You may know him for the Mona Lisa. You may know him for The Last Supper. However, Leonardo da Vinci was far more than just a painter and an artist. He was an anatomist, a military engineer, a scientist, and the list goes on.
Leonardo theorized that the Earth was not at the center of the solar system decades before Copernicus’s revolutionary work On the Revolutions of the Heavenly Spheres. He pioneered the field of ichnology (the study of fossil traces) and made discoveries in optics that weren’t re-discovered for over a century. One of his most impressive feats was modeling how blood flowed through the heart, something that medical researchers didn’t confirm until the 1960s, over 450 years later.
Throughout his life, Leonardo was the most inquisitive of souls. And in examining his life and work, through Walter Isaacson’s Leonardo da Vinci, I found four lessons that can help us to be better investors:
1. Study Many Disciplines
Leonardo is the poster child of the multi-disciplinary approach to knowledge. As I have already mentioned, his interests included just about everything under the sun (and beyond)! Because of his proclivity to study many things, Leonardo was better able to make analogies across disciplines that helped his understanding of the world. For example, he applied his thinking in studying anatomy (the human body) to form his thoughts on how to properly design a city.
We should study many disciplines because the study of investing is not only about returns, diversification, and compounding. The study of investing is also the study of human behavior. And in order to better understand human behavior, you should expand your interests beyond the finance aisle of your local bookstore. So get a taste for psychology and sample some sociology because, as I hope I have demonstrated on Of Dollars And Data, many such topics are directly applicable to investing.
It is far better to know a little bit (or the core principles) of many disciplines than to be an expert in only one. Charlie Munger describes this through the use of his many mental models. These models were derived from multi-disciplinary thinking and should be an inspiration for you as you continue your education. Don’t put yourself in a box. Study many disciplines.
2. Let Experience Be Your Guide
A century before Sir Francis Bacon and the foundation of the scientific method, Leonardo was producing discoveries using the one thing he relied on most—his experience. Leonardo had a distaste for theory and believed that empirical testing was the proper way to acquire knowledge. He wrote:
My intention is to consult experience first, and then with reasoning show why such experience is bound to operate in such a way.
This is one of the most important lessons we can utilize as investors because investing is a domain where experience is far more important than theory. All the theory in the world cannot tell you how it feels to live through an asset bubble or a 50% drawdown. The only way to distinguish between theory and practice is to test yourself and understand your biases. Can you do buy and hold? Can you be 100% passive? Can you avoid market timing? There are no wrong answers here. As I learned from Michael Batnick:
There is no right way to invest. What’s right is whatever works for you.
So find what works for you. Just like Leonardo, let experience be your guide.
3. Write Down Your Thoughts
It is estimated that Leonardo wrote over 28,000 pages of notes, of which only 7,200 (~25%) survived to today. According to Walter Isaacson, this represents a higher percentage of Leonardo’s work than that of Steve Jobs, whose many electronic communications from the 1990s (and prior) were not backed up and lost.
As an investor, writing down your investment theses can provide clarity to your thought process over time. Whether you are a 100% passive investor or an active day trader, writing down what you think about a particular portfolio decision can be incredibly helpful for later convincing you why you should stay in (or get out of) that particular position.
For example, if you decide to allocate 20% to emerging markets for the coming year and then emerging markets decline by 15%, you should revisit your original rationale before a possible panic sale. Having your rational thoughts set in stone from a less turbulent time can be one of the best ways to prevent yourself from making an emotional mistake.
Though this can be tiresome early on, writing down your investment thoughts is one of the best ways to challenge yourself and improve as an investor. If you want to take it to the next level, make those thoughts public and start an investment blog!
4. Stay Curious
Of all of Leonardo’s traits, his intellectual curiosity was his greatest gift. His burning desire to understand the world around him, from the profound to the mundane, is what separated Leonardo from others in his time. As he once wrote:
Men who desire nothing but material riches and are absolutely devoid of the desire for wisdom, which is the sustenance and truly dependable wealth of the mind.
It is in this “desire for wisdom” that you can become a better investor. Why? Because the world is always changing. New assets emerge. Valuations shift. Collective beliefs adjust. With the ebb and flow of time, what used to work stops working and we have to evolve.
While I wish I could give you a single rule that will do you well throughout your investment life, I don’t know what the future will hold. This does not mean we are hopeless though. There are some good guidelines out there, but you have to keep looking. You have to keep digging even as things get complex. No matter what, stay curious my friends.
With that being said, I will leave you with a final word from Isaacson:
Above all, Leonardo’s relentless curiosity and experimentation should remind us of the importance of instilling, in both ourselves and our children, not just received knowledge but a willingness to question it—to be imaginative, and, like talented misfits and rebels in any era, to think different.
If you want to learn more about one of history’s greatest and most curious minds, pick up a copy of Leonardo da Vinci. Thank you for reading!
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This is post 99. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data