Sometimes turning things upside down can give you a different perspective that you may not see otherwise. With investing I’ll invert questions with regard to a business’s operations to see if it shows me something I may be missing. I also sometimes turn charts upside down to see if it shows me something I may need to pay attention to.
Recently, when I was meditating it occurred to me why tibetian monks turn their lives upside down and seek isolation in order to attain a higher level of mediation. When meditating your mind quiets, and things creep into your mind. Most of these thoughts that come during quietness revolve around your life.
Our lives are constantly intertwined with keeping things going and maintaining our environments related to our lifestyles. These thoughts that come into the mind when meditating can take you off into different thought directions. In order to reach a higher level of meditation those thoughts associated with your current life maintenance would need to be removed from distraction.
Unfortunately, the mind is set up to focus on what exists currently, so it always tries to go back to those thoughts. Reaching a pureness of depth in meditation would require a person to give up all their possessions in order to limit these types of thoughts from moving into their peaceful realm of focus. Simple life, simple distractions. The monks realize this, and hence their isolation.
Turning Pressure Upside Down
Getting rid of one’s possessions would be a complete reversal of someone’s daily life. It occurred to me after working around this thought during meditation what it would mean for an investor if they turned everything around and inverted the overall concept. In other words, what if an investor had to invest to lose money rather than make money? Reverse the concept and turn the pressure upside down.
I started asking questions as I thought this concept through and realized it would be rather difficult to make this happen with equity investing. First off, this concept would require finding companies or industries on the brink of failure. Most companies are in business to be profitable, and most CEOs and founders want to succeed, so the entire premise of failure is something that wouldn’t be an option even though some do.
Even if a company does face struggles and possible failure they can exist for long periods of time at minimal levels, and then become acquisitions, or find new lines of businesses that can turn things around. History shows us examples of these situations. Blackberry, GE, and Kodak are a few of these examples. They are all focused on revitalization of their businesses in new forms. The oil and gas industry is currently regraffting itself to green energy in order to find new revenue streams as another example.
Maybe finding a complete failure would be an idea as it seems like it would be easy as there are many examples of failures over the historical landscape such as the Worldcom’s, Enron’s, and other examples of fraud out there. Yet as you dig deeper it becomes clear that these failures were hidden from investors by clever people until uncovered. Discovering a potential business failure of this type would be difficult.
Lastly, it would seem that maybe a rational idea would be to find companies that are well extended in price to their intrinsic valuations according to the experts. Unfortunately, history shows us that much of the time these types of companies are the ones that may back off in price, but rarely to zero, and can keep going for years and potentially turn into the Amazon’s or Tesla’s of the world.
The significance of this upside down challenge offers an interesting meaning into investing. Maybe the idea of losing everything through investing in stocks might be more difficult than perceived. Either way this thesis would be an interesting school project or challenge to see the results over time.
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