There Ain’t no Such Thing as a Free Lunch

There Ain’t no Such Thing as A Free Lunch

“No Free Lunch” (or “No Arbitrage“) is a fundamental axiom of finance. It is the force or Prana that keeps the markets efficient. It is the finance equivalent of the energy conservation axiom in Physics.

“No arbitrage” means that there is no guaranteed profit without assuming risk to your investment. No risk, no return! If somebody promises to double your money without any risk, you must get away as a fast as possible from him. Especially so, if he is wearing a tailored suit and an expensive watch!

Since risk is unavoidable, investing is essentially an optimisation exercise. The questions one typically asks are: What sort of risks one ought to avoid? Are the returns commensurate with the risks one is taking? What sort of financial instruments (stocks, bonds, etc) one should invest in, given the investment objective? How do we allocate our investment?

There Ain’t no Such Thing as Eternal Happiness

A single class of wine may not give the same pleasure as it once did. One might need 3 or more of an exquisite kind to match what a single glass could do years ago.

Yoga philosophy recognises that change is the inherent nature of the world. You and I change. The objects around us change. A logical implication is that an interaction that produced a pleasurable experience might not repeat the same way in the future.

In the wine example, there are two sources of unhappiness. Firstly, a glass of the same wine is just not enough anymore and hence, disappoints us. This is because the physical body changes with time and wine intake. More wine is needed to get one tipsy. Secondly, regular (and copious) consumption of alcohol affects the organs of the body and the mind, often resulting in palpable suffering.

Sūtra 2.15 summarises the dynamics succinctly.

(Sūtra 2.15) parināma tāpa saṁskāra duḥkhaiḥ guna vṛtti virodāccha duḥkham eva sarvam vivekinaḥ / people with discernment understand that all worldly objects cause suffering; suffering arises from the direct experience, from the latent impressions they leave behind and due to the inherently changing nature of the world

An added complication is the way human brain works. The huma brain has a tendency to form patterns of action or habits. The regular drinking of wine leaves a habit (of drinking). Over time the habit becomes so strong (addiction) that the person simply drinks at the usual time and place as an automaton regardless of the experience gained as a result. In spite of the afflictive nature of the experience, the habit one developed dictates the behaviour.

While the example of wine may appear a tad extreme, one can see shades of similar dynamics at work in other interactions we have with the world (and people) around us.

The person with discernment (Yogi) perceives this dynamics clearly in every interaction. As Vyasa in his commentary points out, practices of Yoga make the Yogi as sensitive as an eye ball, perceiving even a speck of dust as clearly as touch on the skin. Thus, he sees the seed of suffering in every experience.

Not Leaving Money on the Table

Just as risk and return go together in every investment, happiness and suffering go together in every interaction in this world.

What does this mean for us? How do we go about investing as well as choosing a philosophy of life?

In the finance world, without any minimum return requirement, minimising risk leads to investment in the least risky choice i.e. keeping it all cash. Remember no risk, no return! At the other end of the spectrum, maximising return, without any consideration for risk, leads to investment in the riskiest financial instrument available.

Clearly, without taking both sides of the coin into account, we end up with potentially unhelpful, extreme choices.

What about life in general?

Sūtra 2.16 offers one solution to the problem outlined by Sutra 2.15 above.

(Sūtra 2.16) heyam duḥkham anāgatam / suffering that is yet to come must be avoided

One cannot do much about the past and the present suffering as they are due to past actions and the habit patterns formed as a result of these actions. However, we can do something about what is to come.

What Sūtra 2.16 says is somewhat similar to minimising risk as a strategy of investment. This is the path of renunciation. Those on this path avoid the triggers of the mundane world and lead a frugal life, taking on just enough to sustain the physical body. This is a logical result of discernment taken to its completion. As Hariharananda Āranya states in his commentary, when the Yogi’s perception is the sharpest it can get, he/she loses interest in wealth, family, material objects, etc.

Clearly, this is NOT a viable strategy for everyone.

There are people who pursue this path from a young age. They are the pros! They are naturally inclined towards philosophising and introspection.

However, renunciation can be a slippery slope for the commoner. As Dr Carl Gustav Jung warned, it could end up being just an excuse for abdicating one’s moral responsibilities. In classical Hindu way of life, for a commoner like you and me, the stage of Sannyyasa or renunciation is the final stage of life AFTER having fulfilled our duties (e.g. to our spouses, children, etc). Sort of easing oneself to the ultimate act of renunciation – death.

On the other end of the spectrum (equivalent to maximising returns without any constraint on risk) is exemplified by slogans such as “Life is short, live it up!“, “Come on, you only have one life. Have fun.“, etc.

A standard rule of investing is to maximise return per unit of risk within the limitations one faces. A logical implication of this is not to take on risks that are not compensated adequately. And, most certainly, not to take on “bad trades”, which leave money on the table for someone else.

The equivalent for life in general would be to avoid suffering that is not compensated adequately. Since we are creatures of habit, some experiences can bind us to an action that creates only suffering that are not compensated for (e.g. Smoking example above). In other words, we keep repeating actions that leave us with bad trades.

Suffering or discomfort that go along with creation of good habits (i.e. Kriya Yoga) are worth bearing because they leave us with habits that bring us wellness, clarity and peace (i.e. Sattva) that in turn helps us avoid the bad trades. (Read more about habit engineering here and here.)

 So, next time around, when your friend implores you to live it up, you might want to consider if you are leaving money on the table.


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