Table of Contents
Can Stoicism help you master market volatility and build lasting wealth?
Discover how Darius Foroux’s The Stoic Path to Wealth combines ancient philosophy with modern investing. Learn to master your emotions, build resilience against market volatility, and achieve financial freedom through disciplined, long-term strategies. Stop letting fear and greed dictate your financial future—explore Foroux’s Stoic blueprint for wealth below and start investing with confidence and peace of mind today.
Genres
Psychology, Money, Investments, Personal Development
Introduction: Apply timeless principles to modern investing.
The Stoic Path to Wealth (2024) applies ancient Stoic philosophy to modern investing. It shows how cultivating emotional control and personal growth can help lead to better financial decisions – and provides techniques on building lasting wealth while maintaining a balanced perspective on life and money.
Darius Foroux The Stoic Path to Wealth Ancient Wisdom for Enduring Prosperity What could a 2000-year-old philosophy possibly tell us about investing? As it turns out, quite a lot.
In this summary, we’ll explore how the wisdom of the Stoics can transform your approach to building wealth. You’ll learn about the role of emotions in investing and how to cultivate resilience to the market’s ups and downs. By the end, you’ll have a simple blueprint for becoming not just financially richer, but wiser and more content. Whether you’re a seasoned investor or just starting out, these principles will help guide you toward greater wealth, confidence and peace of mind. Let’s begin.
Why you need to invest
Why you need to invest Investing is perhaps the surest way to become wealthy. Here’s a hint, it isn’t asking for a raise. In fact, for the top 1%, the millionaires and above, salaries account for as little as 15% of their income. While a higher salary certainly helps in the short term, to really build wealth, you need to invest.
Consider inflation. Over the past four decades, inflation has eroded the value of money at around 3% annually in the United States. Meanwhile, the S&P 500 index, which represents the 500 largest publicly traded US companies, has yielded an average annual positive return of more than 11%. This means if you stuck $1,000 under the proverbial mattress in 1980, by 2022 it would have dwindled to a mere $240 in value. On the other hand, if you’d invested it in the S&P 500, that same cool grand would have grown to nearly $30,000 in value. Author Darius Faroo argues that the formula for growing your wealth is simple.
Invest it in reliable assets and keep it there. But simple doesn’t mean easy. Pulling this off can be more challenging than it sounds. Why? There are three reasons. The first is volatility.
In the decades since 1980, we’ve seen wars, earthquakes, recessions, booms, crashes and even pandemics. Regardless of the market’s gradual upward trend, this volatility triggers two powerful emotional responses – fear and greed. When prices plummet, fear drives people to sell at a loss. And when the market shoots up, greed tempts them to pour all their savings into the market at once. The second challenge is consistency. Today’s vast array of investment options can be overwhelming, leading many investors to frequently switch up strategies and chase the latest trends.
But successful investing often boils down to filtering out the noise and adhering to a proven investment strategy year after year. What if you don’t have an investment strategy? What Faroo reckons to his own friends and family is an exchange-traded fund, ETF, that tracks, once again, the S&P 500. It takes minimal time and effort to execute and it performs well.
At an 11% interest rate, for instance, your investment will double roughly every seven years thanks to compounding. But to succeed in this, or any strategy, you’ve got to keep your cool on the market rollercoaster year after year. You have to stay strong and resist the burning temptation to abandon ship when faced with glittering opportunities, looming threats, or great loss. As we’ll see in the next section.
A personal loss
A personal loss Darius Faroo was born in Iran in 1987, during the country’s devastating war with Iraq. Faroo’s parents emigrated to the Netherlands, arriving with nothing but a couple of suitcases. They had lost everything and had to start over from scratch. Growing up, Faroo recalls there was never enough money.
So from a young age he promised himself he’d do whatever it took to become wealthy someday. Faroo studied business and finance in college. As soon as he could, he started investing with the amount he could scrape together – about $2,000. But misfortune struck. As it happens, he’d started his investing career at the very peak of the 2008 housing bubble. The markets crashed and he lost over half of his money.
Losing money on the stock market isn’t uncommon. Research indicates that only between 1 and 3% of active individual investors actually achieve short-term profits. But after experiencing losses, many people become disillusioned with investing and start thinking it’s only for those other people. Faroo hadn’t let go of his dream. He immersed himself in research, searching for the secrets of master investors and the perfect investment strategy. But the money he’d lost left him too afraid to pull the trigger and put anything real at stake.
It wasn’t until he came across a passage from the Stoic philosopher Seneca that he truly understood his situation. Every emotion is weak at first, then it rouses itself and gathers strength as it advances. And when you indulge in it too much, it is a fault. Faroo had let his fear of investing grow and grow, gathering strength in the years since his painful loss. To take the next step in becoming wealthy, he didn’t need more knowledge. He needed to master his emotions.
A Stoicism primer
A Stoicism Primer The Stoics were a diverse group of ancient Greek and Roman philosophers who flourished from the 3rd century BCE to the 3rd century CE. Key figures include Seneca, a Roman statesman and playwright, Epictetus, a former slave turned teacher, and Marcus Aurelius, the philosopher-emperor of Rome. But Stoicism was actually founded by a merchant by the name of Zeno of Citium. One day, while transporting goods on a sea voyage, Zeno’s vessel was shipwrecked, causing him to lose a fortune and seek the consolations of philosophy.
It was a bitter pill to swallow, but what Zeno realised was that misfortune can strike anyone. Stoicism teaches that the path to happiness and fulfilment lies in focusing on what’s within our power to change, and accepting with grace all that we can’t. So much in life lies beyond our control. We can’t always shape the world into what we’d like it to be, but we can control our character, our judgement, and the actions we take. The Stoic approach to life is encapsulated by a phrase attributed to Zeno – virtue is the only good. Ultimately, the good and bad things that happen in life – health and illness, wealth and poverty, pleasure and pain – are merely, to quote Marcus Aurelius, material for virtue to act upon.
In honing the virtues of wisdom, justice, courage and self-control, we build the strength to navigate life’s challenges more happily. A true Stoic, says Epictetus, may be sick and yet happy, in peril and yet happy, dying and yet happy, in exile and happy, in disgrace and happy. Going too far, our desires can become obstacles. Think about how we build our lives around specific milestones and external goals, or plan our investing around exact income targets and figures.
But all of these lie, at least to some extent, beyond what we can control directly. The Stoic solution isn’t to eliminate desire, but to redirect it. Instead of fixating on outcomes, we should cultivate desire for our own virtues and personal growth. These goals are always within reach.
Skill and self-reliance
Skill and self-reliance So the Stoics urge us to focus on what we can most directly control – our own virtue. But that’s not all. We can also cultivate our skills and knowledge. How does this apply to investing?
Well, to invest, you need some initial capital. For anyone not born into wealth, that means developing a skill others will pay for. By continually sharpening your abilities and expanding your knowledge, you lay a solid foundation you can rely on no matter what. Consider the story of Jesse Livermore, a high school dropout who became one of the most successful traders of the early 20th century. Starting as a board boy at a brokerage firm, he absorbed knowledge voraciously, developing a system for predicting stock movements with remarkable accuracy. Those around him couldn’t help but notice his skills, and so helped him recover his wealth even after multiple bankruptcies.
Eventually, his skills led him to amass a fortune during the 1929 stock market crash. Livermore’s story underscores a crucial Stoic principle – resilience through self-reliance. While money can be lost in market downturns, skills remain a permanent asset. Farouk calls his framework for developing skills the Skill Springboard. First, identify and nurture your inherent strengths and passions. Then study the greatest people in your chosen field and master the fundamentals.
Next, it’s time to synthesize that knowledge into your own distinctive style. And finally, be sure to balance your determined effort with sufficient rest. You want to achieve excellence, but not at the risk of burnout. This approach to skill development also requires consistent self-reflection.
The journaling, a practice advocated by many Stoics, can help you identify your natural abilities and track your progress. And as an investor, self-awareness and reflection will help you deepen your financial knowledge and refine your investment strategies. By focusing on continuous learning and improvement, you won’t just build wealth – you’ll cultivate financial wisdom and freedom. After all, as Epictetus put it, only the educated are free.
Moderate your desires
Moderate your desires. All too often, greed lies at the heart of investing mistakes. The relentless pursuit of more – more money, more returns, more status – can lead to destructive behaviour and poor decision-making. It’s easy to fall into the trap of chasing the quick buck.
But one of the most crucial lessons in investing is that wealth builds faster when you focus on avoiding losses rather than pursuing the highest possible returns. In the long term, the key to success is protecting your capital. Think of your investment portfolio as a garden. While it’s important to nurture and grow your plants, it’s equally vital to protect them from pests and harsh weather. One bad storm can undo months of careful tending. In the same way, you should focus on sticking to your investment strategy, managing risks and educating yourself rather than trying to predict the next big winner.
To help control emotions like greed and fear, here’s an exercise you can try. Take a burning desire that you have – like, I need to generate 20% returns this year. Now see how you can reframe that in terms of what’s truly within your power. For instance, you could say, I’ll focus on making well-researched investment decisions based on my long-term strategy. This reframing acknowledges the reality of uncertainty while emphasising your agency in the process. By aligning your desires with what you can control, you’ll learn to find satisfaction in the quality of your efforts rather than the vagaries of outcomes.
Another valuable stoic practice is moderating your habits, starting with something as fundamental as food. By exercising self-control in your daily life – like putting down your fork when you’re full – you’ll build the mental muscle needed to resist impulsive urges in other areas, including your financial decisions. This practice of moderation extends to your approach to wealth itself. Rather than constantly striving for more, aim for enough. What does enough signify in the context of investing? It means finding a balance where your financial needs are met and you have a cushion for the future without the constant pressure to endlessly accumulate more money.
Legendary investor Jack Bogle, founder of the Vanguard Group, embodied this principle. Despite creating a trillion-dollar investment company, Bogle lived relatively modestly and focused on providing value to investors rather than maximising his personal wealth. He defined enough as having one dollar more than you need. Adopting this mindset doesn’t mean settling for mediocrity or giving up on wealth. Instead, it allows you to approach investing with a clear head, making decisions based on sound principles rather than emotional impulses or societal pressures.
Conclusion
The main takeaway of this summary to The Stoic Path to Wealth by Darius Faroo is that successful investing takes more than just financial knowledge. It takes mastering your emotions. That’s because building wealth is a marathon, not a sprint. The surest path is to consistently invest in reliable assets such as index funds tracking the S&P 500.
But the challenges of market volatility, maintaining consistency and dealing with losses can still derail all but the most level-headed investors. Stoicism calls you to develop the virtues of wisdom, justice, courage and self-control so you can face these challenges calmly. This begins with a subtle but powerful shift in your internal dialogue to reframe your desires in terms of what’s truly in your power. In other words, focus on what you can control and accept what you can’t. It’s also important to practice moderation in your daily life which will help you build a strong stoic foundation. By embracing these stoic principles, you’ll cultivate a mindset that leads to greater contentment because, in the end, true wealth isn’t just about having lots of money.