Dow Theory Letters Interview with Benjamin Butler

Thursday, May 22, 2014

Learning from Each Other

Introduction: I first met Benjamin Butler when he came to San Diego for the Altegris / Mauldin conference and met briefly with Richard. I was impressed at his combining his intense interests in Zen and finance, and even more impressed to hear about his wife’s mother. She spends every night – all night – meditating in a local Buddhist temple, taking only a few hours to sleep!

-- Daria Russell Doering


Benjamin James Butler – Zen and Finance

Benjamin was born in 1975 in Hampshire, England. His father was an accountant and later a finance director for the British health service, while his mother owned several beauty salons, and later trained as an herbal doctor. As a child, Benjamin liked to ride his bike until he was thoroughly lost, and then try to find his way back home. This presaged the international globetrotting he loved later in life!

Benjamin attended private schools as a child, and as a young adult got through two-thirds of a law degree at King’s College, University of London. He enjoyed the study of law, but after experiencing internships, decided the practice of law was not as exciting as he had thought! He transitioned to the study of economics and Japanese at SOAS (School of Oriental and African Studies) at the University of London. Benjamin says he was attracted to SOAS because he wanted to study the cultures most far removed from his own, and liked finance because it was dynamic, interdisciplinary and international – it would satiate his desire to travel!

His first jobs after graduation were with investment banks. While working at Morgan Stanley in Japan he met his Korean-born wife, Danielle. Danielle had been a flight attendant for Singapore Air, and had helped launch and manage a fitness center in South Korea. Now she was in Tokyo studying Japanese, and waitressing at a restaurant at the top of a high-rise, which is where Benjamin met her. She is the youngest of seven children, and the only one to follow her mother to a serious practice of Buddhist meditation.

(Q) What have you learned about investing?

One must keep asking the questions, which is interesting because our modern society always emphasizes knowing the answers. Ancient traditions often emphasized questions. Personally, in investment I like both macro and microanalysis. So I like to fuse: technical analysis, market psychology, macroeconomics, geopolitics, valuations and analysis of businesses. In investment some people refer to the concept of stocks going from weak hands to strong hands. How can you maximize the chance of being a strong hand? Well I think its simple: buy when valuations are fundamentally low and the economic cycle is pointing in the right direction.

(Q)What is or was your favorite stock or asset class?

Depends on the price. Dogma is dangerous. At the moment I think European stocks might be at risk again, US stocks are on a knife-edge and I generally still don't like emerging markets. The US is a challenge because whilst the valuations are historically very expensive, the economic cycle has yet to turn south and central bankers are still printing. So this could mean that stocks continue to go north. But we are at a challenging juncture and that's why technical analysis is very useful. I also like gold and think that gold will have its day again, especially if trust in the system breaks down.

(Q) What has been your greatest investment challenge?

Having an opinion (the danger of). A long time ago a wise investor asked me "do you want to be right or do you want to make money as an investor."

(Q)What has been your biggest investing mistake?

Singapore real estate - twice. The first time, I delayed buying real estate in Singapore in around 2005, even though my own analysis led my to believe that this could be a once in a lifetime opportunity, because intelligent locals dissuaded me. I learned again to be skeptical of locals' views on a market, as sometimes they are too close to discern an inflection point. The second time was that having made money in the real estate market there, I went against all my own rules and continued to speculate on property, even after I thought things were peaking. I guess I got arrogant and believed I could outsmart everyone.

(Q)Who has influenced you the most?

In financial markets - George Soros, Stock Market Wizards by Jack Schwager, Marc Faber, Sean Darby at Jefferies (a personal friend) and Robert Shiller.

In life - my grandmother, parents, Socrates, Jesus, Lao Tsu, Buddha and a Korean Zen Master called Seung Sahn.

In Business - Jim Collins, David Bohm, and Tony Hsieh, the entrepreneur who authored Delivering Happiness. Also Adam Lindemann, my former business partner and co-investor in a number of Silicon Valley companies.

(Q)Describe your current surroundings.

I am sitting in a motel on the edge of the city of San Diego. My wife and I are travelling up the Pacific Highway from San Diego all the way to Seattle. It’s a combination of work and pleasure. Its one of the most beautiful highways in the world and I wanted to spend some quality time with my wife. But we want to meet lots of people along the way, and get inspiration for some books I am writing and my blog, I am trying to write a book on the inner journey of an entrepreneur (and hence my visit to Silicon Valley where I have made investments) and also a book on the mindset of a successful investor.

(Q)Tell us a bit about your life, your occupation(s) or businesses.

I have had a number of different incarnations in business but at the end of the day I am an entrepreneur, as I love the creative path. Currently, I run a macro consultancy firm, which publishes a blog on markets and touches on the psychology of investment. We have also been coaching investors on the psychology of investment and markets and plan to start running some workshops on this. How do you overcome your emotions – greed and fear? I am also very involved in studying and consulting on creativity, entrepreneurship and innovation. To me, you cannot really understand finance and the economy without having an understanding of these forces. But there are many financial pundits who live in their Ivory Towers and one should be careful of those. Some of them probably work at the Fed!

In terms of my personal life, I live in Hong Kong and have been a resident of Asia for 16 years now: 7 years in Hong Kong, 1 year in South Korea and 8 years in Japan. I speak Japanese and have a good knowledge of the cultures and history of the region. But I have always travelled back to the West, and increasingly so since the financial crisis. After the crisis I started investing in US ventures, particularly in California.

Although Hong Kong is perceived to be a hectic urban jungle, we actually live in an apartment on the top of an isolated hilltop with undulating mountains and lakes as our views! It’s really quite beautiful.

(Q)What was a major turning point in your life?

1997 - followed my head into finance.

2008 - followed my heart and passion into entrepreneurship and more importantly, self-reflection. “Knowing others is intelligence, but knowing oneself is wisdom.” Lao Tzu.

(Q)Do you consider yourself rich, middle class or poor, and how has that affected your life?

Spiritually rich. Material wealth will follow that, a lot of the time. If you get the latter wrong it’s not a problem. If you get the former wrong, you'll never be happy.

(Q) How would others characterize you?

An enigma! I used to be extreme in everything I did - from triathlons to work. I guess now people would say creative and hopefully compassionate and inspiring.

(Q) What invention that you have experienced has had the greatest impact on your life?

The ski? It brought me years of joy when I was a young, stressed-out investment banker. OR perhaps the Kindle as now I can carry even more books around with me on holiday!

(Q) What great (or infamous) moments in history have you participated in?

Living in China when it started to overtake the West in many ways, seeing Hong Kong both under British rule and Chinese rule, and going to the Football (Soccer) World Cup in Japan.

(Q) What keeps you sane?

Prayer, meditation, good friends, and sport (now mostly yoga).

(Q) What are you most proud of, or what has been your greatest accomplishment?

Although I could point to many career highlights such as being the lone voice of reason in my bank prior to the financial crash of 2008, I would probably say it’s overcoming an addiction (alcohol). It's not so much the achievement itself per se, but what I can do with it. I now mentor others on how to overcome - or avoid - life crises.

(Q) What do you struggle with the most?

Me - the burden of self! There appears to be a "self" that is very small-minded, materialistic and fearful But there is another part that is expansive, creative, infinitely generous and compassionate. The ability to wake up the latter and keep the former in check is key! Or at a deeper level, realizing that the former is just a delusion and not "me" at all.

(Q) What book influenced you the most?

The Tao Te Ching by Lao Tzu, Emmet Fox 's Sermon on the Mount was the gateway for me to more profoundly understand the Bible, Awareness by Anthony De Mello, and The Art of Happiness by the Dalai Lama.

(Q) What do you read now?

I am reading My Billion Dollar Education by Toshi Iguchi, a history of California as I am travelling through the state for six weeks, Talk like TED by Carmine Gallo and I always carry a copy of the Tao Te Ching by Lao Tsu.

(Q) How have you evolved and grown as a human being?

Confucius said that there are three ways to learning. First is through insight, and this is the most noble. The second is through imitation, and this is the easiest. The third way is through experience, and this is the bitterest! I wish that all of my evolution had been through "insight"! The school of hard knocks is tough indeed. Nowadays though, I think an increasing amount of my growth is due to self-reflection and insight.

(Q) What advice would you give to youngsters?

Don't run away from your fears - run at them! This is the quickest path to real inner growth. And be compassionate. This is the road to true joy.

(Q) What is your favorite element of "modern life"?

To fly or drive to secluded parts of the world where I can enjoy ancient nature! But I do love to have access to all of humanity's accumulated knowledge via the internet.

(Q) What is your favorite quotation (or something you made up yourself)?

"It is no use walking anywhere to preach, unless our walking is our preaching." St Francis of Assisi.

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