Denise Shull of the ReThink Group underscores the importance of paying attention to feelings and emotions when investing. She explains how interpreting them as information can lead to a better trading mindset. Watch more Real Vision™ videos:
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Using Feelings as Information (w/ Denise Shull) | Mental Game of Trading
Transcript:
For the full transcript:
I'm Denise Shull, a performance coach for hedge fund managers, traders, professional athletes, and now some corporate lawyers. I founded the ReThink Group. We think of it as a decision consultancy, although I think we're probably known for peak performance, using neuroscience and modern psychoanalysis to help people really deliver their best performances in any realm, actually.
The industry talks a lot about behavioral finance and these cognitive biases. And there is a lot of effort directed at trying to make you aware of-- I may be invoking recency bias or confirmation bias. And that's fine and well, but the juice is in understanding the feeling that's causing you to have a recency bias. Like your cognition is generally not stronger than the feeling.
So what happens is lots of people, when they hear this approach to trading or investing psychology, are like, oh my gosh, this makes so much sense. And you know, I want to implement this. But it becomes really hard because it's so counterintuitive. I mean, I even have clients that I've had for a long time who say I'm doing a great job, but they still have a certain amount of resistance to actually being aware of all of the feelings that are influencing them and trying to understand those feelings as emotions-- I mean, those feelings as information, excuse me. You know, it's amazing.
I have a great client that I was talking to the other day. And we were talking about over his 20 year history, how if he looked back, his biggest problems were positions he got stubborn in. Where he'd been making money and then something happened-- and he's a relatively long term holder-- then he pulled back. And he should just get out, like according to his risk [? goals, ?] he should get out. It's, you know, x amount off of his high watermark. And he's like, but I get stubborn.
And we were talking about understanding why he got stubborn, which in his case, probably has to do with being the youngest child and wanting to prove he's smart to his older brothers and sisters. But in any event, I'm like, OK, we got to get in touch with that feeling, like there's some sensation of proving yourself smart in your physicality.
He's like, what do you mean? I don't think I know at all what you mean. And I'm like, like a feeling in your chest or your stomach. Like literally he was just like, I mean, a wonderful guy, just didn't have any idea. So I'd give him tricks to figure out like how to get in touch with that physical information.
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