Financial Post

Saturday, March 27, 2010

Mindfulness over market matters

Jonathan Chevreau, Financial Post

Authors advocate meditation to keep calm amid turmoil

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Photo by Peter J. Thompson, National Post
The Mindful Investor co-authors Maria Gonzalez and Graham Byron

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(Length: 4:59 min.)

The next time the stock market takes a sickening plunge, perhaps you should take time out to meditate.

That would be the recommendation of certified financial planner Graham Byron and meditation coach Maria Gonzalez. The pair recently published a book called The Mindful Investor. The book's subtitle makes an impressive claim: By maintaining a calm mind, you can obtain both inner peace and financial security.

Gonzalez, president of Torontobased Argonauta Strategic Alliances Consulting Inc., says the book was conceived after Byron noticed how practising "mindfulness" and "equanimity" helped his clients when the market crashed.

Mindfulness meditation involves cultivating the simple awareness of whatever is arising in the moment. "It enabled him to work with clients more effectively, listen to them more deeply and help him in ways he didn't think of before he learned about mindfulness."

Or, as they write in the second chapter, mindfulness meditation is "simply noticing the way things are." The ability to accept what is, without resistance, is called equanimity. That means accepting things you can't control, such as stock prices or interest rates.

That doesn't mean the authors recommend a passive indifference to investment portfolios. It means, simply, "don't fight with yourself."

Failure to keep a calm mind when financial markets are plunging may lead to making wrong decisions, like selling at the bottom, crystallizing what might otherwise have been only temporary paper losses.

After a 30-year career as a successful businesswoman, including stints at several Canadian banks, Gonzalez had as much exposure to the market as many investors did when the crash of 2008 occurred. How did she react to it?

"Honestly, it wasn't that stressful. It was shocking, absolutely, but not stressful in the sense you can't control the outcome. The only thing I could control was my response, which was to become calm."

Stock crashes will happen again, "so it's really a matter of maintaining a calm centre. It's a very trainable skill."

Byron, a vice-president and associate portfolio manager with CIBC Wood Gundy, doesn't ask clients to meditate but says they get the benefits of his own half-hour sessions, which he performs immediately on waking in the morning. But the focus on mindfulness also pays off when he's talking to them.

"It's all about focus, tuning out the noise, and concentration," he says. "Mindful listening is one of the best things about meditation."

In a long investment career that began with Winnipeg-based Investors Group, Byron has experienced seven major market corrections. The 2008 crash was the worst of them, but he didn't stop meditating when it occurred. He says he didn't have the same "visceral reaction" earlier crashes caused.

"I felt in control and that I could communicate with clients clearly and with focus."

As a fee-based advisor, Byron doesn't trade often, preferring clients use the money managers he recommends.

How many other advisors meditate? "I've not run into too many," Byron admits. "The other way to be calm and stay focused is to have experience. Experienced advisors are pretty much all good at this stuff. Once you have a few years under your belt, you can really stay calmer automatically." But he still believes meditation gives him an edge over advisors who don't practise it.

The authors say another way of staying calm about money is to reorder your priorities, keeping money in perspective. The authors suggest your priorities should be: 1. spiritual and mental health; 2. physical health; 3. time; 4. helping others; 5. money

"We talk a lot about risk and the possible downside, but money is a tool," Byron says. "You should use it for good things you enjoy, like giving to charity. At the end of the day, a good financial plan will help you relax and enjoy your money. Most people are better off than they think they are."

[email protected]

THE MINDFUL INVESTOR
By Graham Byron and Maria Gonzalez
Wiley Canada 304 pp; $32

--------- - The first of three video interviews with Maria Gonzalez can be viewed this weekend at financialpost.comor wealthyboomer.ca