All of us want to make wise investing decisions. For many today, that means focusing on profit. And while that may be the de facto understanding of wise investing, it isn’t wise.
What does wisdom mean?
Wisdom is an ancient word, of course, and we all know it – or think we do. Today, it means a kind of ‘street smarts’ or ‘knowledge applied skillfully.’ But this modern definition is only part of the word’s meaning.
What I want to do is take brief look at the meaning of the word in different times and places, going back to ancient wisdom teachers for understanding.
Wisdom in western thought, c. 300BCE
Let’s go back in time to around 300BCE, to listen to western wisdom teachers, like Aristotle. At that time, the word for wisdom was phronēsis (or that’s how you would pronounce the Greek word, which looks like this: φρόνησι). Phronēsis translates to our English word ‘wisdom,’ or better ‘practical wisdom.’ But for western teachers, wisdom wasn’t just practical, like it’s understood today – it was ‘aimed at’ doing what’s right. It was a kind of ‘know-how’ that ‘knows why.’ For this reason, some say phronēsis should be read as ‘mindfulness.’1 Wisdom was knowing in a particular situation what to do in order to progress towards life’s highest ends. It was decision-making oriented towards doing what’s right. For western teachers, wisdom meant two things together:
- doing what’s smart
- aimed at what’s right.
We can talk about these two components of wisdom as analytically distinct, but in practice they were indistinguishable. Wisdom described one action that’s both smart and right.2
Wisdom in near eastern thought, c. 600BCE
Let’s go further back in time to around 600BCE to the near eastern wisdom teachers, like Solomon. At that time, the word for wisdom was hoekma (Hebrew: חָכְמָה). This word translates to wisdom in English. Again, we discover wisdom meant two things:
- doing what’s smart 5 and
- doing what’s right.
Leading scholar on the Jewish and Christian Old Testament wisdom books of Proverbs, Ecclesiastes, and Job, Craig Bartholomew of Redeemer University College, says, “Wisdom […] has a double advantage: it pleases God” (what’s right) “and enables one to negotiate life successfully” (what’s smart) (emphasis mine).3 Bartholomew writes that for the Hebrew wisdom teachers, what’s right and what’s smart were so bound up together that it would be impossible to dissociate the two concepts. In near eastern thought, the righteous (the person who does right) and wise are ‘co-referential’ terms that describe the same type of person.4 The wise person does what’s right and what’s smart and the fool does what’s wrong and what’s stupid or insane.
In both western and near eastern thought, wisdom meant one action that’s both smart and right. It’s only a recent, modern, and mostly western turn of events for wisdom to have the limited sense it has today, of only skill or technique. For most of human history and in most cultures, wisdom required both virtue and skill.
Returning to investing, we can see that focusing on profit only isn’t wise. Wise investing, must be as concerned with people as it is with profit. It would mean investing that prospers by serving well the needs of others. It would mean doing well, by doing good.
Wise investing means paying attention to both profit and people. This not only satisfies a technical point about the criteria of wisdom – it’s also just a more satisfying way to invest. We’d love for you to experience it with us.