Investing in Religion

There are two basic approaches to stock market investment: fundamental analysis and technical analysis. A fundamental analyst studies individual companies in detail, looking at the quality of their balance sheets, the calibre of their management, the competitiveness of their products etc. Technical analysis, on the other hand, focuses on the performance of companies’ or whole sectors’ share prices in relation to the rest of the market, searching for historical trends that will indicate a good moment to buy or sell.

Fundamental analysis lends itself to true investment, meaning long-term commitment to particular companies, whereas technical analysis can feed short-term speculation. Warren Buffett is one of the best known fundamental analysts, who has built up big, long term positions in companies such as Coca-Cola, Gillette and American Express. His investment vehicle, Berkshire Hathaway, performed poorly during the dotcom era because Mr Buffett does not understand IT, and therefore did not feel he could invest in technology companies based on fundamental analysis; nor would he relax his principles and invest based on technical analysis. However when the dotcom bubble burst Warren Buffett’s star ascended once more, as other investors piled into the traditional companies with proven track records in which Berkshire Hathaway already had large holdings – then seen as safe havens.

The problem with technical analysis as an investment approach is that it can lend itself to sheep-like behaviour. Technical analysis is based on specific principles, and any differences in approach can be subtle, meaning that, at any given time, most technical investors will be moving in the same direction, with slight variation. The sums of money at stake can be huge – measured in the billions – so even small variations can yield gains or losses of millions. Hedge funds try to distinguish themselves from each other through the subtlety of their mathematical algorithms that plot the market’s movements. Where algorithms are well designed, huge profits follow. Where they are badly designed hedge funds can come close to bringing the international finance system to its knees, as in the case of the 1998 crisis caused by the failure of LTCM ( However, no algorithms are so well designed that they can withstand all eventualities, despite the pretensions of the ‘masters of the universe’.

Automated trading based on technical analysis is one of the main reasons for volatility in the world’s financial markets. Many trades are no longer discretionary – they are automated, dictated by an investment fund’s computer software (unless of course a rogue trader can bypass controls in the spectacular fashion of Jerome Kerviel at SocGen!). So when one fund starts off-loading shares because its software tells it to, the chances are there will be a dozen other funds whose software is telling them to do the same, leading to exaggerated effects.

“What”, you may be asking, “does all this have to do with religion”? Well, without wanting to stretch the analogy too far, I think there are some useful parallels that can be drawn between investment in stocks and investment in religion. Clearly there are many differences: the currency invested in stocks is money; the currency invested in religion is faith. Unwise investment in stocks can result in you losing your house; unwise investment in religion causes suffering to the soul.

Just as most individual investors in stocks are in no position to engage in a thorough fundamental analysis of the companies they might invest in, most seekers after spiritual truth are in no position to engage in a thorough fundamental analysis of the religions they might choose. Thorough fundamental analysis of a religion and its bearer organizations would require degrees in theology, sociology, and at least one ancient language! (I should point out, of course, that most people in the world do not choose their religion – they are born into it. Choosing your religion is predominantly a modern phenomenon, although not without precedent in the ancient civilizations of India and China amongst others.)

Those of us who find ourselves living in a society which has largely dispensed with its spiritual heritage, but who feel drawn to the spiritual path ourselves, can exercise choice over which spiritual path we follow. However, we work within limits. There is little point in my choosing to be a Zoroastrian while living in Derbyshire, as there are no groups to join, and precious little opportunity to receive teachings or attend ceremonies. And there’s the rub – no matter what fundamental analysis we engage in, and what conclusions we come to, we are constrained by ‘technical’ factors such as where other people in our society are headed. To give another example, I could choose Kum Nye as the form of physical exercise most conducive to my spiritual path, but it is much more sensible for me to choose Hatha Yoga as there are half a dozen classes in my small home town.

This leads onto a very important point about religion, that it is partly (if not largely) about communal experience. One of the great joys of involvement in religion is joining together with others, breaking down barriers, and experiencing the primacy of the group over the individual. If we have a spiritual practice that does not include this communal experience (communion?) we are missing out on a great deal.

What does this mean in practice? Well, it means partly that we should put down the finer tools of fundamental analysis, and look practically at what spiritual paths are available to us where we actually live. I do not mean that if we are strongly drawn to Islam we should become a Christian just because there is no mosque in our area, but I do mean that if we have a preference for Shia Islam we might decide to attend the Sunni mosque instead because the closest Shia one is 300 miles away. Regarding Buddhism, it would seem foolish not to attend a local meditation centre because it is from the ‘wrong’ tradition, if it is the only one available in our area. Conversely, even if we start to become disillusioned with our own tradition, there can still be benefit in continuing to attend its local meditation centre, just to commune for a while.

On a bigger scale, we should not allow ourselves to be pulled out of communion with the rest of our co-religionists because we find that the tradition we have joined is a ‘splinter group’. Even if the fundamental analysis of the splinter group were to be proved right (just as Warren Buffett’s fundamental analysis was proved right at the end of the dotcom era), there are still benefits with going along with the rest of the herd to an extent. Even though dotcom shares were fundamentally flawed they still made money for a few years – years in which Warren Buffett was missing out on profits. If other Buddhists are having a great time, we don’t want to cut ourselves off from them just because we disagree on some fine points of fundamental analysis!

The point of a religion is to be a valid basis in which to invest our faith. It does not need to be perfect, and in fact no religion is (by the mere fact that we are in samsara). We are always going to find faults if we look hard enough. This does not mean we should ignore obvious faults, but it does mean that we should cut some slack for ourselves and others and realize that the benefits of joining in can outweigh the demands of strict religious purity. And if we are happy in our tradition, we shouldn’t worry too much if others don’t like it.


Posted on June 26, 2008, in Economics, Religion. Bookmark the permalink. 1 Comment.

  1. Paige Bigelow

    I agree with you that religion is very much about communal experience. I am drawn to Buddhism, but I don’t call myself a Buddhist, primarily because I have no Buddhist community in my area that I have felt able to connect with. There is a Zen Center that I attended for awhile, but I just didn’t click with it, for whatever reason. On the other hand, sort of out of desperation and because I did want the communal experience, I started to attend the Unitarian church. I’ve been happy there. So I guess I’d say I’m a Buddhist Unitarian if someone asked (and actually I hear that there really is such a thing.) But it would still be my preference to have more of a Buddhist community that I felt comfortable with. (I guess that’s why I’ve started roaming the internet looking for Buddhist blogs.)

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: