The Psychology of Happiness – James Montier

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This is a classic read although rather unusual. I had the chance to attend a presentation by James Montier (now at GMO) at a Morningstar conference in Amsterdam a couple of years ago. In his intro, Daniel Needham unearthed his note on happiness. Although it probably has little to do with value investing, it is interesting to see that as an equity strategist at DkW, Montier had the liberty to write on such an important topic in life…

« • Don’t equate happiness with money.  People adapt to income shifts relatively quickly, the long lasting benefits are essentially zero.

Exercise regularly.  Taking regular exercise generates further energy, and stimulates the mind and the body.

Have sex (preferably with someone you love).  Sex is consistently rated as amongst the highest generators of happiness. So what are you waiting for?

Devote time and effort to close relationships.  Close relationships require work and effort, but pay vast rewards in terms of happiness.

Pause for reflection, meditate on the good things in life.  Simple reflection on the good aspects of life helps prevent hedonic adaptation.

Seek work that engages your skills, look to enjoy your job.  It makes sense to do something you enjoy. This in turn is likely to allow you to flourish at your job, creating a pleasant feedback loop.

Give your body the sleep it needs.

Don’t pursue happiness for its own sake, enjoy the moment.  Faulty perceptions of what makes you happy, may lead to the wrong pursuits. Additionally, activities may become a means to an end, rather than something to be enjoyed, defeating the purpose in the first place.

Take control of your life, set yourself achievable goals.

Remember to follow all the rules. »

The note also includes a lengthy quote from Adam Smith:

« Through the whole of his life he pursues the idea of a certain artificial and elegant repose which he may never arrive at, for which he sacrifices a real tranquillity that is at all times in his power, and which, if in the extremity of old age he should at last attain to it, he will find to be in no respect preferable to that humble security and contentment which he had abandoned for it. It is then, in the last dregs of life, his body wasted with toil and disease, his mind galled and ruffled by the memory of a thousand injuries and disappointments which he imagines he has met with from the injustice of his enemies, or from the perfidy and ingratitude of his friends, that he begins at last to find that wealth and greatness are mere trinkets of frivolous utility, no more adapted for procuring ease of body or tranquillity of mind, than the tweezer-cases of the lover of toys. »

You can read the full note here.

I think that there a lot of wisdom there, and to complete the reading, folks can go and check out this amazing Charlie Munger’s interview.