Over the past 15 months, I have been in a LOT of family therapy. And the one thing I have learned is that when a person is feeling strong emotions (fear, anger, insecurity), the rational part of their brain (the pre-frontal cortex) literally is not working. It physically gets no energy and just shuts off. Your brain is hijacked by the amygdala, which controls your fight/flight/freeze reflex.
The amygdala is also the part of your brain that controls your reaction to investment losses. When you see your accounts drop, you cannot help but feel physically driven to do something about it. “Run away!” is the most typical human response.
As a parent, I am being taught to listen to my son’s emotional feelings without trying to solve or fix or defend against them. For example, “Mom and Dad, you are terrible parents and it’s all your fault that my life is awful.” For me to respond, “But son, we love you and have only tried our best with you! Don’t you remember all the things we’ve done for you?” is to invalidate his feelings and make him shut down.
What we are supposed to say is, “Yes, we understand your feelings and they are valid.” And then just sit there. It’s REALLY hard.
So, as you are turning to your financial advisers for comfort during these trying times, understand that we KNOW we can’t make you feel better. All we have are history, and facts, and behavioral finance studies to reply with. We also don’t have the luxury of sitting by for months in therapy and let you feel your feelings, and worse, agree with your feelings without trying to engage that rational brain of yours.
This technique, while maddening as a parent, could be dangerous as a financial adviser. If I say to you, “Yes, these are terrible times and of course you feel bad,” and just sit there, you may take that as tacit approval to sell your investments while they are down.
If I remind you that we have a financial plan and diversified portfolio for just this type of market correction, you will feel invalidated and like I am not taking your fear seriously. Trust me, I know your fear is real and valid. But investment decisions can be executed in seconds and if I don’t try to remind you of the dangers of market timing, I won’t have done my job.
In summary, I really am not worried about the stock market. In other posts I’ll appeal to your rational mind, knowing it may not work. With this note, I’m trying to say that I know you are worried, and it feels really bad. My responses may seem cold and bitchy, but it’s all I have with the time I’m allotted.
Hey, if you’d like to learn more, you can jump on the hours-per-week family therapy train with me!