The Joy of Investing

Why do you invest?

The answer may seem simple: You invest so that you can retire comfortably someday, send your kids to college, or dive into a big pool of money a la Scrooge McDuck.

But is this what motivates the greatest investors? Or to flip the question: Does Berkshire Hathaway's (NYSE:BRK-A) Warren Buffett care only about becoming incalculably rich? Did Peter Lynch just want to make his Magellan fund fabulously successful?

The answer in these cases -- and many more, I'm presuming -- is a resounding no. In Buffett's case, not only is the money secondary to him ("We enjoy the process far more than the proceeds," he's said), but he also looks for that quality in the managers of Berkshire's businesses:

The first question I always ask myself about [a business's owner] is: Do they love the money or do they love the business? ... Because the day after I buy a company, if they love the money they're gone.

And I think that what lies beyond the bottom line can help us all become better investors.

A key ingredient of success
I don't doubt that folks like Buffett and Lynch enjoy the wealth and prominence that have come to them through their super-human investing careers. But I do doubt that they would have become so successful if they didn't enjoy investing.

Like any endeavor, becoming an expert in the field of investing takes something that many people aren't willing or able to give -- a lot of time and hard work. I believe that the best investors have been able to dedicate themselves to becoming masters in the field because they find enjoyment and fulfillment in the process of investing -- as opposed to just the outcomes.

Buffett-like success is probably not in the picture for most of us, but if we mere mortals could figure out how to truly enjoy investing, we would stand a much better chance at becoming proficient investors.

So how do you find this joy?
There isn't one single avenue to finding this pleasure, but we can get some insights from Mihaly Csikszentmihalyi, one of the foremost experts on positive psychology and the author of Flow: The Psychology of Optimal Experience.

In his book, Csikszentmihalyi describes optimal experience or "flow" as:

What the sailor holding a tight course feels when the wind whips through her hair, when the boat lunges through the waves like a colt -- sails, hull, wind, and sea humming a harmony that vibrates in the sailor's veins. It is what a painter feels when the colors on the canvas begin to set up a magnetic tension with each other, and a new thing, a living form, takes shape in front of the astonished creator.

Sounds great, right? What's even better is that the author provides guidance on how to enter this flow state. Three primary factors in going from zero to flow are:

1. Engaging in an activity with clearly defined goals.
2. Engaging in an activity where there's a sense of personal control.
3. Finding a balance between activity level and abilities.

Can we apply this to investing? You bet!

At its core, the clearly defined goal of investing is to make money, whether it be through price appreciation, dividends, or a bit of both. While we can't control the vicissitudes of the market, there are certain things we do control -- the buy and sell decisions we make, how much research we do, etc. -- that we can use to tilt the odds of success in our favor.

And as for matching challenge and ability level, this requires that you have a sense of your skill level as an investor and match that to the companies you try to tackle. For example, a beginning investor is likely to get overwhelmed trying to nail down all the intricacies of Goldman Sachs (NYSE:GS) and its black-box operating model. Trying to analyze a more straightforward company like Coca-Cola (NYSE:KO) may be more likely to induce flow for that investor.

Line up all three of these factors, and you may just find yourself -- dare I say -- joyfully investing.

Harnessing the joy
We've now established two things: First, that enjoying the process of investing gives you a better chance at success, and second, that there are some parameters for creating an enjoyable, "flow-like" investing experience.

So what do we do now? I'd say it's time to get down to business. Go ahead and define what your goals are for investing (a process that Fool Dayana Yochim can help you with), recognize that you have control over multiple factors that can improve your chances of success, and start picking out some quality companies to dive into.

In case you need a few ideas, below I've presented a handful for you to get started with. Each one of these companies has a crew of insiders with a significant ownership stake, little or no debt, and a price-to-earnings ratio (P/E) that is lower than its estimated growth rate -- three factors that Fool co-founder Tom Gardner has identified as traits of winning stocks.

Source: Capital IQ, a division of Standard & Poor's. PEG ratio is P/E ratio divided by the expected long-term growth rate.

While these aren't meant to be formal recommendations, jumping in and researching these companies is a great way to practice creating flow and experiencing pleasure from your investing. And hey, you just may determine that one or more of these stocks make for fabulous investment opportunities.

Of course, there's no reason that the joy of investing has to be experienced at a table for one. The Motley Fool Hidden Gems newsletter service brings together a group of talented advisors and thousands of community members to attack the twin goals of finding the absolute best small-cap stocks and improving as investors.

You can try Hidden Gems free for 30 days and get not only stock ideas from the advisors but access to their thinking and philosophy, as well as access to a community of other subscribers who simply love investing.

Whether or not you check out the service, I sincerely hope that you find out what a blast investing can be!

Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, but does not own shares of any of the other companies mentioned. You can follow Matt on Twitter @KoppTheFool. eBay, Berkshire Hathaway, and GameStop are Motley Fool Stock Advisor selections. Coca-Cola is an Income Investor pick. Garmin is a Global Gains selection. Berkshire Hathaway, eBay, and Coca-Cola are Inside Value selections. The Fool owns shares of Berkshire Hathaway. The Fool's disclosure policy finds joy in the couch cushions..