How to manage emotions during a down market

“Don’t make decisions based on emotions,” they say. But how?

You finish another article about the market’s swoon – the worst week for stocks since 2008. The human and economic impact remains uncertain. You don’t want to look, but let’s face it: A down market is scary. And fear is a powerful emotion.

“Don’t make decisions based on emotions.” That’s right. So is, “Focus on a long-term plan,” and “Inform yourself with the facts.” Even though, like a spooked horse we’re riding, fear plunges us off course. We’re just trying to hang on. Hanging on means calming ourselves and avoiding rash decisions.

 Emotions make great teachers, but terrible bosses.(1)

When we manage to reign in our thinking (and to not get thrown into a cactus), we may be left with strong feelings. Feelings that affect our well-being and peace of mind.

Daniel Goleman begins his book “Emotional Intelligence” (2) by describing the fundamental competency of emotional self-awareness. Emotions reveal what we care about but only when we take the time to pay attention. We lose this opportunity trying to “control” them.

I offer this simple framework for you to explore the connection between your felt emotions and what you care about.

Perhaps you’ve experienced this scenario:

A young child chases a ball bouncing into the street, you spring into action and snatch him from the path of a car screeching to a halt. You scold the child – your voice rising to a shout. He begins to wail, and you finally hug him close.

Sound familiar?

Let’s rewind and reveal the emotional journey.

A young child chases a ball bounding into the street, you spring into action and snatch him from the path of the car screeching to a halt.

Fear is a powerful emotion (positive, in this situation) in response to a threat (to the child’s safety). Adrenalin narrows your focus and allows you to move quickly and decisively.

You scold the child – your voice rising to a shout.

Anger is also a natural response to a threat (the street, the car, the child’s poor behavior, and your own poor supervision). The anger overwhelms the child.

He begins to wail, and you finally hug him close.

The child fears our anger. And as we comfort them, the adrenaline fades and we feel sadness. Our anger-driven behavior damaged a special bond – causing something we care about to be lost. They feel sad too.

Sadness gives way to tenderness with your continued embrace.

Get the picture?

However, the emotional landscape that other life experiences, such as financial concerns, offer can be just blurry images. Our care about money is abstract in the sense that what we really care about has to do with what money can do for us.

To realize clarity from this blurriness, I invite you to sit with and listen to your emotions as you experience them. Find a quiet place and sit. Breathe deeply several times and allow your breath to settle into its own pace. Sit.

“Be grateful for whoever comes, because each [emotion] has been sent as a guide from beyond.” ~ Jalaluddin Rumi (3)

Don’t worry about naming or labeling your feeling (fear, anger, sadness, etc.). Focus on what the emotions tell you about what’s most important. Patience.

We habitually process emotions intellectually. We tend to “think” about them, as modern society has taught us to. But our language (i.e., “feelings”) suggests another (less modern) avenue for learning. As you sit quietly, notice your felt senses. Our bodies give us ample opportunities for deeper learning – but they don’t speak to us in plain English.

For example, “gut feelings” – strong sensations in the belly – suggest concerns about safety and security. Feelings about relationships speak from the heart (yes, really!). And, overthinking, neck-tension and headaches, speak to matters of decision-making, intelligence and respect.

• Tom and Geri get knots in their stomachs during market downturns. They worry they won’t have enough money for retirement. They resolve to review their retirement projections and assess their current spending patterns and balance sheet.
• Bonnie and Clyde would be heartbroken if they couldn’t take the family on next year’s vacation as planned. They realize that togetherness is what’s most important to them. They review their accounts to ensure the vacation money is secure. If they need to make adjustments, they’re fine doing so.
• Jack and Diane try to “time the market” and come to realize that market volatility causes neck-aches and sleepless nights. They decide to determine an asset allocation plan and rebalance regularly.

While a down market can still feel like an emotional bucking bronco, listen to what your emotions have to teach you.

 “The best fighter is never angry.” ~ Lao Tzu

 Now you focus on actions that support what you care about. 

Take action.

• Talk to your advisor. That’s why we’re here.
• Focus on what you can control (which is a lot).
• Assess proactive moves, either newly discovered or ones you’ve been putting off.

 I invite you to explore "Coronavirus and Your Portfolio" - here - from my colleagues at Buckingham Strategic Wealth.

(1) This saying comes up in a variety of traditions. “Emotions make excellent servants, but tyrannical masters.” John Seymour is just one framing.

(2) This article is a good overview of Goleman’s book:

(3) In his poem “The Guest House,” - read it here - Rumi suggests we invite emotions to come and go as we would guests.