Are You an Emotional Investor? Run Away.
Stress is a terrible backseat driver.
This morning, I scrolled through my Fishbowl app and stubbed my toe upon a tiny post. The poster (anonymous — most Fishbowl posts are) sold their stocks too early, missing out on potentially 100k+ in profits. They announced they’d washed their hands of individual investments.
Their new thing? Index funds.
Replies were tepid, to say the least.
One poster suggested the OP (original poster) “learn from his mistakes.” Suggesting, implicitly, that the OP’s switch to index funds meant the OP hadn’t learned from his losses. Ouch.
Another poster suggested playing seasonal trends for better returns.
Neither reply is wrong, per se. But they do miss a powerful point. The poster isn’t claiming index funds beat the market. The OP frames “regretting losses” as the reason they switch to index funds. It’s not about the money (I mean, it is, but it isn’t. Ya know?)
It’s about emotions.
Emotions like depression, regret, and fear are terrible backseat drivers. They inspire unsavvy financial decisions like selling early and hopping on hype trains. The OP knows this. Probably. That’s why they looked at their history of emotional investing and ran for the hills.
Investor mentality matters.
The stock market rewards patience, attention, and critical thinking. Depression, regret, and fear foster impatience, apathy, and emotional spending. These emotional states are mutually exclusive — they cannot coexist.
Earlier this year, I bought declining stocks like Plug Power at a premium without so much as glancing at their fundamentals. I have FOMO (fear of missing out) to thank for that.
The OP’s case for switching to index funds? Strong. Especially if they stress easily. Doubly true if they have a history of emotional spending.
Mental health is foundational to practicing proven investment strategies. Things like meditation, yoga, and hauling ass to the gym for that 15-minute bike session strengthen my willpower. Flooding my body with post-workout chemicals helps me think — before I spend.
Unfortunately, not everyone has the luxury of a stable mind 100% of the time, or even most of the time. The months I spent in therapy wrestling with my teenage sexuality taught me that lesson first-hand.
If the stress is overwhelming. If the history is there. Run. Invest in the index. Leave your stressors behind. And when you’re in a better mental space, feel free to try again. The market isn’t going anywhere.
*knocks on wood*
Food for thought. And the fishies.
