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Your first instinct is to do something, so you look at the current value of your account and compare it to the all-time high watermark and say, “I am getting killed. I need to do something.” Then you wait because your subconscious mind tells you to hold off and see what happens.

Two weeks of tough down days later: You start to notice that your resting heartbeat is about 4–5 beats faster than it was last month before this selloff started. As you hear the media talk about this selloff and the “talking heads” start to reinforce the move just made, (-22% as of 6/17/22) they quietly get into your subconscious mind…whispering,

You idiot sell…SELL; everyone else that is smart has already sold…get out! Why did you believe those idiots that told you to hold on? They probably have an incentive to keep you in the portfolio, they probably get a bonus. I am the sucker, why did I believe the markets would treat me well? Oh good, after two weeks of selling there is hope the markets are up and they say the worst is behind us, why should I believe them now? I am going to wait until Friday to see how the markets respond to the new Government programs and as soon as I get back to only down 10%, I AM OUT! 

After a weekend of worry:

Oh no, now the markets are going down again on Monday because some hedge fund head honcho said he believes we are headed for a depression. I know what that code word means, I lose everything and all I have worked for is lost. How could this be happening to me? I am a good person, I try to do the right things…why did I ever invest in the stock market…what was I thinking? I should have put my 401K money in the FDIC guaranteed account. I would not have any growth, but at least it would be safe. Logically the markets should be okay, The Fed has started raising interest rates. There really could be a depression? Oh my God, as soon as the market is up I am selling everything, I’ve made my decision. Maybe I should talk with my brother in law, he is a PHD and I think also a lawyer, he told me once he had a good friend at Goldman Sachs. I will call him and get his advice before I sell.

You hang up the phone, loosen your shirt collar, subconscious mind rolls on:

I should never have called, he told me he was already in cash and he heard the insiders are out and have been out since December 2021. He promised a depression was coming and I still have time to get out and keep 80% of my account which sure beats 0%. God, he was as smug and arrogant as I am stupid and uninformed. Because I am not sleeping well it seems I have a headache and pain that does not go away. Everything seems to be a life or death decision lately. I have stopped watching the news and I just have this overwhelming feeling of despair and hopelessness. If I sell I will feel better and then I can rebuild. I am only 55, there is plenty of time before I retire. I know my wife is panicked but I don’t dare bring this up to her. She is worried enough about inflation and not sleeping either. She says she has never been so anxious about things in her life. If she finds out I have lost over $200,000 of our nest egg she could have a breakdown and it would be my fault for not taking care of things. I hate my brother in law. Maybe I will call my company rep who facilitates the 401k plan and ask her opinion. She said the regulations no longer allow her to give me advice about what to do, but she did say that she cannot believe how many people are moving to safe and secure accounts. Why wasn’t I paying attention, did I miss the cues? I am going to go to cash tonight, I have had it, I am not suited to stay in the market and ride through this. Maybe there is no positive outcome for a whole generation, I cannot wait that long. Oh my poor kids they were hoping to get something after we died…well so much for that idea. I will have 550,000 after tonight, but I was over 800,000 and I can earn 0.75% in the Government money market account and maybe I can go back into the market in 5 years when things are better.

And so ends another client’s hopes and dreams forever. This person will never get back in the market. He got bad advice, made lousy decisions. Even though as we speak in June 2022 the Dow is still down over 6000 points during this bear market, this fictitious client has locked in life long losses.

To be continued…

Does the power of the subconscious mind intrigue you? To learn more about its affects on financial decision making, click here.

This is a hypothetical example for illustration purpose only and does not represent an actual investment. Prior to making any investment decision, you should consult with your financial advisor about your individual situation. Any opinions are those of Mark Teed and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Keep in mind that individuals cannot invest directly in any index. The Dow Jones Industrial Average (DJIA), commonly known as "The Dow" is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.