Finding Your Ikigai: The Secret to Long-Term Success in Investing

During their recent episode, Taylor, Carlisle, and Conor Maguire discussed Finding Your Ikigai: The Secret to Long-Term Success in Investing. Here’s an excerpt from the episode:

Tobias: Yeah, nicely put. JT, you want to do some veggies?

Jake: Yessir. So, let’s see. I recently learned about this Japanese concept called Ikigai, and I don’t know if you guys have heard of this before. It’s I-K-I-G-A-I. And the word breaks down into iki, which means life and gai, which is interpreted as worth or value. So, put those together, and you get kind of a reason to live or kind of your calling.

But before we learn more here, do you guys remember that 1978 study which found that people, they tend to have a relatively stable level of happiness regardless of major life events and what they looked at were lottery winners and then those who became paraplegic. So, it was like one seemingly very, very good life event and one seemingly very bad life event, and then how were there levels of happiness a few years after that. I don’t know if you guys remember that one, but it’s kind of a famous psychological study that found that it was surprising in that people seemed just as happy as before or after these major events.

That study was authored by a prominent psychologist at the University of Michigan named Philip Brickman. He’s actually the one who coined the term “hedonic treadmill,” which is basically like, you adapt to any new environment, and you feel like you’re sort of running in place. And by all accounts, he was this warm, irrepressible, really engaging to talk to gentlemen.

Yet despite all of his academic success, Brickman struggled with his own mental health. And in 1982, at the age of 38, he climbed to the top of the tower plaza in Ann Arbor and jumped 26 stories to his death, leaving behind a wife and three daughters. So, even studying happiness in depth might not be enough for your ikigai, your reason to live. And we’ll try to cheer up the segment here a little bit. I know that was a bit– I should have given a little warning. It was going to get heavy there.

This concept I discovered from a book of the same name, and it’s mostly about Japanese people and how they blend together longevity and health and purpose. And the author diagrams out these four overlapping circles, and one circle is what you love, and another is what you’re good at, what the world needs, and then finally, what can you get paid for? And right in the center of that intersection of that Venn diagram is your ikigai. And it’s this thing that lights you up and makes you feel like you’re contributing to the world in a meaningful way.

And in reading this book, I was reminded of Simon Sinek’s talk, Start with Why, which I don’t know if you guys have ever seen that one, but I would encourage you to watch it, it’s very engaging. And people really key into the bigger why of something. And then later you can worry about the who, what, when, where, and how. And I’ll use one of Sinek’s examples that he uses in the talk just to kind of illustrate the purpose.

Do you guys remember TiVo? And I don’t know if that’s still a thing or not, and that’s kind of exactly the point. At the time, they were the first to market with this game changing technology, a device that lets you pause live TV, skip commercials, record your favorite shows, and they were the only ones who had– And they had it all. They had the cutting-edge technology. Reviews were great. User base who absolutely loved it. And despite all this overwhelming enthusiasm, they didn’t have a massive hit that you’d expect. Like, the sales were a flop. And Sinek points out why he thinks they failed is that instead of focusing on the why, which is the fact that it gave you total control over your TV watching experience, they focused instead on the features. So, their ads were like, “Hey, you can pause live TV or rewind or fast forward.” But basically, they were just telling people what the product did. And Sinek argued that if you connected to the why, which is like, “Are you someone who wants total control? Boy, do we have a product for you. It lets you pause live TV, lets you rewind, lets you fast forward. But you’re always in control, and that’s the big thing that separates it.”

So, in this book, it also then leads to the concept of flow which, if you think about, it’s those things that make time just absolutely fly by. Maybe for some people, it’s painting or coding or cooking or surfing or reading 10-Ks. Who knows? But it’s where you lose all sense of time and then also kind of your sense of self-consciousness in the moment.

And the man behind the research into flow is this guy named Csíkszentmihályi. I’m not going to say that a whole bunch of times, and I’m not going to spell it, because it’s quite the mouthful, but he really cracked the code on this, and it’s really about peak performance and feeling good while you’re doing it. And he was born in 1934 in a section of Italy, which is actually now modern-day Croatia. And in his early years, during World War II, he was a kid, and like a lot of people at that time, he saw all this hardship and chaos. But what fascinated him, even as a kid, was that even how terrible things were, some people managed to stay happy in all of that craziness, and that question stuck with him. How do they stay positive even when the world feels like it’s falling apart?

That sent him on a lifelong quest into psychology and eventually developed this idea of flow. So, when you’re in that flow state, you’re fully engaged, you’re learning, you’re growing, and you’re really at your happiness, and it’s an optimal experience, and it fits in with– the real-time part of your ikigai is when you’re in this flow state, everything just clicks.

I think to bring this back to the investing world, if you study the best investors, I feel like you get a sense that they’re in that sweet spot all the time, like they’re riding in that pocket. Buffett says he tap dances to work every day, and you really believe him. It’s something they do for free. It’s more about the game than the money necessarily, maybe the relationships. And if you read William Green’s book, Richer, Wiser, Happier, which is really just a series of profiles and interviews of all of these stellar investors, you really get the sense that they’re doing exactly what they were meant to do on this planet. It’s kind of hard to imagine them doing anything else. And I think they spend all day in that flow state, in that ikigai.

And I think for us mortals, you really should ask yourself and check and make sure that you have this deep passion for investing because you absolutely will be tested at some point. And getting your teeth kicked in for multiple years is no fun, as all of us can kind of attest to at this point. And your passion and your resolve is really going to be tested, and so you need a big reserve of it. It needs to feel like this is really your thing. And if it’s not, it’s really difficult to compete with people who it is.

Anyway, that’s, a little bit of more of a Japanese term that blends with some Start with Why, which blends with flow, which then, I think you sort of see in all of the best investors.

Tobias: Isn’t the ikigai, there’s a Venn diagram that there’s three or four–

Jake: Yeah.

Tobias: The little circles for– What are they?

Jake: The four circles on that were– Make sure I do it in the right order. It’s what you love, what you’re good at, what the world needs, and what you can get paid for.

Tobias: What happens if none of your circles are–? [laughs]

Jake: Yeah. If you shoot the arrow and none of them hit the circles then, yeah, I’m not sure. I think you need to spend a little bit more time thinking about where you are and what that activity, where does it fall in those things.

Tobias: That’s a good one, JT, some good comments here.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts