Posts Tagged ‘investing styles’

What’s your dosha? (The Financial Athlete #49)

August 31, 2008

By way of yoga, I have learned of ayurveda, a medicine system from India dating back 5,000 years. Ayurveda teaches that the human body and mind are comprised of three psycho-physiological functional principles called doshas: Pitta (fire), Vata (wind), Kapha (earth). Most people are dominated by one or two of these.

Interestingly, the dominant dosha for your body may be different than for your mind. Here only the doshas of the mind is explored. It’s important to know your strength and weaknesses and why you do what you do including your manner of investing.

Vata (wind or air)
Positive characteristics: spontaneous, imaginative, active, flexibility, visionary, trend setter
Negative characteristics: restless, nervous, anxious, acts too hastily

The vata mind craves excitement. Thanks to the vata mind we have extreme sports and funding for new companies with promising, revolutionary technology. The investor with the vata mind is in tune with trends. She focuses on the future. Stocks with tremendous growth prospects attract her. Although she may identify future trends correctly, she tends to invest too prematurely as progress materializes more slowly than she had anticipated. This reality of life tires her with worry.

Pitta (fire)
Positive characteristics: ambitious, hard-working, intelligent, strong-willed
Negative characteristics: anger, critical, loss of self-control, overconfident

The prototype of warrior and athlete are pitta types. The pitta mind loves to compete. A Pitta tends to rise to the top or sink to the bottom. He does not fear failure because he believes he can always bounce back.

The pitta type over commits on investments because he is on the fast track to success. For him to take on big risks for potentially big returns is a noble venture. The challenge for the pitta type is to control aggression. If he learns to control it, then this is the fire which nurtures the soil. If left uncontrolled then this is the fire of intense heat which damages the soil.

Kapha (earth)
Positive characteristics: down to earth, analytical, methodical, patient, calm, affectionate
Negative characteristics: stubborn, lazy, slow moving, more attention on past

In sports kaphas are the heavyweight athletes. Think sumo wrestlers and weightlifters. The Kapha type likes to take it nice and slow. He is good at saving money, as his main concern is return of principle rather than return on principle. At the edge of his comfort zone is investing in brick and mortar or solid, blue chip stocks. When the economy is sluggish, the kapha type is the wisest. But when boom time rolls around, he still behaves with excessive caution for fear the economy suddenly will turn for the worst.

All three doshas lie within us. Being conscious of which dosha is dominant is the first step towards bringing them into balance. For example, when we are conscious pitta is too strong we should engage kapha qualities.