James Mon­tier, Co-Chief, Cross Global Strat­egy, at Société Générale in Lon­don, not only has a long term track record of accu­rate mar­ket calls, he also hap­pens to be well renown on the sub­ject of behav­ioural psy­chol­ogy. Some years before join­ing Soc­Gen, he was, along with Albert Edwards, at Dres­d­ner Klein­wort Wasser­stein, writ­ing some of the best known papers on behav­ioural finance and in the case of this article, "The Psy­chol­ogy of Hap­pi­ness". Mon­tier is elo­quent in his writ­ing. Here is the syn­op­sis from the front page of the report, a classic:

If you are after spe­cific invest­ment advice, stop read­ing now. We seek to explore one of Adam Smith’s obses­sions: what it means to be happy. We also dis­cuss why that’s impor­tant to investors, and how we can seek to improve our own lev­els of hap­pi­ness. The list below shows our top ten sug­ges­tions for improv­ing happiness.

• Don’t equate hap­pi­ness with money. Peo­ple adapt to income shifts rel­a­tively quickly, the long last­ing ben­e­fits are essen­tially zero.
• Exer­cise reg­u­larly. Tak­ing reg­u­lar exer­cise gen­er­ates fur­ther energy, and stim­u­lates the mind and the body.
• Have sex (prefer­ably with some­one you love). Sex is con­sis­tently rated as amongst the high­est gen­er­a­tors of hap­pi­ness. So what are you  wait­ing for?
• Devote time and effort to close rela­tion­ships. Close rela­tion­ships require work and effort, but pay vast rewards in terms of happiness.
• Pause for reflec­tion, med­i­tate on the good things in life. Sim­ple reflec­tion on the good aspects of life helps pre­vent hedo­nic adaptation.
• Seek work that engages your skills, look to enjoy your job. It makes sense to do some­thing you enjoy. This in turn is likely to allow you to flour­ish at your job, cre­at­ing a pleas­ant feed­back loop.
• Give your body the sleep it needs.
• Don’t pur­sue hap­pi­ness for its own sake, enjoy the moment. Faulty per­cep­tions of what makes you happy, may lead to the wrong pur­suits. Addi­tion­ally, activ­i­ties may become a means to an end, rather than some­thing to be enjoyed, defeat­ing the pur­pose in the first place.
• Take con­trol of your life, set your­self achiev­able goals.
• Remem­ber to fol­low all the rules.

Down­load the com­plete paper here.

James Mon­tier has also writ­ten the quin­tes­sen­tial books on the sub­ject of Behav­ioural Finance, Behav­ioural Finance: A User’s Guide , then, Behav­ioural Invest­ing: A Prac­ti­tion­ers Guide to Apply­ing Behav­ioural Finance (The Wiley Finance Series).

Read more from the author/contributor here.

Comments

2 Responses to “James Montier: The Psychology of Happiness”

1. Jan Arkema Says:
   February 25th, 2009 at 9:25 am

   Excel­lent arti­cle. I would like to add that to expe­ri­ence hap­pi­ness, it is impor­tant to focus on BEING happy, rather than becom­ing happy; atti­tude pre­cedes expe­ri­ence. Police your thoughts — neg­a­tive thoughts bring neg­a­tive expe­ri­ences.
   Don't ask how I found out...

2. GreenLight Advisor Says:
   February 25th, 2009 at 11:20 am

   So true...Thanks for sharing.