In the last several years there has been an explosion of interest by the business community in meditation.

However, what most investors do not realize is that meditation provides unique benefits that directly address many of the obstacles each of us face when trying to manage our investment portfolios.

Who in Business and Investing Meditates?

Meditation has captivated the attention of some well-known investors, for decades in some cases. For example, those who are public champions for the practice include Bridgewater Associates’ Ray Dalio, Tudor Investment’s Paul Tudor Jones II and Fortress Investment Group’s Michael Novogratz. Additionally, BlackRock, Deutsche Bank and Goldman Sachs each have meditation programs in place for their employees. Even important business schools embrace meditation for their students, including Georgetown University, New York University, Claremont Graduate University and the University of Oxford.

CFA Institute, the not-for-profit global membership organization that administers the highly regarded CFA exam for conferring the certified financial analyst designation, found that 59% of its global financial professional members wanted the organization to develop a meditation program. Interestingly, we also found that approximately 16% of surveyed members already meditated. A more detailed follow-up survey among those who do meditate found that even though one in six meditate, none of these folks knew others in finance who meditated. This likely means that, even in the intensely skeptical industry of finance, there are many who are curious about meditation or are active practitioners.

The Noise and Misunderstandings

There is a tremendous amount of noise surrounding meditation and it contributes to very large misunderstandings about practicing it. For example, for starters, what is meditation anyway? Is it a practice, or is it a state of mind? If so, what state of mind? Also, what is the difference between meditation and mindfulness? Are these descriptions interchangeable? Are there actual statistically evaluated benefits to meditation, or is it just mumbo jumbo? Are there really thousands of different meditation practices, or are there just several core practices? Do I have to stray from my religious beliefs to practice meditation? And so on. Let’s address some of these questions and redress some of the common fictions.

One of the reasons that meditation carried a stigma for so many years is that there are many popular fictions about the practice. By far the greatest fictions are that meditation is only for shaven-headed cave dwellers or that it is a religious practice. In fact, the states of consciousness achieved while meditating (as measured by brain waves) are innate to human consciousness. Each of us has experienced these states. Most of us even enter these states of awareness daily, but without recognizing them for what they are. Many of us also have not developed the focused awareness or control necessary to achieve these states at will, despite their benefits. These points all mean that meditation can be practiced in a secular fashion, divorced from any religious trappings, because brain waves are not dependent on a religion. So there’s no need to go out and shave your head, move to the Himalayas, burn incense or give up your religious beliefs!

Another common misperception is that there is just one way to meditate. If you sit down with an instructor and they teach you how to meditate, it is very likely they are only sharing with you the style they know or prefer. In reality, there are thousands of different meditation styles and practices. This can make the subject seem daunting, but please do not worry. By focusing solely on the scientifically demonstrable mental and physical benefits of meditation practices, what we discover is that this vast array of styles can be distilled down to just four kinds of meditation: focused awareness, open monitoring, visualization and compassion. There is a strong candidate for a fifth meditation style, but more testing needs to be done (more on this in a moment). Very importantly, it is now being demonstrated that many everyday experiences, like walking and doing the dishes, can lead to meditative experiences.

Lastly, if you have heard about meditation, or have tried it, you may believe that it is hard to do. Nothing could be further from the truth. Just as walking is innate to human beings, so are the states of consciousness attained by a meditation practice. But like walking, it takes time and practice to learn.

Because our modern culture is obsessed with the quality of our intelligence, meditation can make many of us feel foolish as it quickly demonstrates that most of us cannot control our awareness or our thoughts. A good analogy for this would be gravity, which makes those learning to walk feel foolish at first. With practice, a sense of exploration and fun (just like walking), meditation gets easier with time. Remember, you are already meditating; you just don’t know it.

Meditation Smartphone Apps and Online Services

There are several smartphone apps designed specifically for meditation. Three suggested to me by Jeremy Hunter of the Peter F. Drucker School of Management at Claremont Graduate University are:

• Headspace (www.headspace.com)
• Whil (www.whil.com) and
• Insight Timer (www.insighttimer.com).

The three are available for both iOS and Android devices. They can also be accessed through their respective websites.

Headspace and Whil provided guided sessions, focused on a variety of topics.

Headspace, which I personally use, has “packs” of sessions covering stress, anxiety, relationships, creativity and motivation, among others. Sessions can be set to last 10, 15 or 20 minutes with a couple of minutes of narrative at the beginning and end of each session. The packs start with more narrative and instruction and gradually decrease the amount of guidance with each subsequent session within the pack.

Whil’s sessions are similar in length and cover topics such as difficult emotions, mindfulness, leadership and yoga. Whil also promotes its “digital wellness training” to corporations. Both are subscription-based.

Insight Timer is primarily a timer. It does offer a few thousand guided meditations along with its timer, however. The basic app is free, with premium upgrades available.

Hunter added that he also likes Dan Harris’ book “10% Happier” (Dey Street Books, 2014).

—Charles Rotblut, CFA

(Left) Headspace

(Right) Insight Timer

What Is Meditation, Anyway?

So what exactly is meditation? To me, it is disappointing that so few who talk about meditation risk giving it a definition. I assume this is because many people have not taken the time to explore this vast subject to parse out the signals from the noise. Let me attempt some clarity. Based on my own meditation practice and my professional exploration of the subject, I believe a good definition for meditation is: a set of practices designed to lead to states of mind that increase awareness and restore choices to practitioners.

Meditation is both a set of practices and a set of states of consciousness. Because individual practices change and strengthen different parts of your mind, it means that practitioners should engage in different meditation practices if they are trying to reap the benefits. Primarily there are two skills you are trying to cultivate: top-down control and metacognition. These two skills, when used in conjunction, result in the states of consciousness associated with meditation—namely, effortless awareness and equanimity.

Top-down control is a neuroscience term that basically means the ability to choose what you think and when you think it. There are interesting points to be made here. First, we are talking about self-control, not spacing out, which is what many perceive a meditative state to be. Second, top-down control is essential for investors because it allows you to insert a pause between a stimulus (e.g., a stock in your portfolio that is down 10%) and your response (“The sky is falling and I should sell!”) With this pause, you restore your power to choose: “Does today’s news permanently affect the value of the investment? If not, can I buy more now that it is on sale?”

Metacognition, another neuroscience term, means awareness of awareness itself. We all have the experience of recognizing the run of our internal mental dialogue at times. Yet for most of us, this is coupled with layers of prejudgments and preferences that skew our thinking of what is happening now. By developing metacognition skills, you can sit back and appreciate sensations and thoughts objectively. Consider, for instance, the comments made by the CEO of a company you hold shares in. Did the executive convey any information that triggered feelings of anxiety? Unless you have awareness, this key sign to examine the CEO’s statements more carefully is missed.

In conjunction, top-down control and metacognition lead to a restoration of your awareness of the degree to which your consciousness is in accord with reality. It also improves your ability to choose what to do with that awareness, rather than be lost in a sea of biases and prejudices about how you want things to be.

Notice that you do not need to sit in a lotus position to develop these skills. [The lotus position involves sitting cross-legged with your feet placed on the opposing thighs.] If you are aware of what you are doing and you are focused, then you are also developing your mind in a similar way to traditional meditation practice. So things like walking, gardening, doing the dishes, working out and so forth can all lead to similar development of your meditation skills. However, these activities also introduce many distractions, which is why many people enter meditative states while engaged in these activities, but do not experience the full benefits of a full-fledged practice.

Major Meditation Types

As mentioned, the thousands of types of meditations can be distilled down to just four major practices:

• focused awareness,
• open-monitoring,
• visualization and
• compassion.

A possible fifth type of meditation is proposed to be called automatic self-transcending.

Focused awareness asks practitioners to focus their attention on a single thing, commonly your breath, a word, a white wall, a candle flame and so on. If your mind strays—say, you start evaluating it—you instead return your mind back to focusing on the singular object. Not surprisingly, this very common meditation type is excellent at developing top-down control.

Open-monitoring meditation is commonly called mindfulness. These meditations ask you to simply be aware of the many things that enter your mind in what frequently seems to be a never-ending stream: thoughts, emotions, sensations and so on. Rather than focusing on them, you note them and then let them go, returning your mind to awareness. It should be obvious that these meditations are designed to develop metacognition.

You are probably very familiar with visualization meditations because they are frequently used in sports to improve technique and in business to alleviate anxieties such as public speaking. Meditations of this kind are excellent at increasing creativity and at increasing the mind-body connection.

Compassion meditations ask you to express feelings of gratitude and kindness to different categories of people such as family, friends, coworkers, strangers, the world and so on. While this may sound squishy, compassion meditation has many demonstrated health benefits. It also increases your ability to choose your responses to intense stimuli, rather than simply react emotionally.

Automatic self-transcending is a category proposed to describe meditations that involve the repetition of a word as a focus. There is emerging scientific evidence that because this meditation involves the motor cortices (you are moving your mouth to say the word), it has benefits that exceed those found in a focused-awareness practice.

How Meditation Can Help Investors Overcome Obstacles

Great, you say. I am investing to reach my financial goal. How does this help my investments?

Meditation should interest you because investing can be stressful. The stress associated with investing can lead to health consequences and sometimes bad decisions.

We want our investments to fulfill our goals, but because we all have difficulty overcoming behavioral biases, our desire to achieve our goals frequently leads to bad decisions.

Science demonstrates that meditation is a potent antidote to each of these obstacles faced by investors. Plus, meditation is a portable activity and it is free! To those of us at CFA Institute, this is an excellent outcome.

What Science Says

Scientific studies and published research papers have found many benefits to meditating, including stress relief, increased mental functioning and the ability to overcome behavioral errors. (See the box at end.)

Stress Relief

Stress relief is by far the most widely known benefit of meditation. It has been exhaustively tested in this context, with several thousand research papers having been published in peer-reviewed journals. A recent massive meta-analysis by Johns Hopkins found significant evidence that meditation lessened anxiety, depression and pain.

Stress is implicated in cardiovascular disease, osteoarthritis and osteoporosis, Alzheimer’s disease, stroke and diabetes. Not only are meditators able to reduce their stress, they are able to alter the functioning of their own DNA.

So if you experience anxiety in your investment endeavors, meditation may be a worthwhile activity to engage in.

Increased Mental Functioning

If you believe that investing success requires you to do something that others are not doing, then you need ideas that others do not have. In other words, you need to increase your creativity.

Meditation is scientifically demonstrated to increase your creativity. Additionally, meditators are shown to have better memories and better awareness of their state of mind, as well as be more decisive.

It is hoped that you understand exactly how these things can affect the investment process. Again, meditation can be your powerful ally.

Ability to Overcome Behavioral Biases

With several Nobel prizes awarded to behavioral economists for their work in identifying persistent human biases, one would think that each of us investors is improving our investment performance. But sadly, behavioral finance is essentially a diagnosis without a prescription.

This is confirmed by a 2014 survey of CFA Institute Newsbrief readers. The survey found that 56% of responding readers had failed to implement behavioral finance concepts successfully into their practice of finance. In fact, when the grandfather of behavioral economics, Daniel Kahneman, was asked at CFA Institute’s 2012 Annual Conference what you could do to overcome behavioral biases, he said: “Very little; I have 40 years of experience with this, and I still commit these errors. Knowing the errors is not the recipe to avoiding them.”

Yet meditators are able to overcome their behavioral biases. In several direct tests of meditation’s ability to overcome the biases identified by behavioral economics, it was found to improve performance on these tests tremendously.

It Is Time to Start!

Given the many proven benefits of meditation for investors, and its exceptionally low cost, the question isn’t, “why aren’t you meditating?” it is, “when will you start?”