The importance of an investment philosophy

AGGREGATE ASSET MANAGEMENT
SINGAPORE (May 28): “The educated differ from the uneducated as much as the living differ from the dead” — Aristotle. Investors seek the holy grail to riches — the strategies that successful investors use. However, it is my personal opinion that most of the strategies are a manifestation of a philosophy. Therefore, I see great and renewed importance in philosophy and, in particular, investment philosophy. In this article, I will be looking at two questions — why philosophy and how to create one.

The word “philosophy” comes from the Greek word “philosophia”; “philo” meaning love and “sophia” meaning wisdom. To answer “why philosophy”, I will be offering two perspectives, one from a pure philosophical standpoint and another from an investment standpoint.

Philosophy enables us to be reasonable. Being reasonable is at the very core of philosophy. It can be taught in the specialisation of logic (argumentation) and epistemology (knowledge). It enables us to form an argument structure, to question and probe one’s inner self. It also satisfies and recognises our limitations of being mere mortals. As Robert Hutchins once said, “It must be remembered that the purpose of education is not to fill the minds of students with facts… It is to teach them to think, if that is possible, and always to think for themselves.” We are students of life, and we should constantly question everything. Philosophy is also a transferable skill. The knowledge acquired is widely applicable across different specialisations and fields, such as investing. It helps us to enhance our critical reasoning, communication as well as ethical reasoning skills. Furthermore, philosophy is all around us, from the quantum world to the cosmos.

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