Virtue, Value, and Volatility

Introduction

Investing can sometimes feel like riding a wild rollercoaster—markets soar and crash, fortunes come and go. How do we keep our heads and make wise decisions amid all this turmoil? One unlikely source of insight is Stoicism, an ancient philosophy known for its calm resilience. Surprisingly, the Stoics’ wisdom aligns closely with sound investing principles. Here, we explore how Stoicism’s three core teachings—Physics, Logic, and Ethics—can guide investors through volatility while staying true to their values. We will explore how ideas from Marcus Aurelius, Epictetus, and Seneca might help us become better, more rational investors.

Stoicism, at its heart, was a practical philosophy. The Stoics taught three disciplines: understanding nature, sharpening reason, and living virtuously (ethics). Each of these can apply to investing, helping us navigate market cycles with equanimity, think clearly amid hype, and uphold strong principles in our financial decisions.

Embracing the Natural Order of Markets

Ancient Stoics believed in a rational natural order governed by the Logos (universal reason). Everything that happens in the world unfolds according to nature’s laws and cycles. Change, therefore, is inevitable and constant. As Marcus Aurelius observed, “Observe constantly that all things take place by change, and accustom yourself to consider that the nature of the universe loves nothing so much as to change the things that are and to make new things like them. For everything that exists is in a manner the seed of that which will be.” In other words, nature is always in flux, endlessly transforming old into new.

This insight is a powerful mental model. Markets move in cycles—bull markets turn into bear markets; bubbles inflate and eventually pop. If we accept that volatility and downturns are as natural as winter storms, we can prepare for them without panic. The Stoics would say it’s unwise to rail against inevitable changes. Instead, we learn to expect them and adapt. One might think of a market crash not as a personal catastrophe but as part of the natural order of economics. Just as Stoics practiced viewing life’s setbacks from a broader, cosmic perspective (“zooming out” to see the bigger picture), we can remind ourselves that corrections and recessions, however painful, follow laws of cause and effect in the market system (e.g. cycles of greed and fear, credit expansion and contraction). They are not random surprises but natural phases.

Seeing things this way helps cultivate patience and resilience. When we know that “Nature loves change,” we won’t be shocked by a sudden bout of volatility—we knew the sunny days wouldn’t last forever. Instead of reacting emotionally or trying to time every twist and turn, an investor with this outlook focuses on being prepared. This might mean keeping a reserve of cash for opportunities that arise in downturns, or simply mentally fortifying oneself to endure lean times. Nothing is permanent: even extreme market losses can be temporary, and economic springs generally follow winters. This isn’t Pollyanna optimism, but a sober reminder that “for everything that exists is in a manner the seed of that which will be”—today’s losses may plant the seeds of tomorrow’s gains. By embracing the natural cycle, we replace surprise and anxiety with foresight and acceptance.

Crucially, understanding nature also means recognizing what is beyond our control. We cannot stop global events, natural disasters, or macroeconomic trends any more than a Stoic could stop the tides or seasons. What we can do is adjust our sails. An investor who internalizes this outlook won’t waste energy lamenting external forces (“Why did the Fed do this to me?!”); instead they’ll say, “This is the environment now—how do I respond wisely?” In sum, this perspective teaches us to align with reality’s nature, not fight it. Market volatility becomes less frightening when seen as just another natural phenomenon that we can prepare for and endure.

In fact, many renowned investors echo this perspective. Ray Dalio, for instance, often stresses the importance of embracing reality and expecting cycles rather than denying them. Similarly, Blackstone’s Jonathan Gray credits a long-term focus on fundamentals—and not getting rattled by short-term market swings—as a key to navigating volatility. By anticipating change and accepting what we cannot control, we cultivate the calm and foresight needed to weather financial storms—just as the Stoics advise.

Reason, Clarity, and Sound Judgment in Investing

The Stoics were keen analysts of thought; they trained themselves to question appearances and avoid cognitive traps. In investing, where emotion and bias can lead to costly mistakes, this logical mindset is a perfect antidote. It encourages us to base decisions on rational analysis and evidence, not on fear, greed, or the chatter of the crowd.

A core teaching is often referred to as the “dichotomy of control.” As Epictetus wrote, “Of the things that exist, some are within our control, and others are not.” He then plainly explains that our own opinions, intentions, and actions are up to us, whereas external events—like what others do or the outcome of events—are not up to us. This simple idea has huge implications for an investor’s mindset. We cannot control whether the market will crash next month, what the inflation rate will be, or if a company’s stock will suddenly fall out of favor. But we can control our own research, asset allocation, risk management, and the judgments we form about investments. In practice, an investor focuses on the process (which is controllable) rather than the outcome (which is ultimately uncertain). We can control how prudently we build our portfolio, but we can’t guarantee a positive return in a given year. Understanding this dichotomy helps prevent a lot of anguish and rash behavior. Instead of fretting over every headline or market swoon (things we can’t control), we redirect attention to what we can do—perhaps re-evaluating fundamentals or double-checking if our portfolio risk matches our tolerance.

Humans are prone to emotional reasoning—getting carried away by euphoria during a boom or paralyzed by fear during a bust. The Stoics trained themselves to pause and examine their impressions: “Is this really so bad? Are my feelings clouding the facts?” They sought mental clarity. An example of Stoic logic in action is the practice of describing situations objectively, without emotional labels. Instead of, “The market is crashing, it’s a disaster!”, a Stoic lens would say, “The valuation is down 20% this year.” This isn’t denial of reality—it’s facing reality without the extra panic our minds might add. From that steadier viewpoint, we can rationally ask: Is the market overreacting or was I perhaps too optimistic? What does the data truly show? Such clear-headed analysis is the hallmark of good investing. In fact, Warren Buffett once noted that temperament (how one handles emotions and stays rational) is more important than IQ in investing. Sharpening reason is essentially training in the right temperament: it helps us remain level-headed and evidence based.

Another aspect is commitment to truth and reality, no matter how uncomfortable it is. Stoics value being truthful with themselves above comforting illusions. This means being brutally honest in evaluating a business or our own strategy. It’s easy to fall in love with an asset and ignore red flags (confirmation bias), or to follow the herd into trendy investments without examining the fundamentals. We should strive to question assumptions: “Do I have solid reasons for this investment or am I just riding hype?” and be willing to change our mind when the facts change—applying reason over ego. This discipline of mind guards against common pitfalls like chasing fads, doubling down on a mistake out of pride, or making panicked decisions when the market swings. As Epictetus taught, only our own judgments are truly within our control, while external outcomes are not. We can hear an echo of this in the modern advice to “control your inputs and know that outcomes will vary.” By following this logical approach, an investor develops a kind of inner coach that keeps them grounded. It asks, “What evidence do I have? Am I thinking clearly? Am I reacting or reasoning?”

It’s about clarity of thought. We replace emotional reactions with thoughtful reflections. We guard against bias and sloppy reasoning. We remember that our decisions, not fate, are our realm—so we’d better make those decisions with as much wisdom as we can. This logical discipline leads naturally into Stoicism’s third and most important component: ethics, or how we choose to act.

Virtue as the Ultimate Investment

Stoic ethics is all about character and virtue. While natural order and logos set the stage, ethical action was the true aim of Stoicism. Virtue is the only true good—in other words, living with integrity, wisdom, courage, and self-control is far more important to a good life than external success or failure. This doesn’t mean externals (like wealth) don’t matter at all; it means they matter far less than how we conduct ourselves. Interestingly, this ethos can guide us to not only live better but often invest better too. In the long run, good ethics and good outcomes tend to align (think of the reputation of a trustworthy businessperson), but even when they don’t, a principled investor would rather lose money than lose their character. Let’s explore the Stoic four cardinal virtues—Prudence, Justice, Temperance, and Courage—and see how each translates into practical investing behavior:

Prudence (Wisdom in Decision-Making). Prudence is the Stoic virtue of practical wisdom—the ability to discern the appropriate course of action in any given situation. It’s about good judgment. In investing, prudence is absolutely critical. It starts with knowing our own circle of competence—being humble about what we know and don’t know. As the saying goes, a prudent person “never risks what they cannot afford to lose.” This means doing thorough research before investing, understanding the business or asset, and not getting involved in products we barely understand just because they’re popular. For example, during a hot market fad (be it dot-coms, crypto, or any new craze), prudence pumps the brakes and asks: “Do I really understand how this investment works and what its risks are?” If the answer is no, the wise move is to step aside, regardless of what others claim they’re earning.

Prudence in investing also means managing risk rationally. An approach would emphasize capital preservation and measured progress over wild gambles. Buffett’s Rule #1 is “Never lose money” (and Rule #2 is “Don’t forget Rule #1”). This epitomizes prudence: it’s better to miss a silly rally than to join it and crash hard. In practice, a prudent investor diversifies appropriately, avoids over-concentration in highly speculative bets, and maintains some margin of safety. They are skeptical of “too good to be true” opportunities. This isn’t cowardice; its wisdom is born of recognizing uncertainty.

Prudence also guides us to plan for the long term. Instead of chasing quick profits or trying to time the market (which often backfires), a wise one focuses on long-term value. They cultivate patience. One might say prudence is what helps an investor do nothing at times—an underrated skill! If the wise move is to hold a solid investment through a temporary storm, prudence gives us the calm to do so. And if the wise move is to admit a mistake and exit a bad investment, prudence helps us overcome our ego to make that decision. In Stoic terms, prudence is the intellectual virtue that steers the ship. It uses knowledge from facts and guides actions accordingly. A prudent investor asks, “What course of action aligns with my knowledge and my principles?” and isn’t swayed by the crowd or by impulse. Practicing prudence in investing means making decisions with care and intelligence, much like a sage carefully considers the likely consequences before acting. It’s the opposite of speculating on a hunch.

Justice (Fairness and Integrity). Justice means doing the right thing by others—being fair, honest, and responsible in our dealings. Marcus Aurelius, the philosopher-emperor, put it succinctly: “If it is not right, do not do it; if it is not true, do not say it.” This virtue is as crucial on Wall Street as it was in ancient Rome. It translates to integrity: fair dealing with clients, partners, shareholders, and even competitors. One who values justice will not engage in fraudulent or unethical practices for a quick gain, knowing that a stained reputation can undo even the most successful career. More importantly, they know that character is a form of wealth that doesn’t show up in valuations but has real value.

What does justice look like in practice? It means telling the truth in communications, not misrepresenting an investment’s risks, and treating others’ interests with respect. For instance, a fund manager will prioritize his clients’ well-being—one wouldn’t knowingly load their portfolio with inappropriate risks just because it yields a higher fee. In deals, it means honoring agreements, not cutting corners or exploiting the other side unfairly. This builds trust, and in the long run, trust is an asset. Many of the world’s great investors constantly talk about the value of reputation: how it takes decades to build and minutes to ruin. Blackstone’s Stephen Schwarzman, for example, has remarked that without honesty and fairness, lasting success is impossible. That sentiment is deeply Stoic. The Stoics believed that injustice harms the doer most of all, because you’ve compromised your own virtue. In modern terms, if you win by cheating, you’ve really lost something more important.

Justice in investing also has a broader dimension: contributing positively to society. The Stoics saw each person as part of a larger community. An investor practicing justice might ask: “Does my investment strategy create value for others, or am I profiting at others’ expense?” For example, profiting off a harmful decision or engaging in predatory lending—while legal perhaps—might not square with Stoic ethics. A just investor aims for win-win situations where wealth is created ethically. They understand that doing right by stakeholders (employees, clients, the community) tends to make a business more sustainable and reputable, which can also improve returns in the long run. But even if it didn’t, the Stoic would say justice is worth it for its own sake. There’s a quiet confidence (and actually a competitive advantage) in being known as someone who can be trusted. Deals come your way, people want to partner with you, clients stick with you in hard times. Thus, practicing justice is not only virtuous—it’s smart business. The key is, as Marcus urged, to never do or say anything that isn’t right or true. In an industry often marred by scandal, maintaining unwavering integrity is a differentiator. Such an investor can sleep at night knowing they never sacrificed their principles for profit.

Temperance (Self-Control and Moderation). Temperance is the Stoic virtue of self-control, moderation, and balance. It’s about restraining our impulses and desires, so they don’t run away with us. If ever there was a realm where impulses can do damage, it’s investing. Fear and greed—the two great forces—have destroyed many a portfolio. Temperance is what keeps them in check.

In practice, temperance for an investor means controlling greed during the good times and controlling fear during the bad times. It’s easy to get swept up when markets are euphoric—people start leveraging up, chasing high-flyers, or trading rapidly to make a quick buck. A Stoic tap on the shoulder would whisper, “Easy now.” Remember not to overindulge. One of Seneca’s warnings resonates here: “It is not the man who has too little, but the man who craves more, that is poor.” If we let greed (that craving for more, and more) take over, we paradoxically put ourselves in a position of weakness—never satisfied, often overextended, and vulnerable to sharp reversals. An investor exercising temperance will set prudent limits: for example, not borrowing too much on margin (leverage can amplify gains but will crush one in a downturn if used recklessly), not allocating an inappropriately large chunk of capital to one hot sector and not buying something just because “everyone’s getting rich from it.” Stoic temperance is a calm inner voice that says: Stick to your plan. Don’t get drunk on exuberance. In boom times, this might feel like we’re being overly conservative while others celebrate huge wins, but when the tide goes out, we’ll be glad we kept our clothes on (to paraphrase Buffett).

On the flip side, temperance also means not giving in to blind panic or despair when things go south. It’s the moderating force that prevents a fire sale of assets in a crash just out of fear. The Stoics practiced enduring discomfort and remaining steady under pressure, which for an investor could mean reining in the urge to impulsively sell everything at the bottom. Instead, a temperate investor sticks to their rational strategy: maybe rebalancing systematically or simply holding quality investments through the storm. It’s the discipline to say “no” to actions that satisfy a fleeting emotion but undermine long-term goals. Temperance keeps our greed from turning into folly and our fear from turning into capitulation. By avoiding extreme actions and emotional swings, we preserve both capital and sanity. The Stoics would call that living in accordance with nature—neither excessive in pleasure nor in pain, but balanced. For an investor, that balance is a quiet superpower.

Courage (Fortitude and Resilience). Finally, courage – the virtue of fortitude, bravery, and perseverance. When we think of courage, images of soldiers or activists might come to mind. But investors need courage too, albeit of a different kind. It takes courage to stick to principles under pressure, to remain calm in chaos, and to make tough decisions in the face of uncertainty.

One aspect of courage in investing is emotional resilience during market downturns. Anyone who has been through a brutal bear market or a financial crisis knows the sinking feeling as we watch our account value plunge. Panic is a natural impulse. Courage doesn’t mean we feel no fear; it means moving forward despite it. Adversity is part of the journey (as we know from the nature of cycles, this was bound to happen sooner or later). Instead of capitulating or becoming paralyzed, the courageous assesses calmly: “What can I do that is rational right now?” Often, courage means holding on when others are capitulating—not because of stubbornness, but because your analysis still supports your positions. It might even mean having the guts to buy more of an investment you truly believe in when its price is beaten down and everyone else is fleeing.

Courage is also required to admit mistakes. This might sound counterintuitive—admitting a bad investment requires courage? Absolutely. Our egos resist acknowledging that we were wrong, and many investors have gone down with a sinking ship rather than exit a losing position simply because they couldn’t face the error. The Stoics prized truth and improvement over ego. Having the courage to say “I was wrong about this stock, time to cut my losses” can save us from far greater damage. It’s the same fortitude in acknowledging their faults to improve character. Here, we acknowledge a misstep to improve our portfolio. Similarly, it takes courage to deviate from the crowd. There’s psychological safety in doing what everyone else is doing. But some of the greatest opportunities come when you have a well-founded conviction that goes against the consensus. An investor armed with courage (and prudence, of course) can venture into an unpopular investment—maybe an asset type or a market that’s temporarily hated—provided they’ve done their homework. It feels lonely and risky, but courage isn’t the absence of fear; it’s acting in spite of it when you have conviction.

Real-world examples bear this out. Brookfield’s CEO Bruce Flatt, for instance, has built his career by buying solid assets when they’re out of favor. While others panic in crises, Flatt’s team calmly acquires properties and businesses at bargain prices—moves that require the courage to go against the crowd, but are rewarded when markets recover. His success shows how patience and bold conviction, backed by analysis, can turn adversity into advantage.

Another angle: Stoic courage involves perseverance. Investing is not a smooth, linear path. There will be periods of losses, perhaps years where your strategy underperforms. The virtue of courage gives us the grit to believe in our principles, or to start anew if needed. The Stoics practiced an exercise called premeditatio malorum—premeditation of evils—where they would visualize the worst-case scenarios so they could face them better. An investor might do something similar by always considering, “What’s the worst that could happen in this investment? Can I handle it?” If we’ve braced ourselves, then if that punch comes, it might knock us down but not out. We’ll have the inner strength to get back up and carry on. Seneca, who was a wealthy statesman as well as a Stoic, advised becoming “intimate with poverty” in one’s imagination so that if fortune ever stripped away our wealth, we’d be mentally prepared. For us, that could mean not only preparing financially (e.g. having emergency funds and diversification) but also mentally rehearsing how we’d cope if our portfolio were cut in half. It’s not pessimism; it’s building resilience. And if the worst never comes, that’s fine—courage was ready regardless.

Courage is about staying true to rational decisions in the face of fear and maintaining composure when the seas get rough. It pairs with temperance: temperance keeps us from overreacting, courage keeps us actively doing what is right despite fear. Combine the two virtues, and the result is an investor who won’t easily be shaken out by volatility nor seduced by mania—a rare and valuable breed.

Stoic Wisdom for a Steady Path

Stoicism’s quiet wisdom offers a refreshing perspective in the often noisy world of investing. By viewing market ups and downs as natural and inevitable, we cultivate patience and preparedness. By insisting on reason and clarity of thought, we make better decisions and avoid costly biases. And by holding ourselves to high ethical standards, we ensure that our pursuit of wealth doesn’t compromise our character or long-term relationships. As we’ve seen, the Stoic virtues of prudence, justice, temperance, and courage map surprisingly well onto the traits of a successful, principled investor.

None of this is to say that following Stoic principles makes investing easy—emotion and uncertainty will always be challenging. But Stoicism gives us tools: mental frameworks and values to lean on when things get tough. It reminds us that while we can’t control the markets, we can control how we respond. As investors, we are bound to experience volatility and surprises. Having a Stoic mindset is like possessing an inner stabilizer—keeping us balanced and focused on what truly matters (both in investing and in life). Profit and loss come and go, but developing wisdom, integrity, and resilience yields dividends that last a lifetime.

In our own investing journey, we might take a page from Epictetus or Marcus Aurelius. When we feel swept up by hype or despair, we can step back and reflect: What’s in my control right now? Am I using my best judgment? Am I staying true to my principles? These gentle questions echo Stoic teachings and can guide us back to center. The goal is not to be perfect or emotionless—even Stoics had feelings—but to ensure that our reason and virtue ultimately guide our actions more than fear or greed do.

We find it’s not about suppressing feelings or caring less about results; it’s about caring wisely. It’s about finding steadiness in ourselves amid external storms. An investor who cultivates that steady, virtue-backed mindset will not only navigate volatility better, but also find greater satisfaction in the process. As the Stoics knew, living (and investing) well is a package deal: virtue and value, principle and profit, can indeed go hand in hand. In the long run, the quiet wisdom of Stoicism might just be one of the best investments we ever make.