How Ben Franklin's 13 Virtues Can Make Us Better Investors

A quick guide on thoughtful investing with Franklin's ideas

Author's Avatar
Mar 24, 2016
Article's Main Image

One of Charlie Munger (Trades, Portfolio)'s idols is Benjamin Franklin. As I read through his biography, I have found that his principles can prove beneficial for us as investors and in our lives in general. I will lay out the principles and then comment on each one and its application in investing.

  1. Temperance: Eat not to dullness and drink not to elevation.
  2. Silence: Speak not but what may benefit others or yourself. Avoid trifling conversation.
  3. Order: Let all your things have their places. Let each part of your business have its time.
  4. Resolution: Resolve to perform what you ought. Perform without fail what you resolve.
  5. Frugality: Make no expense but to do good to others or yourself: i.e. waste nothing.
  6. Industry: Lose no time. Be always employed in something useful. Cut off all unnecessary actions.
  7. Sincerity: Use no hurtful deceit. Think innocently and justly; and, if you speak, speak accordingly.
  8. Justice: Wrong none, by doing injuries or omitting the benefits that are your duty.
  9. Moderation: Avoid extremes. Forebear resenting injuries so much as you think they deserve.
  10. Cleanliness: Tolerate no uncleanness in body, clothes or habitation.
  11. Chastity: Rarely use venery but for health or offspring; never to dullness, weakness, or the injury of your own or another's peace or reputation.
  12. Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable.
  13. Humility: Imitate Jesus and Socrates.

How can these be applied to investing:

  1. Temperance: Paraphrasing Kipling, treat failure and success, those two impostors, the same. The most important thing is to achieve a correct reasoning.
  2. Silence: The ability to be on our own just thinking can create great advantages over the long run. Prioritize hard data over opinions.
  3. Order: By assigning our most important asset, time, in a correct way, we become more efficient and leave time to build our criteria.
  4. Resolution: If we are determined to succeed, we need to plan and act accordingly.
  5. Frugality: By living below our means, we are able to save money, invest and gradually achieve independence.
  6. Industry: Since time is all we really have, allocating it in useful projects and thinking about opportunity costs is very important.
  7. Sincerity: If we are sincere, most importantly with ourselves, we will be able to learn from mistakes and earn the trust of people.
  8. Justice: Dealing fairly with people is a characteristic of trust-deserving investors.
  9. Moderation: Keeping a cool head at all times is critical to minimize investing mistakes.
  10. Cleanliness: A messy room is a reflection of a messy mind. By reducing noises and establishing fluid processes, we can avoid mental errors.
  11. Chastity: Focusing on the good and not the bad in others is likely to provide us great peace of mind and better use of our time.
  12. Tranquility: Investing is likely to encounter errors. To learn from them is critical, but these should not reduce our peace of mind.
  13. Humility: Investing requires humility to recognize that one could be wrong. Being willing to learn for the benefit of better future decisions is very important.

What do you think?

Also check out: