The Stock Market Taught Me To Manage My Life
Understanding how you invest will show you how you handle life
When I was in my mid-twenties, I started dabbling in stocks.
At the time, and even guilty now, I didn’t know how to manage my mind, so subsequently my portfolio performance mirrored my emotional swings. I ended up making more poor decisions than good ones. And, even when I did make smart buys, I lacked the conviction to see market cycles through.
Here are a few examples:
- In 2014, I bought in at $93/share shortly after Alibaba IPO’ed. Then, because of a lawsuit, the price tanked, and I sold it for a loss. Today, Alibaba is at $265.
- Coming out of the Great Recession period, I bought Amazon for $1633/share. I sold it a month later, making a small gain. If I held it until now, the price is around $3352 per share.
- Just last year, I had Square when the price range was from $55 — $98. Right when Covid started, I sold everything, thinking of the economy downturn. Well, the market defied economic logic, came roaring back to life, and Square price is $240 today.
- The start of this year, I purchased a couple of stocks because I saw how well the market did last year in spite of everything, but as soon as I did, the prices dropped.
I still ache thinking about the foregone small fortune.
Being in the market revealed to me how I approached decision-making and dealt with setbacks; it directly translated to how I was leading my life and handling the ensuing results that entailed.
Whether it was work, relationships, or how I should have acted/reacted in certain circumstances, I couldn’t seem to be in sync with what was supposed to be the right move at the time. It took a while to figure out what these actions were that kept me from achieving alignment.
Listening to unnecessary noise
The problem wasn’t that I didn’t believe in the longevity of the companies that prompted me to sell their stocks. The problem was I was listening to all that noise surrounding them.
I was buying and selling based on what others were saying, based on events that may only have a temporary effect but I was turning into a permanent decision. I weighed outside opinions more heavily than my own research and conviction.
In life, I allowed others’ voices and judgment to dictate how I should live, and the milestones I should be achieving, even when it wasn’t for me. Not following the dogma was not an option I felt like I had. Fellow writer Vishnu*s Virtues spells it out here so much better than I can.
“Basically, I was so worried about what everyone else was thinking, I forgot about what I was thinking.” — Lisa M. Cronkhite
If societal conventions play a huge role in your decisions, you would go down a path deemed correct by others, hoping it’ll lead to success. Maybe it will, but whose version of success, anyway? Yours, or theirs?
Define what is right for you, and temper what others have to say with what you know to be true for yourself. This will only strengthen your resolve and fight self-doubt at the same time.
Taking too long to let go
When a stock was under-performing because its fundamentals had changed and the next correct step was capping losses, I was reluctant to do so. The erroneous thought of it shortly rebounding fueled my desire to hold on. At this point, I wasn’t making calculated risks; I was operating on emotions. In poker, they call this on tilt. Eventually, when I did sell, it amounted to a greater loss than if I had let go right away.
When I was with my ex-husband, it took a long time for me to cut the cord. Even with the gaslighting and mental abuse… shame kept me at bay.. but also the dogged determination of maybe I can make it work if I just loved harder for the both of us was very high. The fallacy of sunk cost got to me; I’ve already invested time, effort, love, sweat, tears, and multiple moves, did I want all that to go to waste?
“You can’t reach for anything new if your hands are full of yesterday’s junk.” — Louise Smith
If you already know something isn’t working out, the best thing to do is stop it sooner rather than later. This especially applies to relationships because it affects a large part of your success and well-being. If you bungle everything else in life, at least get that right.
You should still always try to repair and make stronger any relationship you have, but if there comes a time it’s no longer healthy, know when (and how) to let go.
Overextending the recovery time
Finally getting out of the brutal run, I’d sit on the market sidelines, nursing my blow. The problem is, I would sit out way too long, at one point for years. This yielded many missed chances of regaining back what I lost. Instead of learning from the situation, I let it jade me.
While I don’t regret taking the time to fully move on after my divorce, I do wish I hadn’t wallowed as much as I did. Living in that state prevented me from growth and opportunities, things that would actually help in feeling and being better. It lengthened the recovery process and added unnecessary stress due to the constant replaying of events in my head.
“It’s okay to look at the past and the future. Just don’t stare.” — Lisa Lieberman-Wang
If something significant happens, by all means, allow yourself to heal and understand the why. But make sure to be proactive in that journey so you can help guide yourself to a quicker and more productive recovery.
Examine where your life is now versus where you want it to be. If there is something you want to do, but find yourself saying you’re not ready yet, look for ways to push forward in small steps so you don’t look back later and say you wish you started sooner.
The Takeaway
Be cognizant of the decisions you’re making. Oftentimes, the way you play your hands will offer a glimpse in how you conduct your life.
Be aware if you’re
- Listening to unnecessary noise: giving others too much power in governing your life
- Taking too long to let go: relationships or situations that aren’t serving you anymore that you still are keeping around
- Overextending the recovery time: too long period of wallowing or inaction that causes missed opportunities and growth
And a bonus:
- Not pivoting: having a fixed mindset and not adapting to changing circumstances
Understanding how you operate will most definitely help you with conviction and battling self-doubt. You will have an internal locus of control and be able to confidently steer your life in the direction you choose.
