distancing yourself from the feeling of shame of being wrong, right?

Like we sometimes make investments and we're committed to them and stay the course has a lot of value to it if the portfolio is well-structured and the investment choices are good. But a lot of times we make bad investments and we cling to them because of the shame of being wrong or that applies to a lot of things in life.

But if you distance yourself from that and you zoom out and you kind of apply objectivity, you can work towards a more rational decision. And you can take pride in being someone who is comfortable changing their minds. A lot of leaders or a lot of people publicly think it's a weakness to change your mind.

But if you get new information, new material information, it makes sense to change your mind. Another tool is seeking out blind spots, right? I mentioned disconfirming evidence earlier. Fine, try to figure out what you're missing. We spoke about portfolio construction. Once you have a good alignment in terms of your goals, timeframe, risk tolerance, asset allocation, diversification, right?

Fundamental for the bogleheads, you need not check your portfolio constantly. And that will protect you from these unconscious biases, right? We're human, we are subject to fear and greed and our willpower is often weaker than our ability to reason and be logical. So by not checking your portfolio often, and bogleheads know this.

So I say this in part for our friends and family and coworkers and the broader community that comes to bogleheads for guidance. It's sort of like not trusting your willpower around snacks. So they say the war with healthy foods is won or lost at the supermarket. So you think, oh, I'll get these cookies or chips and I'll have the willpower to not eat them.

But once they're in the house, your willpower is weak and you're very likely to eat them. So how does that apply to a portfolio? By checking it constantly, you're subjecting yourself to testing your willpower. By saying, I don't need to check it, I'm gonna stay the course, you're more likely to not make impulsive changes.

With that, we can go to the next slide for closing quotes. "You have power over your mind, not outside events. Realize this and you will find strength." So hopefully folks can tie Marcus's wisdom there to many things in life. Jack Bogle in "Enough" spoke about the importance of character, which is mentioned, is fundamental to stoicism, fundamental to how we can define ourselves.

So he says, "In life, we too often allow the illusory to triumph over the real. We focus too much on things and not enough on the intangibles that make things worthwhile. Too much on success, a word I never liked, and not enough on character without which success is meaningless." So completely aligned with the philosophy of stoicism.

And the last quote, this, I believe Miriam found, and Jack was a participant on the forum and he posted to the Bogleheads. And he wrote, "Good morning, my friends. A lot will happen in the coming 12 months. It's a perilous world out there. So get your asset allocation right for you and then just stay the course.

Best always, Jack." With that, we'll go to additional resources. Folks will have this via the PDF, various books written by people we've spoken about. Dan Ariely, another leader in the space, "Predictably Irrational." Richard Thaler, if folks are interested, co-wrote "Nudge." There's so much there. There's just too much. Opting in and opting out for 401(k) plans is now normal.

And this is something that "Nudge" talks about, that people have inertia and they're less likely to enroll in a 401(k) plan if they see all these choices. So Congress passed the Pension Protection Act, I think it was 1996, and folks can be automatically opted in to their 401(k) plan as a result.

Another example of that is organ donation. So I think Dan Ariely writes about this, that some of the, say, Sweden, Denmark type, that area of countries have different opt in and opt out for organ donations. And so the organ donor participation rate is so dramatically different just because of the opt in, opt out, because people experience inertia.

And if you opt them into organ donation, it's shocking. Many people will agree to donate their organs. Okay, "Winner's Curse," another one by Thaler. And then in terms of stoicism, we spoke about Marcus as an original source. Bill Irvine, "A Guide to the Good Life," is a great portal, a starting point to stoicism.

Very digestible, very practical. He's a modern day academic. He lives and teaches in Ohio. There are other modern day academics. Massimo Pellucci, who's listed here, has very accessible free blogs. He has free eBooks. He has dozens of YouTube videos, incredibly articulate and practical. So with that, we'll open it up for Q&A.

- Thank you. Thank you, Gorey. Thank you, Lucas. That was very interesting. I enjoyed it very much. I'm sure Mr. Vogel would have enjoyed it also. Thank you for the quotes, Gorey and Mr. Vogel. - Sure. - Do we have any questions? Are there any questions in the chat?

Anybody like to start out with questions, raising your hand? We do have one chat question. - Okay. - It's from Yuli G. "Why do we say that action or inaction "is out of our control? "I believe that was posted during your Archer example." - Okay. I can comment, but Luke, did you wanna take it?

- Yeah, yeah, sure. So yeah, so the question, why do we say action or inaction, right? So kind of, this is, why is this considered out of our control? So without getting too philosophical, the Stoics, they, I mean, they're pretty big on the part that you control in your mind.

And really, once things, once like outside of your mind, you don't necessarily control it, right? So they actually, the way they describe it is there's actually something else in between here, which this is just a model, right? Some models are useful, but it's not always 100% accurate. But there's actually, it would be an impulse, a mental impulse to action, right?

That you control, which would then lead to that, that your body, which would take the action. But you aren't necessarily in control of your body. Example would be, let's say you go throw at a baseball, right? Maybe 99 times out of a hundred, you know, that your arm's gonna function exactly as you want it to.

But, you know, maybe that one time, you know, something happens and your arm just isn't functioning the way it does, right? Or, you know, even like a major league pitcher is, you know, they try to control their action as best they can, right? To, you know, make sure that they're throwing the best pitch possible.

But even then, even the most trained athletes in the world lose control. So that's kind of the idea that you're in control of the impulse to action, not necessarily the action. And definitely not in control of the outcome of the action. That answers that question. - Lucas, would you say then that when the archer releases the arrow, this action or inaction there would start as soon as the arrow is released and then the outcome is the target?

- Well, I mean, going off of our example, it actually would probably, the part that he controls would probably stop at his mind. Even though, I mean, it is, it's kind of a, and I know philosophers debate about this, right? Like where exactly do you draw the line of what you control and what you don't control, right?

And it's, but yeah, that's my understanding. By the way, I'm absolutely 100% not a professional philosopher. This is just to the best of my knowledge. And I'm sure there's a grad student somewhere that may watch this video that is rolling their eyes at some of these responses. But that's my understanding is the things that we control, it starts and stops within the mind.

And that's kind of a core tenant of Stoic philosophy. - Well, if we have any grad students rolling their eyes, you can raise your hand or speak up. - Yeah. - What about when it says do not, on this slide, I think what the question might have meant was action or inaction with our portfolio.

In other words, we can do nothing, we can stay the course when the markets around us are in turmoil, but that is really an action that we take. It's not something that is out of our control. We can, for example, move some of our money if we're going to retire in the next year or two, we might wanna preserve some of our 401k that is in stocks, preserve it in a stable value fund or something, just to make sure that when we retire in a year or two, it doesn't tank really bad for us.

That is an action that we take based upon external events, but it's our reading of them. And also it's being practical. And I think Mr. Bogle would agree that changing the course for practical, personal reasons based upon your life situation is appropriate, but not to react to the markets and say, the market's tanking, therefore I'm gonna sell.

That would not be what he would advocate. So would you say in that case, you're not really, maybe that needs to be moved into the- - Well, so maybe the way to think about it is like a cause and effect relationship, right? So your cause is really impacting the effect, right?

So the effect of it would be the action. And maybe it's kind of, this is kind of what philosophers end up talking about definitions of words all the time, right? So it may end up being exactly, how are we gonna define action versus the impression and at what point in between?

But I think the baseline underlying idea, right, is the causes, the cause that you are, that have effects in the world outside of us all come from initially from the mind and then the impulse to action, which then the effect of which is action. I mean, it's kind of a, I'm trying not to give too philosophical of an answer, but that's, I don't know, I don't know if, Gauri, if you have a better answer, but that's about as best as the one that I can give right now.

- Yeah, I think that's reasonable. And I'd reiterate what Miriam said in terms of how Jack would answer this. I think that quote that we read of Jack's, he inserts that to make sure the portfolio is right for you. If you go to that quote, Lucas, it was the ending closing quotes.

And I think that's what Miriam was commenting towards. I think that's what Miriam was commenting towards. And I think that's what Miriam was commenting towards. And I think that's what Miriam was commenting towards. And I think that's what Miriam was commenting towards. Yeah, this one, so he says, so get your asset allocation right, pause, for you.

So I think that's what Miriam was commenting towards, that as long as the allocation is right for you, and for you means at this particular phase of life, you want to be more conservative. But if you have other income sources and you're not relying on your portfolio, maybe you don't necessarily want it to be more conservative.

So there's no single answer here. So it's for you, it's very, that specific piece, and then stay the course. But to Miriam's point, if it's not appropriate for you, let's say your circumstances change. Let's say there's a medical event or a family friend in need, or it could be any of dozens of things for you is a material change, then it would warrant the change.

That's how I read it. Any other questions in the chat or live questions? Anyone want to raise their hand? Since we have about six minutes in the allocated time. In the absence of questions, I, and if it's okay, yep. - We have one, someone said, is asking, is there truly a reliable, stable fund?

And then of course I fire it back with the link to the Wiki article, but was there anything more involved with the word stable value in terms of finance? Actually, a stable value fund is our insurance contracts, but maybe there was something implied there. - I was the one that used that example.

In my 401k, there was a stable value fund and a stable value fund is like Lady Geek says, it's offered by insurance companies, but it's in part of a 401k or a 547B plan. My understanding is they're not offered outside of workplace employer plans. And what it is, it's kind of like a money market.

No, it's not a money market. It's not a short-term paper fund. It is more like a CD, shall we? My stable value fund was actually offered by Voya through T. Rowe Price. And they would guarantee a certain percent. You would earn a certain percent and it was a lot.

It was like 4% for a year or a year and a half. At that point, it would be, they would tell you when it was up and then they would renegotiate. And you could guarantee for that period of time, that's what it was. So in that sense, the stable value fund was stable, but it was within the workplace.

It's not with outside in a 401k or something. You can't buy them on the open market is my understanding. And Jim, do you have a question? - They have an area in their life that maybe they got. - We can't hear you, we can't understand you. - Oh, I'm sorry.

I'm on a weird remote connection. So I'm gonna just sit down, sorry. Can you hear me now? - Yeah, yep, yeah. - Oh, I'm sorry. Okay, so my question to both presenters is, is there an area in your life that which you use stoicism to get control of or to get it on the stoicism line?

And then what things do you feel that you might be slipping away from that? Whether the trigger items or what gives you that sense that you're falling off the wagon for stoicism? - Lucas, do you wanna start? - Yeah, so I mean, there's two questions there. The first was kind of, I guess, I think it was kind of how did you kind of get into it?

Was that, that was kind of the first question, right? - Or something that you really thought you had a control over by using stoicism. But now you felt at times you slip away and what's telling you that? - Well, when I kind of first started paying more attention to my personal finances, I'm gonna back up.

One idea within stoicism, you don't control other people, right? You can offer suggestions, but you don't control other people. When I first started focusing a little bit more on personal finance, I had to learn that I do not control my spouse's spending. And that was something that, right? In terms of budgeting and that sort of thing, right?

That you don't completely control the other person, right? And so that was something that it was, a bit of a learning from my end. - Cool, I'll answer kind of more broadly. I think it's so practical daily, like you can meet most any challenge with it. Like, let's say I drop something and it spills all over the floor.

I think, man, it's very upsetting. And then I just, before reacting, like before losing one's temper or whatever, I'll just like zoom out and say, all right, it's actually no big deal. I could clean that up pretty easily. And then you do. And that might be a really simple example, but you could expand on that to almost many unwanted things in life and just zoom out and reframe and then realize this has a solution.

This has a practical approach and I can take action for it. And then it's like instantly empowering. I'll respond to what the other thing you asked about veering from it to the credit of Stoic philosophers. Seneca referred to himself as a patient in the hospital amongst other patients. So he was writing to his friend and he wasn't claiming to have like some superior enlightenment.

He was just saying, these are things that work, that helped me, that may help you. And so Stoicism was big on pulling the best ideas wherever they existed. It was not confined to these certain beliefs and in fact, I think Seneca said, he doesn't mind being a spy in the enemy's camp as long as they're doing something better that he can learn from, he's happy to take that knowledge.

And so when you said veering from it, there are many instances where you really have to reach, like it's not immediate, but if you find something better and Marcus says this too, if you find something better than courage, justice, temperance, and wisdom, then go for it. But in his lifetime and his practicing of running the empire for 20 years, he did not find anything better than the combination of those four.

So I see we're at 9.30. If folks wanna stay on, I think in a minute or two, I could highlight some takeaways from this Scout Mindset book 'cause it's so relevant. We didn't include it as an additional resource 'cause it's not behavioral finance, but. - I have another behavior finance question.

- Oh, sure. - And it has to do with the losing of $100. We hate more than making $150. I've read that before and that relates to the stoic view of what, I can't remember what. And actually it occurred to me when you posted that slide, there might be an evolutionary reason for it.

In other words, when you had the savanna, running from the tiger in the savanna, that if you, sometimes losing something has greater risk. You're more at risk when you lose something than making something. That as long as you make something, you're okay. But losing something, you can lose your life.

- Sure, and there's also a sentimentality. There's an emotional attachment to things. They've done this experiment with what people will pay for concert tickets or show tickets. And once they own that ticket, they experiment by saying, if we offered you X percent more or X dollars more than what you paid, people will hold onto that ticket, even though they were only willing to pay up to a certain amount for it.

Logically, you think they would sell it for a higher price, but not necessarily 'cause there's an emotional bias. And I think that was included more so for behavioral finance and less so than a stoic concept, but included there as an overlap into behavioral finance. - And I see that, Jim, you have your hand up.

Did you have another question? - Jim, did you wanna, did you want to lower your hand? - You're on mute, we're just talking. - Nope, okay, lowered his hand. - Okay, so I don't know if folks are staying on, but I think there's so much value in that. I think there's so much value in this scout mindset that I'll just quickly cover some of her points because part of the theme of this presentation is that we are often not rational, but it's within our power to find tools and use those tools and strengthen our ability to be rational, logical, and less influenced by unconscious biases.

So she says, how do we get there? And her paradigm is scout versus soldier. Soldiers are performing a certain function. Scouts go out and try to get the lay of the land aligned with reality, an objective reality. That's part of how she defines a scout's purpose. And she says, what traits are in people who are more likely to be good scouts?

So what traits are more likely? And she found curiosity is a commonality. Feeling pleasure from learning new information. So that can help you identify objective reality. Itching to solve a puzzle versus just accepting things how they are. Being intrigued when you encounter something that contradicts your expectations or your assumptions or your conclusions.

And all of these things might sound, oh, intuitive or easy or yeah, who wouldn't do that? But realistically, day-to-day and year-to-year and entire lifetimes, we are often ingrained in our ways and our habits that we don't realize we're not being logical, rational, practical, as we've said. So she said, they feel virtuous testing their own beliefs.

And this was fundamental to Stoics. When I say Marcus said, if you find anything better than courage, justice, temperance, and wisdom, he adamantly meant test your assumptions, test your conclusions. And if your assumptions were wrong, your hypothesis had holes in it, strengthen it. So not being married to early conclusions.

We spoke about being less likely to consider someone weak if they change their mind. Like in politics, we saw this phrase waffling and it was framed negatively. But as you find new information, it's actually a strength to sometimes evolve with that new information. So those were some traits for what she found to be a scout mindset.

- Thanks for sharing, Gary. - Thank you, thank you. Do we have any other questions? - No. - Nothing in the chat. One thing, Liguri. - Yep. - The Finance Buff, also known as, his name is Harry Sitt. He often gets, he's a Boglehead who writes on the Boglehead Forum.

He has his own blog, thefinancebuff.com. No, dot, yeah, dot com, I think. He had a wonderful article years ago and he called it "Safety in the Mainstream." And basically, it relates to the stoic values that you were talking about, or the value of that you do the best you can with what you can control.

And what you cannot control, you don't lose your sleep over, you don't stress over it. You do the best you can. And he related that to index funds, investing in index funds. So that is why he invests in index funds. He said, "Because I do the best I can, "I create my portfolio with index funds, "knowing that at least I will receive market returns.

"That if the market tanks, if the market goes down, "if there's a recession, if there is just a bear market, "my index funds are going to go down, "my stock funds are gonna go down. "But I did not cause that. "The market caused that. "I invested in index funds "and I know that they will go up and down, "but I don't have to worry.

"I am safe from my own emotions of kicking myself "that I invested in a stupid stock. "I did not invest in a stupid stock. "I put my money in the index fund "that invests in 3000 stocks "and it is doing what I expected it to do. "It is following the market.

"And so I'm happy, I'm safe. "I was safe in what I did in my own mind." - Yeah, excellent example, super practical. And again, sometimes it takes convincing ourselves like it's an exercise, right? If your portfolio goes down, it's really hard to feel isolated from that experience, but you can do exactly what Miriam just said.

Think about the decision you made, how you made it, that you made the best decision at the time with what was available to you. And you can find consolation in that. You can find comfort and peace of mind. The thing is, I think so many Bogleheads know this, that it's interesting, folks who might benefit the most from this message are not hearing it as easily 'cause there's so much noise in the world and the media that this practical approach gets drowned out.

But yeah, I'll reiterate another thing that overlaps that a lot of these things are so much easier to say, but they are in fact within our reach. They are able to be practiced and they do strengthen with time. So understanding that there are more natural intuitive. (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music)