Well it is about that time of year when everything goes haywire. Travel, eating, family, eating, shopping, eating, colder temperatures, eating, stress, eating, lack of sleep, eating.
Are you starting to see a pattern?
Now we don’t address health too much in our writings because this is an investing blog. Health, however, is just as important as charts, P/E’s, revenues and all the other obvious investing stuff… Maybe more important actually.
Not a lot of people who write about stocks and investing discuss the correlation between overall physical and mental health and investing. I have no idea why to be honest. Your trading and investing is connected with everything else in your life.
Going through a breakup? Didn’t get much sleep? Skipped breakfast and had a candy bar instead?
It’s all gonna affect your trading and investing.
How Exercise Can Affect Investing
Extrapolating this further, if you don’t exercise and have bad heart and less blood flow to your brain, don’t meditate and have a cluttered brain, eat poorly and have an unhealthy body, all of these factors and many more will impact your mental clarity and emotional responses when investing and trading.
Exercise increases blood flow. Not only is this good for every system in your body, but it also means that you get better blood flow to the brain. So, exercise can help you think better.
That’s not just anecdotal. Let’s consider the hippocampus, the part of your brain that controls emotion, memory, and the nervous system.
Multiple studies show that exercise can expand the hippocampus, enhancing its function. So your morning jog or HIIT session can really help you invest smarter.
Mental acuity aside, exercise can just make your body feel better. Exercising helps you work out the kinks.
There’s an emotional element at play, too. Physical exercise can help you attain a better emotional balance … And as you probably already know, emotions can be an investor’s worst enemy. Exercise can help you keep them in line.
How The Food You Eat Affects Investing
With your car, good quality gasoline and regular oil changes help keep your vehicle in good working order. So give your body the same respect and fuel it well.
The saying ‘you are what you eat’ is true –– literally. What you eat is metabolized into energy that helps keep your body and brain working. So what kind of fuel are you choosing for your body?
If you’ve got your eyes glued to charts all day and only taking time-outs to chug energy drinks and eat candy, you’re not setting yourself up for long-term success.
In a recent study published by the International Journal of Food Sciences and Nutrition, based on 245,891 surveys, researchers concluded that subjects on a junk-food diet had a much higher likelihood of experiencing serious psychological distress.
How much higher likelihood? A 2 to 3 times higher probability of having serious psychological distress.
And worse, high sugar diets, where high sugar equals more than the daily allowance of sugar, were 7 times more likely to suffer serious psychological distress!!!!!
So if you’re loading up on french fries, candy and soda, how do you think you’ll react during a short squeeze?
On the other hand, a healthy diet high in omega-3 fatty acids may help support cognitive processes and help maintain the function of synapses and brain plasticity.
Food has a powerful impact on your investing. No, you don’t have to be an extremist and go on a restrictive diet or go all vegan (or full carnivore) or anything like that. But it’s smart to avoid junk and focus on healthy, nutritious food as it really can have a positive impact on your investing.
Sleep And Mental Acuity
Perhaps one of the most overlooked areas of a healthy life is sleep.
According to the National Institute of Health, missing as little as one and a half hours of sleep can have an impact on your alertness. So think about how a lack of sleep could affect you over time.
But that’s not the only thing that can potentially go wrong. A lack of sleep can also lead to impaired memory, greater stress and increased risk of automobile accidents.
Blood flow to the brain is decreased by up to 10% with lack of sleep, Reaction time is reduced by 30-50% by lack of sleep.
Your attention span is reduced by 25-40% with a lack of sleep. Worse than all of this, your long term and short term memory is all affected by lack of sleep. You cannot remember because you don’t sleep enough.
Crazy!!
On the other hand, what could happen if you do get enough sleep?
Countless studies show that sufficient sleep can help increase your focus, creativity and might just make you smarter. What trader couldn’t use a little more intelligence.
What if it’s not always possible to get enough sleep?
On those days, you can make up for it in part with a power nap. Per the National Institute of Health a brief nap in the early afternoon can help increase awareness. Even a brief 20- or 30-minute snooze can help clear the slate that is your brain, helping you release extraneous information or worries and make room for new information.
Health Matters, Period!
So what I learned by doing a deep dive into health and investing is this. Your diet matters, your exercise routine matters. Your sleep patterns matter.
In fact there is a study in the Journal of Behavioural and Experimental Finance, that shows the younger your poor health starts the less likely you will be to invest at all. In fact, there’s a higher probability that if your poor health starts before you’re a teenager, you’ll invest in lottery tickets more than stocks.
I mean there are some scary studies out there which highlight just how important health is for investing success. We haven’t even addressed the other side of health and investing. Which is how the stock market can actually make you unhealthy if you don’t take care of yourself.
Is Investing In The Stock Market Ruining Your Health?
Throughout history, patterns of recession and depression in the economy have been marked by periods of declining happiness.
Each year, Gallup conducts a survey called “Mood of the Nation,” where the organization asks questions to explore happiness and other areas of mental health. The lowest reading ever was 73 percent. Gallup received those results in July 1979 during the oil crisis that led to steep gasoline prices and inflation.
Numbers also dropped in 1987 and 2008, when there were major stock market decline trends. For investors, a market dip can be even more dramatic. Mental health and the stock market are already inextricably intertwined.
Some economists and psychologists study a field called behavioral finance to explore how emotional and cognitive patterns impact trading habits. People who have money riding on the performance of a system they have no control over may suffer from extreme stress levels.
Financial anxiety is a mental health condition marked by extreme worry over money. It can arise due to an economic downturn, job loss or high debt levels.
However, the condition can also affect people who are not experiencing financial hardship. Individuals with a lack of personal finance education or who developed specific ideas about money during childhood may also suffer from financial anxiety.
Stock Market Anxiety Is A Real Condition
Stock market anxiety is a closely related to financial anxiety disorder where people experience extreme worry over stock market trends. Interestingly, scientific research has shown that the problem doesn’t just occur when stock prices fall.
One study in China showed that times of market volatility when stock prices continuously rose and fell even by small amounts led to increased rates of depression and anxiety among investors.
Symptoms of Financial and Stock Market Anxiety Syndrome
Financial and stock market anxiety syndrome is a mental health problem, but it can cause physical symptoms, including:
- Loss of appetite
- Insomnia
- Difficulty concentrating
- Indigestion, diarrhea, and nausea
- Headaches
- Muscle aches
- Irritability
- Restlessness
- Chest pain
- Racing heart
- Rise in blood pressure
Effects of Financial and Stock Market Stress
During financial and stock market stress, people may resort to various coping methods. Often, these coping techniques aren’t conscious decisions.
A person may not realize that they are doing one thing to minimize or mask their feelings of the stock market and financial stress. Some behaviors common among people with financial anxiety include:
Substance Use
Drugs and alcohol can provide a temporary release from feelings of anxiety. However, misusing drugs and drinking large amounts of alcohol doesn’t resolve the anxiety symptoms.
This can lead people to seek out a substance, get relief, symptoms returning, and a desire to use the substance again. The physical dependence on the substance can develop, making it even more difficult for people to give up drugs or alcohol.
Overspending
Buying something can provide a temporary high. Even financially struggling people may chase that feeling, draining their bank accounts or racking up credit card debt in the process.
Hoarding
A concern over food insecurity or financial instability can lead people to stock up on goods. For some, the habit becomes an obsession. When uncontrolled, hoarding can make a home environment unsafe and unsanitary.
Spending and saving obsessions
Financial anxiety leads some people to control their spending to the point that they go without necessities like medical care and food to save money.
It can also cause people to overwork themselves by not taking days off or picking up extra shifts or secondary employment. Working more may increase stress, worsening the fear of spending.
Take The Pulse On Your Health And Be Proactive
SO let’s imagine you’re unhealthy before you’ve ever invested one dollar in the market. Bad diet, zero exercise, sleep issues, then you decide to invest. Because you’re mentally fragile to begin with, you develop symptoms of stock market anxiety.
You are so screwed.
Your body is already in bad shape to begin with, now you add high blood pressure or a racing heart or digestive issues, etc. Honestly at this point you are no longer investing for your future but for your partners future or your kids future because you’re going to die way sooner than them. Just being honest. So what to do?
Exercise, eat healthy, sleep well, meditate or whatever relaxation technique you use, drink lots of water and for the love of all that is holy reduce your processed sugar intake. Aim for next to none.
Sugar kills more people than anything else, but the overlords will never let us peasants know this. 25g is what the “experts” say is a healthy amount of sugar to consume a day without killing yourself.
But the average American consumes more than 6 times that each day. According to the National Center for Health Statistics 8 of the top 10 leading causes of death in America are related to high blood sugar. Think on that…
The biggest take away here is to realize that stress causes us to become inactive, to eat sugary things, and disrupts our sleep. And those things then compound anxiety.
If we make a conscious effort to make better lifestyle choices to promote mental and physical health, it’s possible to build emotional resilience to market volatility and become a more disciplined investor.