Your Stock Market Fear Explained (and Why You Must Fight It)

Andrew Snyder
by Andrew Snyder, Editor-in-Chief, The Oxford Club

A Note From the Managing Editor: In preparation for our 19th Annual Investment U Conference, we’ve spent the past week poring over footage from last year’s event. In the process, we stumbled upon this clip from Alexander Green’s opening remarks...

Around the 2:20 mark, he asks, “Why does pessimism sound so smart?” It’s an important question. As Alex explains, part of the reason is actually ingrained in our DNA. We expand on this concept in the essay below.

And on a final note... just as we have in years past, we’ll be livestreaming this year’s Investment U Conference. If you’re interested in getting web access, click here. (We’ve just opened “early bird” registration, so be sure to act fast in order to lock in the lowest possible rate.)

Are you scared? Do you fear your investment strategy is failing... that you won’t have enough money to make it through retirement?

Believe me, you’re not alone.

Even if you are sitting on a sizable nest egg, I’m willing to bet you’ve got money concerns.

It’s human nature. The instinct to worry is one of our most important survival instincts. And yet, to find true success in the stock market, you must shun it. You must repel it from your mind.

The reason worry is so prevalent is simple.

Think of it this way: The Stone Age man who saw a shadow behind a tree and worried it was an angry lion was likely wrong nine times out of 10. And the man who innocently thought the shadow was just his friend returning from a hunt was likely right nine times out of 10.

But it’s that one time out of 10 that makes the difference.

The worrier survived and passed on his genes. And the man who didn’t worry? He got eaten.

We’re bred to worry. It’s in our genes.

But here’s the deal... The mere act of worrying is worthless. It won’t make you rich. It won’t protect you. And it certainly won’t preserve your health.

You need to use the emotion as a springboard. Use it as the fuel to get something accomplished.

Research shows that, more often than not, the emotion you feel is not the true cause of your anxiety. It’s merely your mind’s way of getting you to do something. Again, it’s a survival trait that’s been bred into us since we were cavemen.

The simplest example to grasp is jealousy. We’ve all felt jealousy toward our partner or a crush. We feel anxious or even angry when they’re talking to “the competition.”

It’s a natural instinct - a necessary evil.

Recent research from Northwestern University shows a fascinating divide between men and women when it comes to jealousy. The controversial study showed that men fear sexual infidelity while women fear emotional cheating.

It makes evolutionary sense.

Throughout history, men simply wanted to make more humans. And women wanted a reliable partner to ensure food and shelter, essential elements while nurturing more humans.

Although modern times have certainly changed the equation, the instinct remains.

But here’s the kicker...

Anybody who understands the human mind knows that jealousy is rarely the underlying problem in our relationships. Instead, it’s an indicator that something is wrong. The relationship has a fault.

Jealousy is your mind’s way of telling you to do something... to fix the fault.

Fear is a similar emotion.

We’re all familiar with the idea of fight or flight. When we believe we can beat the foe, we fight. When the odds are against us, we take off.

Again, pure instinct.

For too many investors, though, there’s no such thing as “fight.”

“How can I fight the market?” they ask. “It’s far more powerful than I am.”

Fair enough. Those are natural and normal thoughts.

Too bad they’re wrong.

Success in the stock market is not about sheer strength or power. It’s about endurance and mobility. It’s having the courage not to run.

Let’s face it. If “flight” is your answer, you’ll never build wealth. You’ll survive today... but die tomorrow.

Don’t know what I mean? Look at your portfolio. If you’re worried about retirement, and yet you aren’t investing for the long term because of fears about today... you’ll survive today, but die tomorrow.

You’re letting an ancient instinct control your fate.

You may think this is contradictory to the analogy at the top of this piece. After all, the Stone Age man afraid of the lion didn’t die. But lions and investing are, to state the obvious, two different beasts.

The stock market won’t kill you. And unless you take obscene risks, it won’t make you go broke. It’s only your instinct and your natural fears working to convince you that it’s dangerous.

The truth is your fear is merely an indicator of a larger problem. Again, the emotion you feel is rarely the true cause of your anxiety.

I’ve found the root of the problem for most investors is they know they haven’t done enough. They haven’t saved. Or they haven’t made smart choices.

I’m willing to bet that’s the case for most readers.

That’s why it’s so vital to understand and overcome our instincts.

Fear... jealousy... stress... worry... they’re natural emotions. But you must understand and control them.

If you’re scared, you’re not alone. But that doesn’t mean you should huddle in fear. You must do something.

Good investing,


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Lecture Notes