The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don't, so we buy. Then people start selling, panic sets in, and we sell too. That is how booms and crashes happen. Charles Mackay called it "the madness of crowds," William Trotter "the herd instinct," and psychologist Solomon Asch showed how vulnerable we are to the urge to conform.
So when everyone is going in one direction, it's worth taking the opposite route, the contrarian option, the "road less traveled." Here is my recommendation for the next few years. While everyone else is thinking about economics and politics, executive salaries and the future of the Euro, do the opposite, even if it's hard. Invest in the spirit. Focus on the mind and the soul. Read. Study. Enrol in a course of lectures. Pray. Become a member of a religious congregation. Study the Bible or other ancient works of wisdom. Find people not to envy but to admire. Do not the profitable but the admirable deed. Live by ideals.
For the next few years European economies are unlikely to grow. Government spending will continue to be tight. Standards of living for most of us will either fall or at least not rise by much. National governments will discover that their power of action is ever more circumscribed by the mobility of capital and people and the interdependence of Europe's economies and banks. Try setting out on a new economic policy of your own when you are linked by heavy chains to 20 or more other nations each trying to go somewhere else, and you will end up angry and frustrated.
That is when we need to switch to another dimension. When one road is blocked, it's time to take another. When material conditions are tough, the best investment we can make is spiritual: in the happiness we don't buy but make. Join a religious congregation and you will find people who care about ideals and are willing to make sacrifices for them. You will make friends on whom you can rely and become part of a community on which you can depend. Study sacred texts and you will find yourself transported to a palace of the mind, the ancient but still compelling wisdom of the past. These are powerful sources of inner strength.
Stop worrying about wealth and success, and think instead of the blessings that surround you and you will find your life flooded with meaning. You will sleep easier at night and wake full of hope the next morning. You will look out on the world and see God's glory. You will smile at strangers and they will smile back. You will worry less and find your fears subside as you entrust yourself to God's everlasting arms.
You will realise that your life is filled with blessings you had until now taken for granted. You will discover -- or perhaps you secretly knew it all along -- that happiness has little to do with what we get and everything to do with what we give. You will rush less and savor more. You will stop wasting time doing the things you should never have done in the first place.
Eat only when you are hungry, and stop as soon as you are sated, and you will lose weight. Buy only what you need, and travel light through life, and you will save much of what you now spend. See the good in people and you will, without intending to, make them a little better than they were. Praise others and do not seek their praise, give to others and do not seek their thanks, and you will grow in spiritual health. At least once every day take time to thank God for the privilege of life itself. Don't judge people by what they wear or drive or earn. In fact, don't judge people at all. Leave that to God. He is better at it than we are, and more forgiving too.
Your return on investment -- not in monetary terms perhaps, but in terms of happiness, fulfilment, flourishing, joie de vivre and a sense of blessedness -- will, I promise you, be better than any alternative on offer today. While others are pursuing material happiness, do the opposite: seek and celebrate the spirit. The price is low. The value could not be higher.
Originally published in The Times of London.