It's All Inside Your Head

 Any good financial adviser will tell you to invest for the long term.  But can you or anyone really ignore the short-term noise?   

Feelings of nervousness, anxiety, or even fear, are normal human reactions.  However, being aware of what triggers us emotionally gives us the opportunity and the choice to pause and explore the bigger picture. 

Volatile financial markets easily trigger our emotions, a fancy way of saying when stock markets go down.  That's because when the brain senses a threat (such as losing money), we experience nervousness, anxiety, or fear.  When we experience these, we have an urge to take action.  

As a species, we have a fine-tuned mechanism that alerts us to danger.  

Known as our fight or flight response, it is triggered automatically when the brain senses a threat.  Fight or flight is part of who we are.  That was true on the savanna, and it's true in modern living.  That includes how we process and make decisions about capital markets.  

Our emotional attachment to our hard-earned money is powerful.  We can feel it when we take risk, even just a little.  It's a physical sensation as well as an emotional one.  Reluctance, excitement, optimism, fear, and panic are normal emotions regarding money.  

Complex brain chemistry plays its part, too.  Investing, for example, can trigger the neurochemical cortisol to fluctuate significantly.  Spending money will likely trigger a rise in Dopamine.  How our brain chemicals influence our money life is unique for each of us.   

With our money decisions and the emotional roller coaster of investing in particular, it can be comforting to know that this is just who we are.  With that knowledge, we're a bit better able to pause and reflect, gain perspective on what triggers us, and even adapt. 

Additional Resources 

Brian Portnoy – Funded Contentment: Am I Going to Be Okay? 

Hal Hershfield – Your Future Self: How to Make Tomorrow Better Today