November 22, 2008
The Market & Me
My apologies for the lack of new content this week. I've been busy watching my personal fortune evaporate in the stock market. While I would never argue that what has been happening at the NYSE is in any way good, it has been most educational. The financial crisis has motivated me to learn more about our economy, the equities market, and finance in general—subjects about which I have long been ignorant.
But the most valuable education I've received over the past week has been what I've learned about myself. And this new personal insight has taken me completely by surprise.
Feeling the Pain
First let me say I had no idea how painful it is to watch your savings disappear. I had perhaps some intellectual idea about it, but the in-person real-life reality of watching those numbers tick down and understanding exactly what it means to your bank account is another matter entirely. Baring a great depression, my family is unlikely to lose our ability to pay our bills. My stock account is small, and it's not central to our survival.
And still, the physical consequences of watching that money disappear was staggering. I lost sleep. I felt physically ill. I felt like I'd aged a year in the span of days. I cannot imagine what those who are nearing retirement, or otherwise depend on their savings accounts, must be feeling right now. To you, I offer my most heartfelt sympathy.*
But the week's biggest surprise, for me, was what it revealed about my sense of self-control. It's a lot more of an illusion than I realized.
You see, I've read articles (see: First Person Plural) suggesting that human behavior is far more unconscious than we like to think. We imagine we make conscious choices in determining our fates, as if we're sitting in a mini-control room inside our heads, pulling levers that set our bodies in motion: what to eat for breakfast, when to go for a walk...what stocks to buy or sell. But the truth is entirely different.
I had a plan in place this week concerning my stock account. It was quite specific. I had predetermined exactly what I wanted to do in response to a set of possible events. I had predetermined exactly what I didn't want to do as well.
I violated my plan on Monday, with terrible consequences. I was outraged with myself, and I swore I'd never violate the plan again. Which is exactly what I did two days later. That so outraged me that I specifically put in place systems that would limit my ability to violate my plan in the future—safeguards and roadblocks. And then, yesterday, I violated my plan again.
Make sense of that, if you can.
But first, ask yourself this question: does this story in any way sound familiar?
A Dozen More Trades
Exhibit A: we have an intelligent man of sound body and mind who has put in place a carefully considered plan of action to keep himself safe in a dangerous environment. The man then proceeds, inexplicably, to violate that plan, with dire consequences.
Going back to our metaphor of the man pulling levers in our heads, those moments where I went off script could be described like this: it was as if someone else suddenly popped into the control room, pointed at the counter and said, "Look, it's a doughnut!" and then pulled my levers of choice during the momentary distraction.
The experience, each time, happened within the span of seconds, and afterward I was left feeling profoundly disoriented: Hey...what the Hell just happened?
That Atlantic Article, Revisited
If you believe that Atlantic Article, events like this happen constantly. Consciousness as we experience it is illusory; rather, it is the synthesis of our sense of being in charge at discrete intervals sitting on top of constantly churning unconscious processes which are actually pulling the most important levers.
So long as the lever-pulling coincides with our intentions, all is well. It is only when the two get dramatically out of sync that we are forced to consider we're not alone in our control rooms.
So what can we do with this information?
The Atlantic Article talks about Self-Binding, in which we deliberately put roadblocks in place to halt or at least slow down our unconscious impulses.
This is exactly what I did prior to Rule Violation #3, in which I conceived and implemented systems to prevent future rule violations.
But that failed, didn't it?
Well, yes and no.
You see, when Rule Violation #3 came along, my new safety systems did successfully force my unconscious impulses to clear their intention with the Executive Me.
In that case, the Executive (what I think of as "me") gave the matter some thought and then said yes. The executive considered the risk versus reward of my impulse's intent (both were/are significant) and made a choice. Following that Rule Violation, instead of having a sense of dislocation, I was at peace with myself and with my decision, whatever its consequences.
It might seem like it's a long way from the Market to the Backcountry, but the experience of my past week is directly relevant to the decision-making process when traveling Avalanche Country. It's so relevant, in fact, that the parallels practically slap you in the face.
In both cases, we enter with a preconceived intellectual plan designed to keep us out of trouble. In both cases, the sudden fantasy of immense reward can overwhelm us, throwing control over to unconscious impulses, with catastrophic results.
A better awareness of this process can lead us to put in place Self-Blocking strategies, which can be enough, in those crucial moments, to slow down an impulse long enough for our executive control to reassert itself. Was that lesson worth the money I paid for it?
I hope so!
*To those watching the Financial crisis: Don't Panic! There is much reason to believe we can successfully weather this storm, but we must first look ourselves in the mirror and believe we can get through it. So long as people do not create out-of-control runs on Banks and Mutual Funds by withdrawing their money in a panic, the system will stabilize. Don't lose hope! New leadership in on the way. Give it time, hold on, hang in there. We'll make it through.