What me worry?
Worrying is not helpful. The process has no constructive value. We all know this. We do not solve problems by worrying, and sometimes we even create other (health) problems.
So why do we worry?
Although anxiety may be caused by a chemical imbalance, how about our everyday generic worrying? According to Valentina Dragomir, a psychotherapist and founder of PsihoSensus, “worry is caused by the anticipation of a future negative event. It’s a type of anxiety that’s usually based on irrational thoughts. These include: ‘What if something bad happens?’ or ‘What if I can’t handle it?’” Although fear can be helpful to us in evaluating risk and potentially triggering the fight or flight reaction, anxiety is different. According to PsychCentral, “Anxiety is distinct from fear in that it tends to cause people to overestimate danger”.*
So why does this matter to investors?
I believe emotional investors tend to buy high (out of greed) and sell low (out of fear). Rational investors prefer to buy low and sell high. If it’s true, that anxiety tends to cause people to overestimate danger, the recent stock market decline may trigger an undesirable response.
What about finances?
Money is the top form of stress for workers in the United States according to the American Psychological Association. Specifically, 54% of workers cite money issues as their biggest source of stress. This is a major issue since 75-90% of all doctor visits are stress related.^
According to Forbes, the number one reason people worry about money is they don’t trust themselves to make good decisions. The best way to overcome this issue, according to the article, is to “…become a money expert or begin working with one”.^
I recommend the latter approach.
In all seriousness, if you have a friend or relative who is worried about their finances, feel free to ask them to call us. We offer free financial advice to all friends and relatives of our clients. We may not be able to take them on as a client, but we are happy to offer a complimentary review of their financial situation. It’s our little way of reducing stress in the world today!
Doug Lagerstrom
* PscyhCentral.com: Fear vs Anxiety
^. Forbes: Five reasons you worry about money and how to stop 1/22/22
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