One Secret to More Creative Thinking? The Effect of Walking
Researchers at Stanford recently conducted a study that found that the physical act of walking improved creative thinking in subjects.
We believe creative thinking is an important aspect of investing, so we would encourage anyone faced with important investment decisions to go for a walk.
We know that in investing, we want to avoid using our System 1 processes. Yet when people consider System 2, they usually call to mind focused, critical or convergent thinking. This type of thinking usually involves reasoning along a logical chain to synthesize information and make reasoned judgments. The approach works well when there is a “correct” solution to a problem, especially with a known technique, such as: what is 2+2?
Another approach involves creative, or divergent thinking, which is more spontaneous. In brainstorming sessions, for example, the goal is to generate ideas/possibilities and explore multiple potential solutions. You exercise cognitive flexibility, move beyond established thinking, and sometimes stumble on better alternatives.
For example, Einstein was riding in a street car one day when he happened to pass by a clock tower. He wondered what would happen if the street car increased its speed to the speed of light. In this case, from the moving frame of street car, the time on the clock would appear to stop. Thus, his theory of relativity was born, based on a mental leap he made through spontaneous, creative thinking.
Creative thinking can make sense in investing as well. I had lunch with an RIA last week, and he explained to me that during the financial crisis, his clients only wanted to see “safe” blue chip, large-cap names they were familiar with in their portfolios. Now clearly, the fact that such names make you “feel” safe is not a good reason to be invested in them. So in order to do something different you need to get out of your comfort zone.
This is where creative thinking comes in. Creative thinkers explore new areas, and might consider rejecting something simply because it makes them feel safe, or they might consider contrarian views during the process of brainstorming.
So take a walk and explore what might be possible.
Note: This site provides no information on our value investing ETFs or our momentum investing ETFs. Please refer to this site.
Join thousands of other readers and subscribe to our blog.
Please remember that past performance is not an indicator of future results. Please read our full disclaimer. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. This material has been provided to you solely for information and educational purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and Alpha Architect to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Alpha Architect.