Practical analysis for investment professionals
28 October 2014

The Intuitive Investor: How to Tune into Intuitive Sensations

So far in this series I have discussed the importance of intuition, a model that helps frame the intuitive process, and intuition’s most important skill: non-attachment. Recall I said our experience of intuition is just like that of our other senses. First there is a sensation, then that sensation must be translated into recognition. Yet, how do you tune into intuitive sensations? What the heck do intuitive sensations feel like?

For argument’s sake assume that your consciousness can take two forms: holistic and specific. Awareness of these two states is essential to tune into intuitive sensations. A subtle sensory exercise will help you learn how to distinguish between the two forms of consciousness.

Take a moment to tune into the temperature of the space you are in currently.

First, notice that there is the sensation existing independently of the words, such as warm or cool, or the numbers, such as degrees Celsius or Fahrenheit, that describe the sensation. Tune into the temperature again and see if you can interrupt the likely automatic translation of the sensation into numbers or words. This may take some practice.

Now do the exercise again. See if you can notice the subtle difference in your consciousness between you just feeling the sensation of the temperature and then the switch that occurs when you translate the sensation into numbers or words. Notice that when you switch your awareness from the sensation to the thought that the sensation disappears? This is similar to the moment when water turns into ice — from liquid to solid. Or, if you understand quantum physics, it is exactly the same as consciousness collapsing the superposition probability wave into a particle.

See if you can get to the point where you can control which form of consciousness is in use. For most, the specific consciousness is very easy. This is the awareness cultivated since we were taught words, counting, grammar, and mathematics as children. It is the consciousness deeply preferred by modern education. Holistic consciousness, on the other hand, flourishes more in athletics and the arts.

Holistic consciousness — the awareness of the actual sensation of the temperature — is experienced as loose, non-specific awareness. In modern culture this state is often denigrated with language such as “spacing out” or “zoning out.” Underlying the criticism is a deep prejudice in favor of the specific consciousness associated with numbers and words. Typically the criticism is rooted in a mistaken belief that there is nothing of value in the holistic awareness. Crucially, both holistic and specific consciousness have their unique uses.

Just like with the other senses, it is holistic consciousness through which you tune into intuitive sensation. Holistic consciousness is also the state of awareness accessed through the regular practice of mindfulness or meditation. In terms of neuroscience, these are states associated with alpha waves (most usually) or theta waves (rarely). Given the time, energy, and effort dedicated to specific consciousness, it is likely you’ll need to invest some effort to gain control in order to choose which form of your consciousness is working at any given time.

Once you feel that you are getting better at recognizing the difference between holistic and specific consciousness, the next step is to stabilize your holistic consciousness. In other words, once you are in holistic mode, you want to be able to shoo away stray thoughts. Typically these take the form of words or numbers that intrude into your awareness. In the preceding sentence, notice I said “take the form of.” This is the essence of specific consciousness where sensations are quantified or named. Holistic consciousness, by contrast, is an experience of the substance of sensations.

With practice, stabilization of holistic consciousness occurs. At that point, you can use specific consciousness to play with intuition. As an exercise, once you are in that holistic state of mind, allow yourself to put into your mind’s eye the investment security in which you are currently most interested.

Likely many words and numbers from annual reports and press releases, images from presentations, and sounds from conference calls all enter your mind immediately, placing you into specific consciousness. This is not a bad thing. However, see if while in stabilized holistic consciousness you can tune into the sensations associated with this prospective investment. Do not force this process. What information is there about this investment? Pay attention, as it is likely that you have insights about the business that eluded your specific awareness. These may be emotions, such as a mistrust of the executives of the business, respect for the business plan, anxiety about the strength of a competitor, and so forth.

Be patient with yourself! After I began consciously using my intuition, it took many months of practice to get good at stabilizing my holistic consciousness. My over-trained reflex was to always freeze the water/collapse the wave — to name and quantify my sensations. But it also took me months of practice to become comfortable with discounted cash flow (DCF) analysis, Gordon Growth Models, costs of capital, and so forth. This is an investment in developing your whole mind.

Eventually your ability to access holistic consciousness will stabilize. Once that occurs, then you can begin to translate those intuitive sensations into meaningful words and numbers without defaulting to your standard prejudices, preferences, and mental models.

But that is a story for next month.

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Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/retrorocket

About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: jason@jasonapollovoss.com

6 thoughts on “The Intuitive Investor: How to Tune into Intuitive Sensations”

  1. Ben Fox says:

    Jason,

    Now we are getting to the juicy stuff!

    “Be patient with yourself! After I began consciously using my intuition, it took many months of practice to get good at stabilizing my holistic consciousness. My over-trained reflex was to always freeze the water/collapse the wave — to name and quantify my sensations. But it also took me months of practice to become comfortable with discounted cash flow (DCF) analysis, Gordon Growth Models, costs of capital, and so forth. This is an investment in developing your whole mind.”

    Your piece does a great job describing the process of tapping into holistic consciousness. I wanted to underscore the preceding paragraph.

    The difficulty I have had (still have) with holistic consciousness is the mental repetitions necessary to be able to achieve that state seamlessly. In a past article, you’ve discussed decision-making and specifically how only a tiny percentage of the sum of one’s decisions is reflected in any given portfolio or fund. The solution to improving decision making is to carefully track how one spends one’s time and the various rationales/supporting theses behind the decisions made.

    That method is (and correct me if I am wrong here) antithetical to the pursuit of a holistic consciousness because of its very reliance on words and numbers (the tracking element). So the only solution is to give it time, put in as many mental repetitions as possible, and let one’s mind develop in such a way that it becomes unfettered from the default-mode specific consciousness.

    It’s extraordinarily hard work, but the first time one is able to successfully tap into those sensations, it’s a powerful experience.

    All the best,
    Ben

    1. Hi Ben,

      As always, you have ably contributed to the discussion – thank you! Regarding the holistic v. specific consciousness…I know that you are familiar with the arch diagram from my book The Intuitive Investor, yes? A new wrinkle that would be in a second edition is that sensations are the base brick on the wisdom/right-brain side and that them, coupled with non-attachment, results in intuition. Yet that side is informed by the left-brain’s knowledge, memory and creativity. On the left-brain/intelligence side of the arch diagram we have knowledge as the base, followed by memory (i.e. recall) resulting in creativity. Yet, this side is informed by sensation, non-attachment, and intuition, too.

      Why is this important? Memory and non-attachment/surrender both seem to survive their encounters with their opposite conscious states. In other words, the trick is to experience sensations without attachment. This is followed by choosing the words to describe your sensations accurately (next month’s intuition piece). The prohibition against numbers and words is a prohibition against unconscious assignment of numbers and words to sensation as this is the (to my mind) source of reality distortion.

      By the way, you are correct that “It’s extraordinarily hard work, but the first time one is able to successfully tap into those sensations, it’s a powerful experience.” Would you care to share any of your experience in that space? I think it would benefit the serious experimenters out there.

      Yours, in service,

      Jason

      1. Ben Fox says:

        Jason,

        Thank you for your response. Melding right- and left-brained techniques is still a work in progress for me. I look forward to your next article, because there are some nuances (similar to the one you addressed above) that really help to flesh out the overall intuitive framework/model.

        As for early intuitive experiences, and specifically within an investing context: a couple of years ago I was analyzing a mid-cap technology company. There was a lot that I liked about it from a purely financial perspective – its bread-and-butter products were patent-protected, the technology was proprietary, they earned 90%+ gross margins (essentially a royalty business), and capital required to expand the business was absurdly minimal. To boot, insiders owned a significant chunk (20%+) of the company’s shares.

        But as an individual investor, it was difficult to get access to top management. I could read what was said at investor presentations/conferences, quarterly earnings calls, and press releases, but as most investors know, that language is so doctored and carefully crafted that it is nearly impossible to draw any conclusions about the actual character of the people running the business.

        I had read through the company’s most recent annual report, 10-Q, and a couple years worth of conference calls, and finished my financial modeling. At this point everything still looked very good, and I was ready to put money to work.

        To make sure all of my due diligence was in order, I read through the proxy. Proxies are typically filled with a lot of boiler plate about executive compensation, biographies of directors, etc. But there was one paragraph detailing a host of intra-company transactions between the chairman (who was the founder and a significant shareholder) and the company. Most significantly, the chairman owned the building in which the company was headquartered, and leased it out on what I considered to be onerous terms.

        While the financial impact was slight in the context of the overall business, the one thought that crystallized for me was: this person is running the business for their own aggrandizement, and it would be foolish to trust my money with them.

        A very difficult situation for me to walk away from given that my left brain was screaming, “BUY!” I’ve tracked the company’s performance in the interim, and while the company’s stock has done well on an absolute basis (up ~35%), it’s lagged the S&P 500 by about 12 percentage points. Financial results have been more or less stable, and the growth that I had been expecting – and that management had been guiding to – didn’t materialize.

        So out of tens of thousands of words read, many hours spent, etc., a few dozen seemingly innocuous words turned a surefire “yes” to a “no,” based solely on my intuitive sense for top management. And it helped to guide me away from an investment that ultimately has not generated any alpha in the last few years.

        An early but rudimentary experience with the power of intuition that has stuck with me ever since.

        1. Hello Ben,

          What a fantastic story! That is one of the best examples anyone has shared with me over the years. Thank you for taking the time to detail your use of intuition.

          With smiles!

          Jason

    1. Hello Ana,

      Thank you for your compliment; I am pleased that you enjoyed the piece.

      Yours, in service,

      Jason

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