Dealing with the guilt factor
If you've been kicking yourself for thinking about the damage to your investments and how you might recover, you're not alone.
By Brett N. Steenbarger
The inhuman terror of Tuesday’s attack on the gleaming capital of capitalism has led to a very human response among the professional investors who have e-contacted me for advice. Amid expressions of anxiety and anger, they are also grappling with the personal guilt they feel over their inclination to do their jobs as traders when markets reopen on Monday.
The e-mail and phone messages are distinctly apologetic. “I don’t want to profit from what these people have done,” one person began, “but…”
That word “but” said everything to me. Amid the desire to reach out to those traumatized by the tragedy and the need to make sense of lost security was also an impulse to take care of one’s own business. And yet there was a sense that many found this impulse to be too selfish, too crass to ask outright at a time of national mourning.
Several seasoned traders reported to me that they could not bring themselves to trade, even though some markets had opened. Like many college and professional sports teams, they could not reconcile “playing” the market with the deadly seriousness of Tuesday’s events. One hedge-fund manager referred to talk about stocks as simply “unseemly.”
The opportunity in crisis
How can these traders, or any individual investors, overcome this sense of guilt and move beyond the events of the past few days?
A large part of recovering from trauma is regaining a semblance of normalcy. The opening and stabilization of the U.S. financial markets is an important step in that direction. So, too, is a turning of the American people to the mundane affairs of personal finance. While the concern over falling markets may seem trivial amid the pain and loss, it is far preferable to the concern over falling buildings. Our ability to turn to personal affairs is a step toward regaining normalcy, and that is a small, but significant victory over the destabilizing influence of terrorism.
Concerns over possible looming price shocks are high, no doubt made more acute by the fact that we have already seen a sickening drop in share prices since late May. Any significant decline from here would convincingly break the April lows on most major market averages, raising the specter of a full-fledged secular bear market. Little wonder that the guilty refrain of the e-mail writers was, “Should I get out of the market or not?”
The difficult -- and even more guilt-inducing -- to this question is that periods of panic and market overreaction often pose opportunities for traders and investors. As fellow MSN Money columnists Laurel Kenner and Victor Niederhoffer recently chronicled, market drops during times of political crisis tend to be followed by rebounds. Similarly, Jon Markman’s interview with veteran trader Linda Raschke described a process of price discovery following large market drops, in which rebounds help to achieve equilibrium. The question, difficult to countenance, is not “Should I get out of this market?” but “What opportunities will this market pose?” To avail ourselves of these opportunities, however, we are going to need to confront one of our nastiest foes: guilt.
Understanding guilt
What, exactly, is guilt? A full explanation requires that we step back and examine the ways in which people cope with stressful events. Personality psychologists make the distinction between those who vent stress reactions outwardly (externalizers) and those who turn their responses inward (internalizers).
An externalizer, facing the recent acts of terrorism, responds with rage and angry acts. Pointing the finger of blame squarely at those who initiated the devastating acts, they yell, threaten and exhort the military to respond. Externalizing can be quite effective, maintaining a semblance of power and efficacy even in situations that are, for the most part, uncontrollable. Externalizing, however, tends to wreak havoc upon personal relations. Pointing the finger away from oneself might make one feel better, but can easily alienate and threaten others.
The internalizer reacts differently. While the externalizer tends to ward threat away from the self; the internalizer wards away threats to relationships. Because of a sensitivity to the feelings of others and the desire to stay connected to them, those using internalizing methods of coping will vent their angry responses inwardly. Instead of resenting others, they will be quick to criticize themselves. Their first line of defense in times of frustration is to blame themselves.
Guilt is generally the expression of such inward anger and frustration. Listen to any message of guilt and you will find a self-criticism, a blaming of self. Rarely will the guilty individual talk with others the way he talks to himself. Indeed, they vent their harshness toward themselves in order to preserve good interpersonal relations. When people grow up afraid to be angry -- threatened by the possible consequences of anger -- they learn to channel their feelings safely, even at the cost of guilt. The reluctance some of us are feeling about finding opportunity in the market is not about finance; it is a way of coping with the uncomfortable rage stirred up by terrorist acts.
Overcoming guilt
Changing any emotional pattern such as guilt requires that we be able to identify its onset and step back from it, as an observer. Some of my clients keep a personal journal just for this purpose. In the journal, they learn to question their own guilty reactions instead of becoming identified with them. “Will forgoing stock purchases after a decline help our country or comfort those who have lost loved ones?” they might ask in the journal. “Is the role of the speculator in stabilizing volatile markets a valuable one or not?” The essence of cognitive therapy is cultivating a part of ourselves that stands apart from our emotional reactions and interrupts them with rational challenges. This gives us a control and perspective not otherwise possible. Writing down guilty thoughts allows us to go back to them in times of clear-headedness and ask the tough questions: “What am I really angry at? What can I do about these feelings?”
And how do we deal with others that may induce feelings of guilt in us? They, too, have their frustrations, their anger. If they attempt to convince you that “profiteering” is immoral in times of crisis, recognize that they, too, are processing a welter of difficult emotions. Such encounters can become your opportunity to bridge internalizing and externalizing. It is possible to challenge guilt, even as you preserve good personal relations. “I don’t blame you for wanting to not lose sight of the human losses in this situation,” I might reply. “I’m trying to keep that in mind, too, even as I refuse to allow terrorism to dictate my behavior.”
As a nation, we will be caught in the weeks ahead with the extremes of externalization -- seeking war and revenge -- and internalization -- blaming ourselves for lax security and intelligence gathering. Such is the nature of dealing with rage. We can do no better than to try and stand apart from our impulsive reactions and find the balance that honors the dead and wounded, even as it allows us to move boldly forward in the face of hostility. |
