Via Negativa: The Power of “Don’t” in Investing and Beyond

Have you heard of the concept of “via negativa”?

Via negativa is a potent concept, especially in the world of investing. This powerful philosophy emphasizes what NOT to do to improve your odds of success.

In other words, instead of focusing on what to add, via negativa works by eliminating what shouldn’t be there

This principle finds its roots in various religious texts too:

• Confucianism: “Do not unto others what you would not have them do unto you.”
• Buddhism: “Hurt not others in ways that you yourself would find hurtful.” (Tripitaka Udana-Varga)
• Hinduism: “This is the sum of the Dharma (duty); do naught onto others what you would not have them do unto you.” (Mahabharata)

Elimination as a Path to Success

Think about it — our brains are hardwired for survival, making us highly attuned to avoiding risks. We’re instinctively better at knowing what NOT to do than what to do. Take parenting, for example.

We understand what not to do with greater clarity than what we should do. This is likely because our brains are hardwired for survival, making us highly attuned to avoiding risks.

Yet, when it comes to investing, we often forget this golden rule. We chase returns, forgetting the potential for catastrophic losses.

Parenting as a Model for Sensible Investing

Take parenting, for example. We know the drill: don’t play with fire, don’t run with scissors—basically, avoid anything that could land you in hot water.

We teach these “don’ts” to protect them from significant harm. Why not apply the same logic to our financial lives?

Protecting Your Wealth: The Via Negativa Approach to Investing

Adopting a via negativa mindset in investing means focusing on avoiding the actions that can lead to financial ruin:

• Get-rich-quick schemes: If it sounds too good to be true, it probably is.
• Penny stocks: High volatility and low transparency are a dangerous combination.
• Investing without understanding: Don’t put your money into something you don’t comprehend.
• Chasing hype: Don’t blindly follow trends or influencer recommendations.

At Bodh Capital, I apply the via negativa philosophy to protect clients’ wealth. I don’t buy stocks (businesses) that:

• Don’t pass forensic checks
• I don’t understand
• Have poor/mediocre business model
• Have history of poor allocation of capital

Your Turn: Build Your Investing “Don’t Do” List

I encourage you to create your own investing “don’t do” list.

What are the risky behaviours you want to eliminate to protect your hard-earned wealth? Share your thoughts in the comments below!