Sustainable Investing & Trading Success via Psychological Strategies

In response to the post and discussion here by @ppearlman, @andrewunknown asks:

Phil’s last line: “So, even awareness is overrated. Its a start but really its about your choices. Its where the training begins, not ends.” Denise: “What is standing in between the “knowing” and the “doing”?”

These quotes rather concisely introduce two explanatory problems:

1) Everyone agrees a lack of “self-awareness” is – in some measure, anyway – responsible for not just a habit-based instantiation of “terrible investing”, but one’s apparent identity as a “terrible investor”.

Here’s the question: the designator “self-awareness” is quite common; but what is the referent? What is the “stuff” we aren’t/are/may become aware of?

2) What “therapeutic” modality helps us cross the “knowing” to “doing” gap? In other words, how do we most fittingly use our now-wider apprehension of “self-awareness” in the service of forming or rehabilitating what made us “terrible” in the first place?

To question 1, I submit that it is knowledge of the actual motivation behind any giving market entry or exit. Is it the result of a cognitive analysis or is it an intellectual mask – maybe even a ruse – for a need to be right, a need to avoid regret or feeling bad or a need to be smart. Over and over again, when traders and Portfolio managers talk about the feelings associated with their decisions, these and other similar formerly unconscious motivators come to light. In short, the fractals of one’s psychological history and current subjective experience sit enmeshed in all risk decisions.

To question 2, I submit that the research on verbalizing all thoughts and feelings (or what lately I am calling the “Tarantula technique” based on UCLA research) is the modality the disconnects these fractals from the current market analysis and decision. The same technique, along with some basic embodied cognition stuff like sleep, breaks and identifying basic “Affect”, works to remove the inhibition surrounding self-awareness. Generally, people are afraid that if they shine a light within themselves, that their worst fears about themselves will become more true. The opposite in fact is what tends to happen.

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