Times like these are when it’s both most important and most difficult to make deliberate, mindful decisions. These leading investment coaches have some suggestions.
By Clare Flynn Levy
Clare Flynn Levy is CEO & founder of Essentia Analytics. Prior to setting up Essentia, she spent 10 years as a fund manager, in both active equity (running over $1bn of pension funds for Deutsche Asset Management), and hedge (as founder and CIO of Avocet Capital Management, a specialist tech fund manager).
The current market environment has equity portfolio managers on edge – uncertainty is rife, to say the least. Fundamentals aren’t driving share prices – and that’s a disturbing state of affairs for a fundamental investor.
Times like these are exactly when it’s both most important and most difficult to make deliberate, mindful decisions.
Fortunately, at Essentia, we are surrounded by experts on the topic. We tapped some of them for their advice for managing the mental game in these stressful times.
“Focus on the things you can control,” says James Macmillan, former equity portfolio manager, executive coach and Essentia Insight Partner. “You can’t control the dramatic ways the market has been shifting recently. Invest your energy in worrying about the things you CAN control – like your process and the discipline with which you apply it – not on the things you can’t.”
“Be careful not to let the market own you, your decision-making, and your agenda,” advises former trader and trader coach Steven Goldstein. “Try and recognise to what degree that might be happening. If that is the case, and you are in fully reactive mode, take a step back, reduce your exposure to levels where you are starting to feel no longer ‘owned’. Then step back into the market when you and your process start feeling aligned again.”
“Uncertainty is anxiety inducing,” says former trader and investor coach Alex Green. “Do what works best for you to keep your mind and body calm, so you can remain disciplined.” Investor coach Christine Scordato agrees. “Remember to breathe,” she suggests. “Google ‘box breathing.’ If it works for Navy Seals, it will work for you.”
For some, market dislocation has proven to be the source of their best ideas, in the past – though it wasn’t necessarily obvious at the time. If you have the benefit of data evidence of which types of investment decisions you’re best at, and in what contexts, now is the time to use it – those are your first principles.
When things get volatile, some people are driven to transact – often without strong evidence that such transacting actually adds value. “Some investors are active personalities – they feel like they need to be doing something,” says Greg Richmond, former equity portfolio manager and Essentia Insight Partner. “That might scratch their itch at the time, but for many, the data shows that the trades they’re making in such circumstances tend to destroy value. If you’re someone who falls into that camp, the urge to trade can be relieved more beneficially by turning off the P&L screen and diving deep into research.”
Now is an ideal time to promote and leverage cognitive diversity on your team, as well. “Surround yourself with Devil’s Advocates and form Red Teams of authentically diverse independent thinkers – and make it safe for them to challenge your assumptions, your worldview, your unforeseen risks, your emotional biases and put forward alternative perspectives,” suggests Dr. Nicholas Beecroft, psychologist and investor coach.
With world-changing events unfolding on a daily basis, it’s clear that none of us knows what tomorrow will bring. But dealing with what the market will bring is only half the battle.
“We don’t see the market as it is,” explains Dr. Andrew Menaker, psychologist and trader coach, “we see it as we are. Our ‘inner market’ is composed of well-known cognitive biases, our own unique personal beliefs, expectations, emotions and memories – conscious and subconscious. Analyzing your own inner market increases resilience, emotional agility and confidence. But it also improves the capacity to see new opportunities, nurture creativity and recognize our own intuition.”
For more information on investor coaching, or for an introduction to any of the contributors mentioned here, please visit our Insight Partners page, our recommended investment coaches, or contact us here.
