Feature Article:

Stop Worrying Yourself Out of Profits, Part Three, By Van K. Tharp

How to deal with worry

How do you manage worry? If you can discover how you worry, then a simple solution to the problem is to do something else. If the new solution doesn't work, then again do something else. Keep changing your approach until you find something that does work. This does not necessarily mean changing your trading system. If you execute a system poorly, you will execute a new system poorly. "Changing your approach" means to change how you think, how you make decisions, how you execute your system.

This solution is simple, but most people find it very difficult to accomplish because they are locked into certain patterns. Changing the way you think and perceive the world is not always easy. To change the way you think, you must first discover how you start the worrying process. Being objective about your own thinking is difficult while you are doing it, but much easier later when you can try two techniques to discover how you start worrying. The first exercise is to review a past, painful market experience. It is the quickest way to discover how you worry. You need only recall what happened just before the painful experience. You have no need to replay the experience itself.

Review the experience as if you are watching a movie of yourself. Sit back in a chair and feel yourself in that chair watching yourself on a movie screen. As you watch your movie, determine what started the worry experience. Was it something you saw or read? Was it something you heard or something someone said? Was it a feeling? What happened next? Did you start talking to yourself? Seeing pictures? Did your self-talk and pictures trigger the bad feelings? How did you do it?

When people worry they typically get themselves into a negative feedback loop. They talk to themselves, which produces bad feelings which results in more negative talk followed by more bad feelings and on and on. Others see images which produce bad feelings which make the images worse and so on. What kind of loop do you produce? Once you discover how you start to worry and what kind of negative feedback loop you produce, figure out some ways to change it. Disrupt your loop in some way. If you say negative things to yourself, practice following those phrases with a picture of something pleasant. Try changing the quality of the voice you hear. If you say negative things to yourself, say it in the voice of some well-known cartoon character. Be creative. Do anything that is different until you find something that works for you. If you have trouble discovering how you worry from your past memories, then a second exercise is to keep a worry diary. When you feel anxious or worried about an investment, make a note of it in your diary. Do so at the time you are worrying. Don't put it off. Be sure to include the following information: What were you doing when you started to worry?

What triggered the worry?

Was it someone's actions?

A memory?

A visual image?

A feeling?

How did you go about worry?

What kind of a loop do you set up for yourself. Is this a new or an old pattern?

Later, when the experience passes, make a note in your diary about what you actually did. What could you have done instead? Also comment on your original diary entry. After recording your worry diary for several weeks, you can study it objectively. What kind of irrational fears do you have? How does worrying affect you as an investor? Most importantly, you can determine how you trigger an episode of worrying and how you go about worrying.

When you have a good idea how you I start to worry, select some changes you can make, such as those just suggested with the past memory technique. Become aware of when you start to worry and immediately select one of your changes. Once you discover how you go about worrying and have selected some alternative behaviors, practice using I them. If you do so diligently, then the process will soon become automatic. Imagine yourself in some future situation where you would normally worry and practice some of the alternatives you have selected. Once you can feel at ease in an imaginary situation you I should be able to deal with the real situation. Investors who go through this process frequently comment, "It's just not the same anymore. I don't know what happened, but it's not the same anymore."


This article is taken from the book " How to Control Stress To Become A More Successful Investor", the second volume of Dr. Tharp's five volume course on how to develop peak performance in the markets.