Happiness Goes to Wall Street

You want to live a happy life. If you approach your happiness as an investment — you have a certain amount of time and energy to put into it, and you want that to grow into something bigger — it makes sense to explore what one of the fathers of modern investing had to say about doing it well.

Benjamin Graham changed the way millions of people (including Warren Buffett) thought about stock market investing. Before Graham, stock buyers mostly gambled. They bought emotionally and without a defined process. That’s how most of us approach happiness — we do this or that thing because we read about it, it’s popular, let’s give it a shot.

Graham cautioned against this approach, creating a framework for determining whether an investment was wise or not. As part of this framework, he wrote the following:

“The essence of investment management is the management of risks, not the management of returns.”

– Benjamin Graham & David dodd, Security analysis (1934)

That’s worth reading twice. Go on, read it again. I want to make sure you understand it.

What Graham meant is that for long-term investing, it’s more important that you avoid big losses than seek big gains. Investors who follow Graham’s advice aren’t the best at making money — they’re the best at not losing it, which over time (because of compounding) leads to greater returns at lower risk.

I’m not especially interested in the stock market applications, but I’m very interested in how this applies to happiness.

In Level 2 of Resilience Academy training, I share that the longest study of human well-being is known as the Harvard Grant Study. The Grant study began in 1938, and it continues today. In fact, the current directors of the study, Bob Waldinger and Marc Schulz, just released a new book on it in 2023, called The Good Life.

The main argument? That the most important thing for happiness in life is relationships. As Waldinger said in his incredibly popular TED talk on the good life, “Good relationships keep us happier and healthier. Period.”

This is consistent with what George Vaillant, Waldinger’s predecessor, wrote in Triumphs of Experience, his 2012 book on the Grant Study: “Happiness is love. Full stop.”

Apparently Grant Study directors like punctuation. But there’s another way of interpreting the Grant Study more aligned with the investing wisdom of Ben Graham. That alternative view, surprisingly, also comes from Vaillant, who wrote in Triumphs of Experience that the secret to happiness isn’t just love. Something else matters too:

“There are two pillars of happiness. One is love. The other is finding a way of coping with life that does not push love away.”

– George Vaillant, Triumphs of experience (2012)

That last part is also worth re-reading because it’s easy to miss (note to members, there’s a whole video on this in Level 2). The key to happiness isn’t just about managing the positive (“love”). It’s also about managing the negative (“not pushing love away”).

Ben Graham learned this on Wall Street because he saw that losses in the stock market typically set us back more than gains move us forward. As a result, great performance over time is about capturing less downside, not more upside. This is why he advocated focusing on risks more than returns.

I suspect that Vaillant learned the same thing from the Grant Study. In his first book on the Study, published in 1998, Vaillant focused more closely on the coping skills themselves. He recognized that our ability to navigate the hard times — what I like to call crucibles — matters enormously. The happiest people aren’t great at being happy. They’re great at not being unhappy. The difference is profound.

It’s also instructive, because it means that if you want to be happier, you don’t need higher highs. You need higher lows — a better way of dealing with all the crap in your life. The person with the best composting skills wins.

It’s possible that the rose-colored marketplace of self-help books and TED talks nudged the Grant Study to the more positive pillar of love, or it may be that it’s just easier for us to grasp being positive over not being negative. We can all wrap our heads around motivational speeches, but an “anti-demotivational” speech? What does that even mean? And how do we get good at not being unhappy?

Actually, that’s exactly what the Resilience Academy teaches. To paraphrase Ben Graham, the essence of happiness is minimizing risks, not maximizing returns. We identify the at-risk parts of our relationships, and we learn to repair strains, bridge disagreements, and double-down on empathy and understanding. And you can try it right here, right now, for free.

That’s an investment even Ben Graham would have approved of.

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