The Power of Negative Thinking
Living a life of "Via Negativa" just might be the most positive thing you can do.
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Norman Vincent Peale's classic work, The Power of Positive Thinking, has inspired an optimistic outlook among millions of Americans for generations.
Its message of hope, personal responsibility, and “the sky is the limit” thinking found unique resonance in the United States.
To question this optimism is almost… well… un-American.
Yet Peale’s imperative to focus only on possibilities has a downside.
A steely-eyed look at reality suggests that to succeed in life, you also need a good dose of "negative thinking."
In Latin, this approach was called via negativa.
The concept was originally used in Christian theology to explain God by focusing on what he is not rather than what he is.
Today, via negativa is used to describe a counterintuitive but critical “negative” approach to improving both your life and your investment returns.
Via Negativa: Principle One
First, eliminate the downsides in your life.
In his latest book, Antifragile: Things That Gain from Disorder, Nassim Taleb argues that the best way for you to become antifragile – that is, someone who gains from setbacks and chaos rather than just survives – is to focus first on eliminating the downsides in your life.
The downsides in your life consist of those things, people, actions, and habits that make you vulnerable.
Taleb’s solution? Identify the significant downsides in your life and then remove them.
Specifically, Quit smoking. Eliminate toxic relationships. And accumulate “F*ck You” money.
Focusing on eliminating the downsides in your life is far more effective than, say, writing down your goals and waiting for them to manifest magically.
A focus on eliminating the negative is easier and more effective than creating new and positive habits.
For example, quitting smoking to improve your health is simpler and easier than building a business that will make you a millionaire.
It will also add a decade to your life.
No amount of positive thinking can guarantee such a dramatic outcome.
Via Negativa: Principle Two
You can summarize The second principle of the via negativa in a simple phrase:
“Don’t do stupid stuff.”
Avoid bad habits and situations in the first place.
If you’re not in debt, you’ve never been arrested, and you don't have the drama that comes with bad relationships… You're in a much better place than someone who has made stupid mistakes.
Avoiding bad situations will leave you with energy, willpower, and well-being.
And as the stormy personal lives of many Hollywood stars and business icons can attest, that peace of mind is something money can't buy.
Elon Musk may be the business icon of his age- and he lost more money in Tesla stock in 2022 than Warren Buffett made in 91 years.
But the guy is bi-polar, divorced three times, fathered five kids in the past year from several women, and boasts about sleeping on couches at the Twitter offices at the age of 51. In addition, his back hurts so much that he can't sit up straight.
For an ostensible genius, Musk does a lot of stupid shit.
How Via Negativa Applies to Investing
So how can you apply the two principles of via negativa to investing?
First, whenever you invest, focus on your downside first.
As billionaire Paul Tudor Jones says:
“I’m always thinking about losing money as apposed to making money. Don’t focus on making money, focus on protecting what you have”
Always figure out what you can afford to lose on a trade or investment before you make it.
Any upside will take care of itself.
Second, don’t do anything unless absolutely necessary. As investors and traders, we feel we must always be doing something.
The opposite is true.
Charlie Munger, vice chairman of Berkshire Hathaway, gets this philiosophy in his bones.
Munger focuses first on what to avoid:
A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc. Just avoid things like AIDS situations, racing trains to the crossing, and doing cocaine.
As Munger explains, by eliminating unpromising parts of "the chessboard," he frees his time and attention to focus on what works.
Berkshire Chairman Warren Buffett put it another way.
Buffett claims you can significantly raise your investment batting average by waiting for the pitcher – Mr. Market – to throw you a nice fat pitch right down the middle of the strike zone.
Unlike in baseball, you can stand by and watch strike after strike be thrown without worrying about being called out.
Buffett says no to thousands of investment opportunities each year.
He swings only at the rare “fat pitch.”
Living a Life of Via Negativa
Following the principles of via negativa may seem counterintuitive, excessively defensive, and a risk-averse way to live.
It may even seem positively un-American.
But don’t confuse via negativa with pessimism.
Buffett and Munger live by these principles – and no one would ever call either a pessimist.
By focusing on what you shouldn’t do….
…and by limiting yourself to the very best opportunities…
you put yourself in a position to generate better results both in your life and in investing.
The lesson is clear:
Living a life of via negativa just might be the most positive thing you can do.