“You just have to control your emotions and you’ll be a much better investor” is terrible advice.

Emotions contain information, and if you try to override that information by controlling it or ignoring it, you miss out on interpreting your lifetime’s worth of accumulated wisdom.

Aided by recent technology that allows researchers to peer deeper and deeper into the brain, science has discovered that “Emotions are your brain’s best guesses of what your bodily sensations mean, guided by your past experience. Your brain constructs these guesses in the blink of an eye—so rapidly, in fact, that emotions feel like uncontrollable reactions that happen to you, when emotions are actually made by you,” says Lisa Feldman-Barrett, professor of psychology at Northeastern University and chief science officer for the Center for Law, Brain & Behavior at Massachusetts General Hospital.

In other words, the brain is not reacting to what is happening, it’s actually constantly predicting what will happen next, based on the sense data it is receiving, and then adjusts how you respond based on whether its predictions were accurate. It’s like an airplane autopilot that is continuously autocorrecting based on new data.

Three Strategies
Now, brain science is complicated and we don’t—and probably never will—have a complete picture of how it works. But based on the best knowledge today, here are three things you can do—and help your clients do—to better deal with your emotions so you can function at a higher level.

1. Ask yourself, “What am I feeling and why am I feeling it?” This question comes from hedge fund performance coach Denise Shull in my new podcast with her. Rather than just suppressing the feeling or trying to rationalize or intellectualize away the feeling (e.g., fear of the market going down), it’s best to “feel the feeling,” put the feelings into words, and then try to sort out whether the feeling is coming from unresolved psychology, relevant intuition or just incidental noise.

As Victoria Song said to me in an earlier podcast, “If you don’t feel your emotions, then the energy patterns get stuck and metastasize, creating dis-ease in the body, which becomes disease.” In a similar vein, Denise said, “If you suppress and don’t want to feel it, sooner or later you’re going to act it out. Period.”

From a practical standpoint, when markets drop significantly, advisors often resort to trying to calm clients by showing historical data about how markets have responded/rebounded from past bouts of volatility.

That’s taking an intellectual approach that avoids allowing your client to feel the emotions they’re feelingThe reality is, they didn’t get into that emotion through a rational understanding so they’re not going to exit that feeling by seeing past performance charts.

If you don’t help them process those emotions and sort out what’s relevant and what’s just noise, they are bound to repeat or “act out” those emotions again.

How do you help a client process those emotions? In my podcast, Denise describes how she coaches hedge fund managers to deal with their negative emotions so they don’t cause avoidable trading mistakes.

2. Get granular on defining the emotion you are feeling. The clearer you can be on the exact nature of the feeling you are feeling, the more effective you’ll be in delivering a response or action plan to deal with that specific emotion.

For example, saying, “I’m feeling angry right now” is a rather broad statement. As Lisa Feldman-Barrett said on Jim O’Shaughnessy’s Infinite Loops podcast, “For some people, irritation, frustration and rage are all synonyms of anger. For other people though, those are really distinct experiences with very distinct behavior action plans that go with them, meaning, that you do different things when you’re angry versus when you’re enraged versus when you’re irritated. And the more precise you can be in giving meaning, guessing at the causes of the sense data, the more precisely your brain will tailor its action plan to the situation.”

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