Written by Sandy Stuart
Feelings – The avowed enemy of the investor. If you feel too good, you tend to buy high. If you feel scared, you tend to sell low. Opinions vary widely concerning how feelings are formed and what we can do about them.
I’d like to take a crack at getting a handle on feelings. These comments are not born of big academic studies. They are based on my 76 years of dealing with my own feelings.
Some years back, I attended a marriage seminar. The instructor made what I considered a profound assertion. He said that, “Feelings are neither good nor bad; they just are!” It is how we react to our feelings with actions that are good or bad.
So what determines what kind of feelings I generate? In my opinion there are three main factors.
First there is the impact of our collective experience dealing with the topic at hand. At the negative extreme, there is Post Traumatic Stress Disorder (PTSD). It is largely brought on by our experience with violence and trauma and can be a terrible source of anxiety and other negative feelings. On the other hand, positive, euphoric experiences can cause happy feelings when we encounter like situations. And everything in between. Clients who have been with HSC Wealth Advisors over several market cycles tend to be more comfortable in turbulent markets.
Next, there is a genetic component. Some folks are laid back, just like one or both of their parents. Others are very touchy and excitable. I am told my temperament models that of my father, who was pretty even keeled. We both could sleep soundly through highly emotional TV programs. My wife tends to favor her father, who was pretty emotional. I could see how he was feeling by the color of his hairless head, which went from pink to scarlet pretty quickly.
Finally, there is our spiritual belief system that can have a huge impact on our feelings. If I believe in the God of the Bible, my faith in Him can provide a steadying influence, especially in tough, potentially scary situations. If my faith is deep enough, the theology that God loves me, is active and in control of the world from day to day will enable me to feel better about tense situations. I know some Judeo-Christian folks who can even be remarkably joyful in situations that would normally generate significant anxiety and pain. The Bible provides its believers with many great examples of “heroes of the faith” whom they can emulate as they encounter life’s ups and downs.
Of course there are other belief systems that have different views of and belief in God. Religions that hold that God is not in control, is impersonal or is capricious in His dealing with mankind, may not experience the peace that Bible believers might. Atheists and agnostics are on their own. Their feelings will depend on their faith in themselves, or a teacher, or a system, etc.
Notice that these sources of feelings all have the common characteristic that they cannot be manufactured by the individual. I cannot determine my DNA. The set of experiences I have been through are water over the dam. So it is also with my spiritual belief system. I cannot will myself to believe in, trust in and rely on the God of the Bible. It’s a “God thing”.
We need to take inventory. We need to determine where and how our feelings are generated and then, for our investing activities, recognize our vulnerabilities to harmful responses. We must avoid over-reacting to those feelings.
Here at HSC Wealth Advisors, we help our clients deal with those feelings in the financial arena. Many of our clients tell us that a significant value of our service is to keep them from going overboard as they react to feelings engendered by market volatility. In such cases, it is not a question of how many bucks we make for our clients so much as it’s a question of how much we save them from excessively reacting to their feelings.
I recall a client who called me during the last severe market correction. She said, “Sandy, I know what you’re going to say. I just need to hear you say it.” Amen. She has a handle on her feelings and knows what she needs in financially stressful situations.