Find Meaning in Your Financial Feelings

Physician's Money Digest, March31 2005, Volume 12, Issue 6

When was the last time you went up to apatient and asked, "Are your bodilyfunctions performing according to recommendedparameters?" Probably notever. You most likely usually ask the simple and moreacceptable, "How are you feeling?" The patient's feelingsmay have been the furthest thing from your mind atthat point, but you're expected to ask the question usingthe emotionally laden and unscientific term "feeling."

What's the difference? Modern brain research usingfunctional magnetic resonance imagings shows that therational parts of our brain communicate constantly withthe emotional parts of our brain. Our rational ideas areroutinely overladen with powerful emotions, and weoften feel the need to rationalize them.

Embedded Emotions

Physicians see this played out over and over in theirprofessional lives. Studies that show that there are actuallysome cardiomyopathy patients who describe theirhealth as "good,"while other perfectly healthy patientsdescribe their health as "poor." Remember that patientyou saw who smoked like a chimney but worried constantly,not about getting lung cancer or heart disease,but about getting breast cancer. Or the patient who carelesslydrove around at high speeds on a motorcycle withouta helmet, but obsessed about getting radiation poisoningfrom the nuclear power plant in the next county.When our patients do something that gives them pleasure,whether through the thrill of speeding down theroad or the nicotine high of a cigarette, they rationalizethat there couldn't be anything bad about such activities.When they think of something they don't like, itbecomes much more important in their minds.

The evolutionary-minded in the scientific communitysay that there is actually a survival value to this abilityto attach emotional feelings to our activities.Emotions can be more easily accessed and acted upon,and give us the ability to act quickly and decisively undercertain situations without wasting time developing complicatedrational thoughts.

When you see a tractor trailer, the modern-dayequivalent of a saber-toothed tiger, heading your way,you don't waste time thinking through the problem; youact out of fear, a powerful emotion that leads to instantaction. You already knew the dangers of that tractortrailer or that saber-toothed tiger. Your mind had previouslyprocessed your knowledge of those dangers andassigned a powerful emotion to that knowledge, so thatit could be instantly accessed without the delays possiblewhen using the rational part of the mind.

Conversely, when you see an attractive member ofthe opposite sex, you don't reason out the complexitiesof life together; you become attracted. The emotionalpart of your mind reacts to the possibility of mating withsomeone with obviously good genetic material. Yourationalize the relationship, of course, but you've alreadymade up your mind in the only way that matters whenyou're seeking to pass on your genes. Then, as we see alltoo often, after you've procreated and the kids are here,you realize that you have nothing in common with thatother person, your rational mind reasserts itself, and youmay separate or divorce.

Financial Viewpoint

Our rational selves and our emotional selves bounceback and forth constantly in our day-to-day lives. It isinevitable that they would come into play in our financiallives as well. Take the following examples thatyou've probably experienced at one time or another:

• You liked a particular company, their product, ortheir charismatic president. You felt good about investingin that company, even though their financial statementswere not the best. You rationalized that with sucha good product, their finances would certainly improve.

• You didn't like a company's product, and yet youinvested in it anyway. Then you felt bad that you putyour rational sense before your emotional sense, and youdidn't brag about your investment prowess as you usuallydo when the stock shot up.

• You were shopping for a major ticket item, such asa house or car. You did all the research beforehand, butthen you fell in love with one in particular. You probablypaid more than you had to for it. You rationalized that itwas worth it because of the high resale value, or someunique attribute of the item that only you appreciated.

• You went to an auction, tuned in to a home shoppingchannel, or logged onto eBay, and paid more thanyou should have for something. You got caught up in themoment, suspended your rational thought, and boughtfor reasons other than need or value.

• You went to a newsstand and scanned the coversof financial management magazines. You picked the onewith the cover of the happy couple sitting on their patioenjoying the view of the lake or the mountains. Yourfeelings related to the picture led you to make conclusionsthat were not strictly rational. You rationalizedthat such interesting, attractive, and obviously successfulcouples must know something you should know tomake your dream come true.

• You enjoyed a particular investment advice televisionprogram that featured a young, attractive host. Youfelt you'd always received good information from theprogram that has helped you with your personal financialplanning, even though you couldn't point to a particularinstance of this happening. You were upset whenyou heard that the person involved left the show.

• When pressed to the wall, you have had to admitthat you are a bad investor. You consistently buy highand sell low, take flyers on risky stocks, and respond tophone solicitations. However, you cling to the feelingthat you're still overall a pretty good investor, and you'requick to rationalize why that may be the case.

• Your finances were in shambles, but you didn'tactually seek out, listen to, or take the advice of someonewith more knowledge and experience. You had tobe at the end of your rope and feel defeated and helplessbefore you did so.

Listening to Yourself

In the yin and yang of emotion and reason, how doyou tell if you're doing the right thing? I don't have theanswer. I don't find anything intrinsically wrong withwrapping your investment choices with some sort ofemotional dressing. It could enable you to resist the urgeto sell at inopportune moments, such as when others arepanicking on Wall Street. You should do your researchbefore you buy something.

In our soul of souls, we all want to use our feelingsto support our decisions. Is that wrong? No one reallyknows why some investors are more successful thanothers. And certainly no one, no matter how rationalthey are or how good they are with the numbers, canpredict the future.

Both ways of thinking are important, and we shouldpay attention to both. It is desirable to be aware ofwhether the emotional parts of your brain or the rationalparts of your brain are operating at any givenmoment as you are making a decision. It just may be thatgood money managers have managed to find their ownunique combination of both forms of thinking thatworks for them. It just may be that for every investmentwe should ask ourselves, "What are the rational factsand how do you feel about them?"

a family practice physician in

Saginaw, Mich, is the editor of the Saginaw County

Medical Society Bulletin and Michigan Family

Practice. He welcomes questions or comments at

3350 Shattuck Road, Saginaw, MI 48603; 989-792-1899; or louisconstan@hotmail.com.

Louis L. Constan,