The ancient Greek philosopher Aristotle provided a framework for virtue ethics that has influenced Western philosophy for over 2000 years. His emphasis on cultivating virtues like practical wisdom and temperance can offer guidance for investors seeking to make ethical investment decisions. By considering Aristotle’s teachings on the virtues and applying them to areas like due diligence, diversification, and long-term thinking, investors can work to align their decisions with ethical principles.
Practical Wisdom in Researching Investments
Aristotle valued practical wisdom, which involves carefully deliberating to determine the best course of action. For investors, this points to the importance of thoroughly researching potential investments rather than jumping into decisions. Wise investors take time to analyze financial statements, understand business models, and consider both risks and growth prospects before committing their capital.
Temperance for Diversified Investing
The virtue of temperance provides guidance for avoiding excess and finding proper balance. When investing, temperance suggests building a diversified portfolio across multiple asset classes, sectors, and regions instead of chasing quick profits in one area. Moderation and diversification provide stability amidst market turbulence.
Cultivating Patience for Long-Term Returns
In Aristotle’s ethics, courage represents enduring adversity with patience and resilience. For investors, courage means having the fortitude to hold investments for the long-term rather than panicking during periods of volatility. Patience allows investors to benefit from the long-term compounding of returns.
By applying Aristotle’s emphasis on virtue to key investing concepts like research, diversification, and time horizons, investors can work to make ethical decisions that create value responsibly. Investing guided by practical wisdom, temperance and courage can lead to positive outcomes for investors, companies, and communities.