Over a bottle or two in a Hong Kong bar many years ago my neurosurgeon friend was unusually excited by a freak opportunity to study the effects of the mind on the body. In the same week he had operated on three adult men of similar health, size and age with near-identical injuries. Each had suffered the loss of three fingers to a “chopper attack”, a form of punishment often used by triads. Meticulously he had reattached each man’s fingers.
A few months later he reported that one had recovered 95% of the use of his hand, the second about 50% and the third hardly any at all, reflecting in his view the impact of their mental approach to their injuries and subsequent efforts to recover. This was the first time I realised that mental attitude could affect physical health.
The subsequent decades have seen huge improvements in surgical techniques and in almost every measurable facet of human existence. Globally, life expectancy today is 73 years – higher than any single country in 1950. There has been a surplus of food since 1978, local famines being a function of poor distribution or worse politics.
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In developed countries you were at least ten times more likely to be murdered, assaulted, robbed or injured at work 100 years ago; women were nearly 50 times more likely to die in childbirth. Very few people had any chance of higher education, inside sanitation, or owning any form of transport. In short, we are astonishingly well off to an extent unimaginable to previous generations.
Still not happy
Nevertheless, we are told that we are suffering more mental health disorders than ever before. This is best demonstrated by the astounding growth in two overlapping industries: mindfulness and wellbeing. The definitions of each are slightly fluffy, but the NHS defines mindfulness as “paying more attention to the present moment – to your own thoughts and feelings, and to the world around you – to improve your mental wellbeing”. Confusingly, wellbeing has been defined by the World Health Organisation as “a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity”.
Mindfulness has its roots in two areas: a monastic and lifelong Buddhist practice aimed at renunciation and detachment, and a long-standing American obsession with spirituality and oriental mysticism. A 19th-century example is Mary Baker Eddy and the Church of Christ Scientist, whose widest-known belief is that disease is a mental aberration best cured through prayer. The Buddhist ethics, duties, discipline and theological roots have been swept away for the 21st century.
Jon Kabat-Zinn is a leading and early proponent of mindfulness and inventor of mindfulness-based stress reduction (MSBR). One of his more interesting quotes is that “mindfulness is not just about helping with stress, but may actually be the only promise the species and the planet have for making it through the next couple of hundred years”. A fundamental tenet of mindfulness is that the causes of stress, upset and dissatisfaction are in our own minds – so they are ours to fix. Wellness, meanwhile, has its roots in the 19th-century alternative-medicine movement including (again) Christian Science and German and Swiss Lebensreform (back to nature). It has eight “dimensions” (social, financial, spiritual, etc.) and the term was created, bizarrely, by the US Office of Vital Statistics in 1954.
It continues to morph into new iterations, but is essentially a holistic approach whereby one’s mental, physical and emotional health are in sync. Proponents of wellness and mindfulness are quick to point out that they are vital in a rapidly changing world where the stresses of work, money and living continue to worsen and that each offers not only a solution, but also a guarantee of happiness.
A new approach to mental health?
Unless you’re a hermit you will know of people with serious mental health problems. These are as real as flu or a broken bone. Treatments such as cognitive behavioural therapy (CBT) often produce remarkable results, with 50%-75% success rates in cases of depression. And despite serious disputes over the claimed cure rates in other illnesses, results from Alcoholics Anonymous show that after CBT, even under the worst-case scenario, around 10% of problem drinkers are cured for life, about half cut their intake substantially, and more regain some control. In other examples, a combination of drugs and therapy have measurable effects on bipolar or eating disorders.
However, distinct from mental health issues, there is a growing obsession with the pursuit of happiness. I blame Thomas Jefferson, who lifted the term from the English philosopher John Locke and snuck it into the American Declaration of Independence in 1776. He meant it to mean aiming for liberty, prosperity and thriving, not polishing your own karma. Yet this cannot explain why mindfulness and wellbeing have become mainstream so fast.
For not only have we materially never had it so good, but on other measures we also seem to be doing fine. Every year the UN produces a World Happiness Report, assessing national and regional happiness. It shows that in most countries most people are pretty happy most of the time and in most cases have never been happier.
The countries in fine fettle are developed nations where wealth is widely distributed, corruption low and legal systems robust; they also boast strong health systems. The top ten include the five Nordic countries, Holland, Switzerland, Canada, New Zealand and Austria. I do not believe it is coincidental that, apart from the Dutch, all ten are relatively underpopulated, have huge open spaces with mountains, lakes or both, clean air and a strong sense of social cohesion. Similarly the miserable countries are, as you might expect, Venezuela and Zimbabwe.
Yet these contented and civilised nations are suffering an outbreak of mindfulness and wellbeing. This is known as the Easterlin Paradox: as countries get richer they tend not to get much happier. Yet the happiest people on the planet, according to Pew Research, are the actively religious, who are far more likely to describe themselves in every country as very happy compared with those who are inactive or have no religious affiliation. This applies across all religions: Christianity, Hinduism, Zen Buddhism, Confucianism and even the wackier ones. They are also far more likely to join non-religious societies and clubs, to vote and participate in society generally. One inference is that wellbeing and mindfulness are simply filling a hole previously occupied by various faiths. Religion – any religion – seems to provide a sense of purpose, engagement with others and group support.
Yet the prime cause for the supposed increase in unhappiness may be the rise of robust individualism. It is hard to recall how much we were collectivised; not just in the obvious sense of the now defunct USSR, but also in more liberal countries, be it through trade unions, political clubs, family groups or even by class. Many of these boundaries have weakened or disappeared. The individual is more “free”, but far less anchored to any group or set of ideas. Into this void has stepped the big business of mindfulness and wellbeing.
A huge opportunity
A commonly cited number is that the health and wellness industry is now worth $4.2trn. This looks a wild guess. Yet a Google search for meditation companies produces 51.7 million results; on Amazon books, over 60,000 titles contain mindfulness and 40,000 wellbeing (including 1,000 on wellbeing for dogs and 643 for wellbeing colouring books).These happiness twins have gone mainstream. New Zealand’s government has prioritised “national wellbeing” over GDP. Bhutan and Abu Dhabi, not previously known for their liberal attitudes, have appointed “happiness ministers”, while the UN and OECD are gearing up to make happiness a priority.
As always, however, private enterprise has moved faster. All the giant tech companies – even in China – have happiness departments and directors, as do many corporate giants such as GlaxoSmithKline and BP. Japan is building a huge wellness tourism industry. Lower down the food chain thousands of firms are introducing mindfulness and wellbeing courses with leaders and coaches for their staff. This outburst of caring politics and huggy companies is creepy; I smell a large rat.
Follow the money
There is everything right about many workplace changes over the last two decades, such as hugely improved childcare packages and progress in tackling discrimination. It can only be good too that companies and governments want to reduce workplace stress. But there is something suspect about mindfulness experts being welcomed at the most capitalist of meetings such as Davos.
The solution, as always, is to follow the money. This outbreak of official niceness seems as much designed to save money as to improve people’s lives. Mindfulness is very introverted: it’s your fault if things are bad and up to you to cure it. For a few dollars a month you can buy an online MSBR course and become a better employee. Or your firm might buy you one of the many apps where the handful of iterations claim to fit all comers, even though some reports suggest they can often worsen your condition. The hard evidence on effectiveness is scarce or unsupportive.
What the research shows
For example, in 2019 the American Medical Association published a report on an experiment sponsored by the Harvard Medical School. It was unusually large, covering 26,000 workers over 21 sites for 18 months. Yet although the participants self-reported significant improvements in their health behaviour, there was no discernible outcome using clinical measures, nor better productivity than in a control group. Nor has any other large-scale research found any significant changes. Perhaps that’s no surprise. The world of wellbeing contains thousands of consultants and therapists’ groups – no qualifications required.
Still, the trend is set to grow. For companies where the boss is useless, the product poor or the working environment dreary, mindfulness and wellbeing offer a get-out-of-jail card – it’s your fault and your negativity. For governments too, the fact that you arrive at work stressed from a commute on woeful public transport is no longer their fault; heal yourself.
Be mindful – or else
You’re not underpaid – you hold the solution. Costs can be lowered too; the NHS is looking to move many patients from proven CBT treatments (cost £900 per course) to “more relevant therapies” at £300. What I find creepiest of all is that mindfulness and wellbeing encourage the acceptance of the status quo without question. Non-compliance with mindfulness meetings in the US is increasingly a black mark on your record. It will be the same here soon.
I have no doubt that in ten years’ time we will look back on many current therapies or “proven” psychological cures with derision. The advances in studying the human genome have been enormous, but constitute just a fraction of what is still to be revealed – be it heredity traits or propensity to certain types of behaviour and mental illnesses – making treatment less guesswork and more science-based.
At present we’re in a strange limbo between new cults, proven therapies and useful medication. While scientists continue their work, the mindfulness and wellbeing businesses will continue to make exaggerated claims for their apps and courses. Many therapies do proven good – and even if they don’t, if it works for you, then why not? The best approach for long-term investors, however, is to steer clear of quackery or faddish therapies and look into firms that are genuinely working on improving our physical and mental health.
What to buy now
The world of wellbeing contains several companies over-promoting themselves as wholesome, flying too close to the sun, then crashing. Beyond Meat (meat-free burgers) has collapsed from $240 to $74 in six months; WeWork nearly pulled off a $60bn listing before investors woke up to its fantastical claims.
There are many firms doing pioneering and fascinating work into mental health and genome therapies, but most are either private, small parts of large corporations, or likely to become strapped for cash because such research and development eats money.
One closed-ended investment trust stands out, however: Syncona Limited (LSE: SYNC), with a £1.3bn market cap. It concentrates on investing in and building up life-science companies. It is 28% owned by the respected Wellcome Trust. Performance last year was disappointing, but five-year numbers are good. Volatility is largely a function of when investments are realised – or flop. I don’t like buying at a 14% premium to underlying net assets, but the valuation of its unlisted holdings tends to be conservative.
For a wider healthcare fund the Healthcare Opportunities Fund managed by Polar Capital fits the bill; it covers the industry well, ranging from pharmaceuticals to biotechnology.
The one-year numbers are also poor, but those for three, five and ten years are good. With a fund size of £1.1bn it can maintain flexibility better than the near equally well-performing but much larger Janus Henderson Healthcare fund.
The standout player in gene sequencing and analysis is US-listed Illumina (Nasdaq: ILMN), which was recently forced to call off a proposed merger with the smaller Pacific Biosciences because competition watchdogs in both the UK and US feared the merged company would dominate the industry.
But the reality is that it does so already, with an 80% share of the gene-sequencing market globally. It is hardly cheap, but it is at the forefront of new medical technologies while net income has doubled to over $800m over the last five years.
Another interesting American company developing therapies for serious neurological and auto-immune diseases is Biogen Inc. (Nasdaq: BIIB). Recently the share price has been strong thanks to its promising prospective Alzheimer’s drug Aducanumab. Approval is by no means a done deal, but it is on a modest 11 times earnings (partially because of imminent patent expiries), while revenue growth has been strong.
A similar company, but much smaller, is Denmark’s H Lundbeck A/S (Copenhagen: LUN), a relative minnow with a £6bn market cap. It is very active in crucial areas such as Alzheimer’s, bipolar, depression, schizophrenia and several others. Free cash flow is very variable, but at 16 times earnings and a 4.7% yield the risks are in the price.
My last pick, which I have tipped before, is the UK’s largest pharma group GlaxoSmithKline (LSE: GSK), with its broad portfolio of pharmaceuticals and vaccines. A £90bn giant, it needs blockbusting new drugs to have a major impact on the share price, but investors can enjoy a 4.5% dividend yield while they wait.
Jonathan Compton was MD at Bedlam Asset Management and has spent 30 years in fund management, stockbroking and corporate finance.
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