Source: Google Dictionary
There are some things my Texas family will never understand, and my willingness to voluntarily live through Michigan winters is one of them. I remember the first winter coat I brought to University of Michigan as a freshman in college. It had enough down for a flock of geese. Nowadays, 30 degrees means coats are optional for me. It’s amazing how your perspective can change over time.
All this tough talk about the “survivability” of Michigan winters brings me to this week – the first week of March – a time where many parts of our country might be celebrating spring. With a touch of a polar vortex, bursts of snow, and seemingly no end in sight for winter, this week is decidedly not spring’s coming out party around here. And I am DONE with it.
My capitulation moment was in February, weeks ago. It was a point in time where winter was ENOUGH! We had six straight weeks where our local schools weren’t in session for more than two consecutive days because of ongoing record lows and snow accumulation. This week, I can’t seem to get my mind off how miserable these last remaining weeks (or months, please no, not months) of winter will be.
According to my Facebook feed, winter capitulation is not a rare personal occurrence. My historical archive keeps reminding me of past years where I posted that I’d had enough of winter like it was a cry for help. With each seasonal cycle I vow to book a warm-weather vacation, or two, next year. I say I’ve had it. And then, a little late for my personal preference, something magical happens. Spring arrives. And let me tell you, there is nothing more special than a Michigan spring. Renewal, warmth, and new beginnings can be a spiritual experience, at least for me. And because you’ve lived through winter, you’ve EARNED the right to celebrate spring!
It turns out, the psychology of winter’s despair feels a lot like other forms of capitulation. Certainly, feelings of despondency can vary in degrees based on circumstances or the person experiencing them, but we can find these challenges in many parts of life. Perhaps your negotiating about something important and your emotions take over rational decisions. Or you’re struggling through a difficult diagnosis or loss.
If you call yourself an investor, capitulation can be a very real emotion or moment. Think of your reaction to the Great Recession. Or how you felt when you opened your statement at the end of 2018. Losing money does not feel good. You may be ready to throw in the towel. But, how do you feel now? 10 years this month after the end of the Great Recession? Or two months after disappointing declines last year?
Source: Mindy Kaling, Twitter, via Matthew Zaremba
With the benefit of hindsight, what may have felt unbearable might not seem nearly as life-threatening. Winter’s prolonged presence eventually gives way to spring’s rejuvenation. But, your actions in those emotional moments may have much more lasting impact. If an investor decides to sell when things are down, it can take years to recover lost growth in recovery.
To manage your actions during vulnerable moments of capitulation, consider the following actions:
- Acknowledge your feelings and possible sources such as winter’s discontent or market losses.
- Discuss your feelings with trusted friends or advisors.
- Focus on things you can control – do you have emergency reserves? a reasonable savings rate? a plan to break up winter doldrums?
- Reflect upon your actions in past seasons of discontent. What would you do differently with the benefit of hindsight? How did you feel as the seasons changed?
Investor decisions can be the biggest component of their ultimate investment results. Managing emotions and decision-making in life’s capitulation moments go a long way to successful process and outcomes. When in doubt, work with your financial planner to coordinate a successful plan of action.
Required disclaimers: Any opinions are those of Melissa Joy and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. All investing involves risks, including the possible loss of principal amount invested. Past performance is no guarantee of future results.