2018 was a pretty meh year for investing.
Stock markets around the world are in the red for the year. As I’m writing this, the S&P 500 is down 7%, the FTSE is down 12%, and Singapore’s very own STI is down 10%. What do we make of all this?
If you were investing in 2018, you’re probably getting a little nervous by now. You’re probably asking: Did I make the right choice? Is this all is massive scam? Should I just give up now and cut my losses?
It’s interesting, because there’s a character in the Bible who asked these very same questions thousands of years ago. What can his story teach us about how to think about investing and psychology today?
As a recap, we’re doing a series about extracting practical wisdom from the Bible. As one of the world’s oldest collections of wisdom, the Bible is a treasure trove of practical advice – even if you don’t believe in God.
Today, let’s turn to the epic story of Abraham to learn about the psychology of becoming not just better investors, but also more courageous and convicted human beings.
The Guy Who Really Wanted Kids
There are 2 things we need to understand about Abraham: First, his original name was Abram. Second,he really, really wants kids.
Not in the “I want kids because I’m ready to take my marriage to the next level” kinda way, but he had a burning, intense desire for children. You see, in ancient times, having children was critically important. To have children meant having economic prosperity (e.g. more people to work on the farm), passing down your lineage, and most importantly, validating that you were blessed by God (folks who couldn’t have kids were often assumed to have somehow angered God in some way.)
When God first speaks to Abram, God promises him children. This is BIG NEWS for Abram, because he’s 75 years old at the time. But a number of years pass, and Abram has still no kids. He complains to God, “Behold, you have given me no offspring”. So God takes him outside and says,
“Look toward heaven, and number the stars, if you are able to number them. So shall your descendants be.” – Gen 15:5
Woah. God promises that Abraham that he will not only have children, but his descendants will number like the stars in heaven! Remember this scene – this will be important, so we’ll come back to it later.
Abram’s Big Mistake
Yet, a few more years pass, and Abram still doesn’t see any kids. He and his wife Sarai begin to doubt if God’s plan to give them children is actually going to play out.
So Sarai has a crazy suggestion: Abram should sleep with her maid Hagar. Why? Because according to legal custom, Hagar’s children would belong to her mistress Sarai1. Abram goes along with his wife’s bad idea and sleeps with Hagar. Hagar gets pregnant and gives birth to a son, named Ishmael.
Almost immediately, trouble begins to brew.
Hagar, feeling smug that she gave Abram a son while Sarai couldn’t, treats her mistress with contempt. Sarai feels resentful and mistreats Hagar, forcing her to flee with Ishmael. The whole household is thrown into chaos, and this is starting to sound like an episode of Yanxi Palace.
What follows is a looooong period of silence where Abram doesn’t hear from God for thirteen years. Finally, God appears to Abram once again in Genesis chapter 17 and says,
“I am God Almighty: walk before me and be blameless.”
In other words, God was saying “Dude, you messed up. Now stop being an idiot and get yo’ act together.” (Okay, maybe not in those exact words, but y’know what I mean). God then repeats His promises, changes Abram’s name to Abraham, and instructs Abraham to be circumcised as a sign of that promise.
By this time, Abraham is already 100 years old. But after his mistake, he now trusts in God and follows his plan. Soon enough, a miracle happens: Despite her old age, Sarah gives birth to a son, named Isaac.
And as God promised, Isaac was the first offspring of a whole line descendants including King David (who united the kingdom of Israel), a whole line of other kings, and several thousand years later, a man named Jesus Christ.
So what do we make of Abraham’s story, and what can it teach us about becoming better investors?
Don’t Just Do Something, Stand There!
Abraham’s mistake wasn’t just about the fact that he bore a child with his wife’s maid. The bigger issue here is that instead of trusting in God, Abraham decided to take matters into his own hands. He was basically saying, “Hey God? I know you told me to do this, but heck it, I’m going to do that instead”, which of course led to disastrous results.
Think about how this applies to investing. When we hear bad news about the markets (Brexit! Trump! China!), so many of us want to jump in and do something. Maybe we want to sell everything and wait for a better time to invest. Maybe we decide to hold off investing until things settle down. Maybe we start to poke around at “alternative” investments.
Of course, this is usually a bad idea. Over the long run, the market rewards those who stay invested despite the challenges, not those who jump in and out at every rumour. As Jack Bogle, founder of the index fund, famously said2,
“Don’t just do something, stand there!”
Of course, this is easier said than done. The past few months have been rocky on everyone’s portfolios. If you started investing during this time, all the “evidence” so far would point you toward the belief that investing is a BAD ida.
How do you stay convicted despite only seeing evidence that tells you to run the other way?
Cause You’re A Sky, Cause You’re A Sky Full of Stars
Let’s go back to the story when God tells Abraham that his descendants will number like the stars in the sky.
Most people assume that God is speaking to Abraham at night, under a brilliant canopy of stars (Gen 15:5). But if you look closely at the following verses (up to Gen 5:12), you’ll notice that nightfall occurs only much later. In other words, God is speaking to Abraham in broad daylight.
God’s message here is profound. He’s saying, “Hey Abraham, while your sight is too weak to see the stars, I, the Lord, can see them; and I the Lord, can also see your many descendants, even though you cannot.” 3
In other words, God is telling Abraham to have faith, even though he can’t immediately “see” the end-goal.
Faith has a bad rep these days. People assume that “faith” means irrationally ignoring all the evidence. But that’s a wrong assumption: Of course you need to gather as much evidence as you can. Faith isn’t opposed to evidence, but complementary to it. Like investing in the midst of challenging times, faith encourages us to take a step forward despite not having 100% certainty.
“Faith is to believe what you do not see; the reward of this faith is to see what you believe.” – St Thomas Aquinas
Doesn’t this apply to so many things in our lives? You can do all the research and preparation you want. But if you want to invest, apply for a new job, have a baby, or do anything that’s worth doing… you’ll always need to have faith.
Even though you can’t always see the stars, sometimes it simply takes a leap of faith in order for you to reach them.
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Sources:
- 1Bible Basics For Catholics – John Bergsma
- 2https://www.barrons.com/articles/BL-FUNDSB-12372
- 3Walking with God – Jeff Cavins and Tim Gray
- Image source
I like your take on how the story of Abraham relates to our current investing climate. Its a timely message, and I definitely need to hold on in faith in both my investments and my own spiritual life. Keep up the interesting writings!