When it comes to making important decisions we often consider two seemingly contradictory pieces of advice—“Use your head” vs. “Listen to your heart.”
The call to “Use your head” is surely the default piece of advice when it comes to investing. Implied in this statement is that to use your head is simply to be smart.
The heart, on the other hand, tends to be shorthand for “Allow your emotions or feelings to affect your decisions.”
The heart, then, is asked to remain outside of the decision-making room while the head, which is understood to be consistent with pure logic and reason, is encouraged to make investment decisions alone without being influenced by the heart.
Is Investing Just about the Numbers?
Our heads rely on what we can count or quantify, namely material facts and numbers. Given this, using our heads makes us feel like we are making an informed and responsible decision because facts and numbers are unbiased and reliable.
But is there any place for the heart to have a say?
The heart has gained a bad reputation in the world of investing because of its association with emotions like fear and greed that cause bad investor behavior. Since these intangible emotions have proven to be problematic, we have grown weary of considering anything that is intangible.
The consequence of this fear is that it reduces investing to just numbers. To some, this may seem like a victory. However, there is a problem—it leaves little room for purpose.
Just imagine if we reduced other aspects of our lives to numbers without considering purpose.
Consider football. If football were to be reduced to numbers only, the game would be just about compiling stats. But no matter how many record-breaking statistics a player may generate in a game or season, it will never replace the true purpose of football, which is about camaraderie and unity and a commonly-shared purpose of winning.
Take food as another example. If food were to be reduced to numbers, eating would become about the measurement and intake of the appropriate amounts of macronutrients. But no amount of calorie-counting will ever substitute for a delicious meal with loved ones. Food is about the joint nourishment of our bodies and souls.
A Greater Purpose
Purpose gives meaning to almost every aspect of our lives and, although it may be intangible and unquantifiable, it invites us to infuse meaning into much of what we do. So, ask yourself this question:
Why do I invest?
This is ultimately a question of purpose. If you silence your heart and rely solely on your head, you will answer this question in a way that you believe to be smart and reduce the purpose to something that can be quantified and measured with numbers, i.e., to make money.
But could it be that your primary motive for investing is for a greater purpose than just making money? My guess is that most of us would want to say that while making money is an important outcome of successful investing, it is simply a means to a greater purpose that we might have.
We are not just rational beings—we are beings that desire purpose. And if you believe this intangible and unquantifiable desire is held in your heart, you should consider inviting your heart to join your head as you answer the question Why do I invest?
You may find that it elicits an answer that comes from the heart.