One of the popular practices in Jainism is tap (a form of austerity), to achieve the ability to detach from karma (material and emotional bondages in this world- not to be confused with the Hindu interpretation of the word) and gain moksha (liberation from the cycle of birth and death). As someone who grew up in a Jain household, upvas or anshan (zero consumption of food) was the most popular form of tap we were exposed to. However, there is a form of tap that is considered by many Jains to be even superior – unodari.

Unodari is a combination of two words- un(a) which loosely translates to lesser and udar which is a reference to the stomach. It is the principle of eating less than ones desire. In simple words – one would eat two slices of pizza if they are hungry for three. 

Through the 2010-2020 decade, most investors have resorted to the practice of upvas by abstaining from investing in cyclical businesses. The decade was dominated with advances in productivity and consumerism benefiting the likes of Google, Amazon, Facebook, etc.. No great strides were made in the augmentation of manufacturing capacity. The belief entrenched in majority of investors is that cyclical businesses are unworthy of investments as they amount to nothing by the end of the cycle. 

A quality in good investors, however, is to not get bogged down by the collective biases of the past which include notions such commodities are pure speculation, pro-cyclical businesses are bad models, etc. There are gains to be made in cyclicals and applying the principle of unodari can help one realize those gains. Restraint exercised prior to the satisfaction of appetite, translates to selling before peak earning possibility. 

The lure of peak earnings in commodities brightened with low single digit P/E make us believe that there is an additional 15-20% headroom remaining for gains to be made. It is better, even imperative to learn to walk away when that happens. It is always easier to sell when there are these 15-20% gains left on the table; prior to the earnings peak in these companies. 

By no means am I advocating purchasing commodities or cyclical companies today or at any point of time. Knowing your circle of competence and practicing ‘upvas’ of sectors shows great discipline in itself. However, being open minded towards cyclicals while adopting the principles of unodari and practicing restraint before your expectations are met, shows greater mental agility as an investor.