Integrated decision-making combines, synthesizes, and mediates information from analysis, emotion, intuition, and body when making our decisions. Integrated decisions lead to outcomes that better satisfy ourselves in analytical, emotional, intuitive, and physical or physiological ways. We can use this approach of integrating analysis, emotion, intuition, and body, what I call Integrated Investment Decision-Making, when making investment decisions that are complex and new to us.
However, we have short-cuts for Integrated Investment Decision-Making. That is where values come in. Our values are a short-cuts for integrated decision-making. A value is something that makes sense to you and you feel good about. Values are present when you are applying your intuition, as values serve as a constant guide. Our values are expressed in the decisions we make and when we ignore our values in our decisions, we end up with a result that doesn’t make sense to us analytically nor intuitively and that we feel unhappy or dissatisfied with. This couldn’t be more true than in investment decisions.
If you think about the things in life that you really care about, do your investments reflect those things? Your values represent the important things you care about and stand for. But are those things where your investments are? Your values may differ slightly depending on whether you are thinking about what values guide you as an individual versus the values that are important to you in a relationship with your partner or family versus the values that are critical to you in investing. There will be values that are core to you as an individual, in relationships, and in investing.
For example, I value Fairness. When I encounter a situation of people being treated fairly, it makes sense to me from an analytical standpoint. I feel good about fairness. It evokes a positive emotion in me. I intuitively sense fairness is a good thing in the long-run and believe that fairness will serve me and others well in future interactions and endeavours. When I experience being treated fairly or witness others being treated fairly, I physically feel good – I might even feel positive tingles in my body (which I am able to differentiate from physical sensations of fear, worry, or warning). If I come across a situation and I can identify fairness in that situation, I am able to more quickly make a decision about that situation or in those circumstances. In my investing activities, I want to invest in companies that treat their stakeholders – customers, suppliers, employees, investors – fairly. I am fair and strive for fairness in my negotiations with companies and entrepreneurs I invest in.
If integrating analysis, emotion, intuition, and body into decision-making is the long-form, aligning your values to your decisions are the short-form.
Investing with your values means using your values to influence the decisions you make in your investing activities and ensuring that your investment decisions reflect your values.
This post is the first in a series of four. The posts that follow will talk about the three key decisions you need to make in the investment process and for each one, how values influence the decisions.
If you ever encounter a situation where you need to make an investment decision, but you are unsure what to do and reflecting upon your values also doesn’t make the decision clearer for you, that is when the tools and techniques of Integrated Investment Decision-Making come in useful. More on Integrated Investment Decision-Making to follow.
Note: This post also appears on Quora.