How do we talk to ourselves? Negatively? Positively?
What do we say to ourselves about our investments? Are they negative or positive?
The things we say to ourselves may be driving how our investments perform. Whether you realize this or not. We talk about markets and investing here on Jersey Shore Financial Advisor. But we don’t often talk about behavior issues behind investment decisions. It’s a difficult topic we’ve attempted to cover in podcasts and videos over at our Mullooly Asset Management website.
I recently read “What To Say When You Talk To Yourself” by Shad Helmstetter. I found the title after it was mentioned by our Twitter friend, Jim O’Shaughnessy. Jim is the author of “What Works On Wall Street” and a great account to follow on Twitter.
I was surprised to learn that up to 77% of the average person’s self-talk is negative, according to the author. So when the stock market drops, are you automatically thinking, “just my luck, I *knew* should have sold!” Or do we say to ourselves “my retirement is getting pushed further and further away!”
Helmstetter wrote “what you put into your mind, in one way or another, is what you will get back out, in one way or another.” Right or wrong, true or false, whatever you put into your mind, your mind obeys. “It makes no difference whether we believe it or not. The brain simply believes what you tell it most. And what you tell it about you, it will create. It has no choice.”
And you can apply this to your decisions about your investments too. For example, if you don’t have rules when it comes to buying and selling. Or rules for what gets added to the shopping list or deleted from the list, your portfolio decisions (and your account performance) are at the mercy of your thoughts.
And it’s not the crazy guy (like Reverend Jim from Taxi) walking around talking to himself, either.
Helmstetter added “…most of our average, habit-formed, everyday self-talk is the kind that we don’t even notice. It is the kind that we say to ourselves silently, often without words. Much of our self-talk is made up of the quiet nudges of self-doubt, the unspoken fears of little (or grand) failures, and the nagging discomfort of knowing that things aren’t right.”
Helmstetter suggests talking out loud (the Reverend Jim approach, or the Dr. Emmett Brown approach?) for a few days, to hear the things you say. You may surprise yourself with the phrases you hear. And maybe pause before entering that order to buy or sell.
“If we truly would like to do better, be the way we really would like to be, and be happier and more successful every day in every area of living, what is the wall that stands in our way?”
It may be how we talk to ourselves.