Borrowing a religious practice for perilous investing times

Travelling around the world you will find people relaxing with their prayer beads. Under banyan trees, in Gothic churches and on trains and planes many religious people constantly finger their prayer beads taking comfort against the vicissitudes of the world.

Whether you chant mantras or Hail Marys it's an interesting practice shared amongst many world religions. The Hindus have their malas, the Sikhs the japa, Islam has its prayer beads, and Christians the rosary.

Here’s a collection of my gold dipped rudraksha beads from the Himalayas and some more prosaic Catholic rosaries.

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When the human brain is anxious, moving the beads gives your mind something positive to hold onto, which in turn breaks the cycle of doom and gloom thinking.

We have our own modern equivalent of prayer beads – the “Home” button on our iPhone or Android becomes our automatic fidget reaction as we scroll through Facebook feeds, Twitter and the New York Times…

We constantly reach for the pacifying effect of our beloved rectangles of technology. Since we always have our phones, I thought I would propose a way to use them to help us feel calmer about investments.

Unfortunately we live in precarious times. In investing terms I think we all worry about a big crash in the markets… a roller coaster ride off a cliff precipitated by political chaos.

– What’s the best thing to do in a market crash – try to make it into an opportunity with cash you have reserved for this. Many clever investors retain cash for a crash to take advantage of low prices.

– What’s the best way to make money in a market crash – buy the undervalued companies that will be the most resilient in coming back.

In a general market crash investors sell even the most well-run companies. A fund manager who has full faith in a company’s management team to weather a crisis, still has to sell the stock if the investors in her fund redeem their money and fly to safe havens. Index funds will automatically sell stock as investors divest from them. As a financial crisis stabilizes, investors will come back first to the most resilient stocks that will do well in a poor economy.

How do we find those most resilient companies – we can look at companies that recovered fastest after the 2008 crash such as IBM and General Mills. We can look at sectors such as healthcare and food – things people will continue to buy no matter what the economic climate. There are many articles listing “defensive” picks on investing sites such as Seeking Alpha.

So start a little note on your phone. I use the Evernote app, but you can just use any “Notes” function. Every time you catch yourself worrying about your investments, force think about your long beads of resilient companies and think about how you can come up with some more solid names to add to your list….

Best,

Mallika