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June 01, 2011 at 08:00 PM
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.
[Read more about the attitudes of intuitive investors.]
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.
