Jason Apollo Voss became co-manager of the Davis Appreciation & Income Fund in 2000. During his five-year tenure, the fund beat the total return of the Nasdaq Composite by 77%, the S&P 500 by 49% and the DJIA by 36%. It was ranked No. 1 in its investment category by Lipper, and received Morningstar’s highest rating for ethical stewardship of investor money.
In October 2004, Voss’s intuition warned him of the financial collapse and global recession that would start little more than three years later. At the age of 35, he retired and devoted himself to studying martial arts and practicing meditation. He writes a blog titled “What my intuition tells me now,” and recently published “The Intuitive Investor: A Radical Guide for Manifesting Wealth.”
When I learned of this unusual journey from Michael Gelb, a creativity consultant and an author himself (“How to Innovate Like Edison: The Five-Step Process for Breakthrough Business Success”), I was fascinated. As a psychotherapist, I believe that fine-tuning our intuitive capacities and using time and energy more productively, whether for investing or any other life decisions, are worthy of deeper understanding. After reading Voss’s book, I interviewed him for Investment Advisor.
Defining and Distinguishing Intuitive Investing
Olivia Mellan: Jason, you contend that the involvement of the right brain’s creative and feeling powers is missing from the traditional investor’s thought process.
Jason Apollo Voss: Within the first few months of my career, I realized that the facts I was gathering and analyzing didn’t answer the question of whether to buy or sell an investment. Investing unfolds in the future, yet there is no such thing as a future fact. That suggested to me that I needed more than facts on which to base a decision.
To most of us, fact gathering looks like an exclusively left-brain activity, yet the right brain provides the discernment that allows us to choose which facts to focus on amid a sea of information. That is, the right brain helps us know which facts are important. I also realized that we treat the right brain and left brain as if they were separate, although they work together holistically without our knowledge or appreciation of that fact.
My goal is to help investors and advisors increase their consciousness about how they are making decisions, and become more aware of any preference they have for one side of the brain versus the other. Successful investing is as much an intuitive, creative process as it is a product of linear, analytical thinking. Only when processes from both sides of the brain are properly combined do we gain the actionable information we need to make good decisions.
OM: I can’t help remarking on your unusual name, since Apollo is the Greek god of music and harmony.
JAV: Actually, my mother loved Greek mythology! I use my middle name because it’s distinctive, but harmony is definitely an important part of my approach to life.
OM: It takes some chutzpah to quit Wall Street during a very successful run as a portfolio manager. Why did you do that?
JAV: While I was meditating on Oct. 21, 2004, I had an epiphany—a profound sense that Wall Street, the real estate market and the mortgage market were going to collapse. I didn’t think there was much I could do as a money manager to change that outcome, and I couldn’t exactly go to the board of directors at Davis and say, “I had this insight during meditation that we should convert everything to cash for the next few years.” So instead, I decided to retire with my performance record intact and pursue more of a spiritual practice. Eventually, “The Intuitive Investor” emerged from this experience.
OM: What’s the difference between a regular investor and an intuitive investor?
JAV: All investors use their intuition; it’s just that the role of intuition is largely invisible, ignored, or misunderstood in making investment decisions. “Intuitive investors” recognize the role of intuition and actively cultivate it so they have a more complete investment toolkit—one that includes creative and intuitive tools as well as analytical tools.
OM: Many advisors tout their discipline and objectivity in developing strategies and choosing investments. What role does intuition play in this process?
JAV: You can apply your intuition in a highly disciplined way to this disciplined process. In fact, that’s why I wrote the book: to turn intuition from serendipity into process.
Intuition is the hidden partner in all investment decision-making. For example, if you’re trying to understand what’s happening in oil prices right now, your intuition is what tells you which information is important and which is not important. Given that there’s a sea of information out there, that distinction is critical. So people are using their intuition all the time. To put it another way, they are processing the future with their intuition.
Intuitive Investing in Action: The Current Oil Market
OM: How can investors use an understanding of intuitive investing to help them make a decision?
JAV: Let’s consider an investment decision involving the oil markets to illustrate four principles of intuitive investing that I’ve identified.
Most investors would begin with what they already know about the oil markets. But in a situation as radically different as it is today, that would typically put them in a position of ignorance, anxiety and prejudice. So my first principle requires you as an investor to step back, expand your boundaries and see the total picture to the best of your ability. This means you recognize your anxieties, assess where you are ignorant and need more information, and identify your emotional prejudices.
Once you go through this process, which takes a lot of consciousness about how your mind is functioning, you’re able to look at the whole picture without excluding important information. So Principle One, which I call Infinity, is about seeing infinite possibilities and interconnections.
However, investors also need to make important distinctions. This leads to Principle Two, Paradox, where you separate probabilities from possibilities and define the important issues. In order to define something, you generally have to consider its opposite. For example, “hot” has meaning only when compared with “cold.” In investing, we only understand “undervalued” because we have an understanding of “overvalued.” The left brain sees this information as being in opposition, whereas the right brain sees them as complementary.
Think of “undervalued” as being the thumb, and “overvalued” being the rest of your fingers. When they work together, you can grasp a concept. You need to treat these opposites as complementary, so you don’t exclude important information that needs to be factored in.
Principle Three, Harmonizing, is where you begin to allow your mind to resonate with these distinctions. The right brain excels at holistic, multi-dimensional thinking. If you allow it to function at this stage, you will likely see interconnections and facts previously missed. With everything we learn in life, there’s a moment when it just clicks. This is when you have harmonized with what you learned or understood.
Finally, Principle Four, Action, requires you to take responsibility and make a choice: buy, don’t buy, or sell.
Whether or not oil prices will impact worldwide economic recovery is a perfect example of how to use these four principles to make a decision. Following Principle One, Infinity, we realize that we must view the big picture in our decision-making process. This means going beyond the usual supply-and-demand fundamentals to carefully consider geopolitical factors, such as the revolutions unfolding throughout the Middle East and even the character of Middle Eastern leaders.
Once we’ve expanded our boundaries to include these factors, Principle Two, Paradox, requires us to draw important distinctions by considering opposites. For example, normally we might assume steady oil production in Libya as a given, but what if rebel forces destroy the refineries? How important is the divide between Sunni and Shiite Muslims? Our intuition, along with our left-brain analysis, might make these and many other distinctions.
Principle Three, Harmonizing, becomes part of the process when we have a “eureka” moment and the light bulb clicks on. In our example, this might include the intuitive realization that no matter who controls these countries, they’re going to be in the business of selling oil. After all, there’s no other resource for them to base their economy on. You may have other “Aha!” moments which will deepen your understanding of the situation and the direction in which it might go.
So now you’ve addressed the existential question of “Will there be oil in the new Middle East?” and you’ve answered it affirmatively. The next question you might put through the intuitive process is “How long will oil supplies be disrupted, and what will the effect be on the world economy?” Whatever your conclusions are, you will find yourself in Principle Four, Action: buy, don’t buy, or sell? And you have to take responsibility for your decision.
OM: Why is an awareness of these four principles important in helping advisors apply their intuition in a more disciplined way?
JAV: It’s important because otherwise, people use their right brains without analytical rigor. Most advisors, when confronted with a typical oil shock, would go straight to analyzing oil supply-and-demand fundamentals. Without right-brain functioning, this heuristic is applied in machine-like fashion.
But once the right brain is engaged, you realize that this situation—simultaneous revolutions in nearly every major oil-producing country—is radically different from anything you have confronted before. So you must expand your analytical boundaries to include new information (Principle One, Infinity) and switch from making normal distinctions (Principle Two, Paradox). Someone who knows the four principles of an intuitive investor would begin their analysis by expanding their horizons every single time.
OM: Some folks might say, “But intuition is just educated guessing based on experience and knowledge, and I already do that!”
JAV: That’s exactly right—there’s nothing radical or profound about the process. But by being aware of the four principles, we can involve our right brain more rigorously in an analysis.
In the oil example, it would have been very easy to start with too narrow a context, look at oil supply-and-demand fundamentals, and go straight into making distinctions. Instead, using Principle One, Infinity, we recognized that we had to broaden our horizons before starting to make distinctions. The right brain does this naturally all the time, but we’re not conscious of it. Think of the hundreds of thousands of years that people took gravity for granted until Newton took the time to describe and understand it. Once he did, people could begin to think about it and its impact on things.
In our case, people are using the right brain all the time; they just don’t think about how they come to their conclusions. By understanding how the right brain works, we can create tools around each of the principles to make them more powerful and useful for decision-making.
It’s like a slow-motion replay of a sports moment. By slowing down the process and seeing each of the steps, we begin to see how to employ them more consciously.
Intuitive Investing and Risk
OM: Does intuitive investing take a nontraditional approach to risk?
JAV: My approach is that the more information you have about risk, the easier it is to avoid too-risky investments.
One thing that is unique about my approach to risk is that I focus on it before I focus on opportunities, because investment risks throughout history tend to repeat themselves. In fact, the insurance industry is based on that fact. Opportunities are ephemeral and much more difficult to assess.
OM: How can advisors be sure they don’t tip the scales too much away from analytics?
JAV: Intuition is merely another source of information. You’re free to reject anything that doesn’t feel right or relevant. You need to have a strong sense of when you feel conviction.
OM: What was your best investment decision, and how did intuition play a primary role in making it?
JAV: Using the four principles, I called the March 9, 2009 market low three days later. I began with Principle Four, Action, by choosing to tune into the mood of the stock market. I then went into a meditative state and began to harmonize (Principle Three) with the collective consciousness of investors. Until I was able to fully harmonize, I was separate and distinct from them (Principle Two, Paradox). Once I was fully merged (Principle One, Infinity), I could feel quite clearly that they were exhausted, not just queasy as they had been for nine months.
Then the right-brain process became a left-brain process. I used my knowledge of people, specifically that when they are nervous or anxious, they’re in a mood to sell. Exhaustion, on the other hand, means they want to walk away from the situation. So on March 12, I declared the market low on my blog. No computer or solely left-brain process could have arrived at the same conclusion.
OM: What was your biggest mistake? What did you learn to inform future investment decisions?
JAV: One of my biggest mistakes was a purchase made shortly after my promotion from analyst to portfolio manager. My right-brain, emotional mistake was that I wanted to have an immediate impact upon my promotion. In focusing on this one particular stock I ignored minor, but nonetheless significant, information because I wanted it in the portfolio.
The lesson for me was that without right-brain rigor, especially full consciousness of my decision-making process, including my ego and my emotional state of being, I was doomed to make many mistakes. This was a huge learning experience for me. I had made no left-brain analytical mistakes; all of my mistakes came from failing to bring rigor to my right-brain decision-making process.
Why Meditation, and Luck Vs. Intuition
OM: You devote a whole chapter to meditation. What would you say to advisors who question whether meditation is relevant to their work with their clients?
JAV: In our culture, we tend to think of meditation as something done by Eastern mystics. Yet we all have had epiphanies that have changed our lives. The meditation chapter, in conjunction with the four principles, teaches people how to access this state at will.
Every human being meditates, whether they know it or not. Science has shown that each of us achieves a meditative brain state every single day. The weight of science now suggests that this state literally is the right brain in action.
Let me ask you this: What do you do that rejuvenates you? Examples might include yard work, sweeping the floor, jogging, swimming, golf and so forth. These activities are overwhelmingly where people experience insight or intuition. I simply advocate doing the things that rejuvenate you to access your intuition. Alternatively, you can sit down and meditate. In fact, the four principles, when worked backwards—Principle Four to Principle One—are how you achieve a meditative state.
OM: How have your peers received these messages?
JAV: Overwhelmingly, the feedback has been positive—especially from the hedge fund community. They have to be at the cutting edge by definition, and many of them are very introspective. Dealing with these issues on a daily basis, they’ve got to be as objective and as free of personal limitations and prejudices as possible. Two hedge fund managers have publicly declared that the book is revolutionary and decades ahead of its time.
OM: If advisors try to follow these “intuitive investing” principles and have good results, how can they be sure it’s not just luck?
JAV: Surprisingly, the answer lies not just in an evaluation of what you bought, but also in what you didn’t buy.
The returns that everybody looks at are your investment purchases. However, success can also be measured in the disasters you avoided, which never show up in anybody’s assessment of you. If you have a consistent record of successful purchases and successful avoidance, you know you are processing information correctly. Whoever understands information in the investment world wins.
OM: What does “The Intuitive Investor” have to offer advisors who do a holistic kind of financial planning?
JAV: All of us use intuition in many aspects of our lives and our decision-making. After all, every decision is an investment decision, because we are investing our resources, time, energy, reputation and so on in order to improve our lives. A deeper understanding and integration of left- and right-brain functions will help all of us make better decisions.
So really, we’re talking about how to make more effective decisions about anything. Much more than just a book about investing, “The Intuitive Investor” is a guide to healthy, mindful living.
Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of “The Client Connection: How Advisors Can Build Bridges That Last,” available through the Investment Advisor Bookstore at www.invest-store.com/investmentadvisor. She also offers money psychology teleclasses and facilitates intergenerational retreats for wealthy families. E-mail Olivia at firstname.lastname@example.org.