You look at your market watch list and it's not rosy;
Or you see the portfolio holdings (mostly) in red;
Or you read the market headlines and you know that you are on for some bumpy days.
How do you feel on days like this?
Have you ever stopped to think what are you saying to yourself on these days?
Did you ever consciously consider what images come to your mind on "red days"?
Better yet...have you observed how these change as downturn days add up?📉
🙃I did and two things I can tell you:
1. It wasn't what I thought it would be😳. To be more precise, I was conscious of my initial reaction but not of the way I was dealing with longer downturns or significant volatility.
🙄What I knew about my initial reaction: I would tell myself that "this too shall pass" and I would be calm and self-centred.
🤦♂️What it really was upon actually consciously looking inot it: there was an "what if" echoing my mind that I was completely ignoring. That also came with a slight feeling of uneasiness in my body that I was shrugging off by smiling or even making jokes about markets.
As regards my reaction to "chronic" red days...well, I was completely unaware of my coping strategies.
❗I believe most of financial professionals behave similarly which explains why studies show that we tend to be risk tolerant in short bouts of volatility and risk adverse as stress becomes more chronic.
2. Becoming more attentive to that allowed me to change something about it:
✅I learnt to acknowledge when I am worried, stressed and manage these states for better decision making;
✅I learnt to take note of what I am saying to myself;
✅ I learnt to pay attention to any image that comes to mind and change it so that I see myself in the picture rather than see it through my eyes (dissociation increases objectivity and rationality);
✅ I learnt to make sure I am in a balanced state when I take a decision.