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How I’m Getting Myself Through the Financial Crisis

First, a disclaimer. The global financial crisis has engendered a great deal of serious suffering across our country and around the world, and what I address here is a minuscule and perhaps inconsequential subset of it. But it is the subset into which I and many readers of Chief Executive fall, and the principles we discern may help broader groups. We are the psychologically damaged: those whose financial losses, though substantial, do not affect our families’ lifestyles or our personal careers, but who nonetheless feel personally diminished by the decline in our net worths.

What are some symptoms?
Checking stock prices addictively, multiple times a day, especially if we hardly ever trade. The telltale sign is how we feel when we haven’t checked prices in a while. Do we begin sensing a pressure welling up, so much so that we cannot continue our normal work until we check the Dow again, even if we just checked it less than an hour before, and even if almost nothing we might learn could cause a change in behavior? It is much like someone with obsessive-compulsive disorder(OCD) might feel if trying to restrain himself from yet again washing his surely clean, red-raw hands.

Second-guessing oneself-the coulda-woulda-shoulda routine-and doing it frequently. Playing over and over and over again the steps one might have taken-selling this or that investment, not investing in this or that company-all with the acuity of perfect hindsight. This is another OCD-like behavior.

Depression, modest or otherwise. There are diverse signals: changes in eating habits (under- or overeating); insomnia and/or oversleeping; abnormal fatigue; extra sensitivity to rejection; disinterest in work or hobbies; mood swings or exaggerated emotional responses to normal situations; feeling sad, lonely or hopeless; diminished work drive; diminished
sex drive; going through the motions of anything (say, work or sex) devoid of usual passions. I could go on, but better, now, to move on to some remedies. These prescriptions are not the only ones-everyone has different circumstances and personalities. Consider these a starter kit.

Recognize Relativity. Our sense of “satisfaction” is perceived relatively, so that how we feel is measured as a dynamic comparison, not an absolute condition. A person who just lost $1 million of her $10 million invested in the stock market will feel worse than a similar person who just made $1,000 on her investment of $8,000, even though the first person has $9 million and the second person has $9,000. That’s human nature. Consider the adage: “I cried because I had no shoes,until I met a man who had no feet.”

Dissect Decisions in Context. Assessing investment decisions retrospectively must be done in their original contexts, not in light of subsequent developments. This is not a simple task but it is instructive and necessary to improve future decisions. In my situation, I think it fair to say that, in hindsight, my worst investment decisions were driven by an accurate and in-context appropriate tax analysis, but the deep flaw was the hubris of accreting wealth that distorted a more conservative strategy. A clear-minded, toughminded self-analysis will be cathartic, and help break OCD behaviors.

Circle the Wagons. Simulate the worst. Stress-test your personal financial condition. Develop scenarios for what you would do under an even-more-disastrous financial collapse. While this also may be helpful in reality, the point here is psychological. You will feel better imagining the (reasonably) worst, because reality will not be so grim (hopefully).

Disentangle Your Ego. Most businesspeople have formed a tight mental bond between their ego and sense of self-worth on one side and their job and financial condition on the other. This is natural, and even-in normal times-helpful for driving ambition and a competitive spirit, but can become destructive, even devastating, in troubled times. The antidote is to reflect on those things of deeper, perhaps ultimate, importance. For many it’s family and children. For some it’s religion. For others it’s hobbies. The idea is to establish nonbusiness, nonfinancial groundings of life.

Allow Habituation to Apply its Balm. When we put on clothes, we feel them at first; then we do not. It’s called habituation and it enables us to function. If we felt our clothes all the time, we’d be distracted all the time. The same habituation works on your mental states so that pains you feel now will diminish over time. And as we habituate to new realities, and no longer feel so bad, emotional relativity will kick in, so that small success will actually make you feel good. Don’t squelch these feelings; use them as motivators.

Get Back to Work. Whatever you need do, do it-career, family, daily chores, all. Do even if you don’t feel like doing. If you must, just go through the motions. The more you do, the more your emotions will change. Doing shapes emotions. If you force yourself to hold a posture of confidence, even if you don’t feel confident, you will after a time actually feel more confident.

Now two personal confessions, odd things I thought about in these times of stress. Perhaps they might help. One day, while trying not to playing the second-guessing-myself game for the umpteenth time, and nursing a wounded ego, I suddenly realized that “other smart people have made worse mistakes.” Kennedy at the Bay of Pigs; McNamara in Vietnam; Nixon at Watergate; Bill with Monica; professional financial advisors who put their own money with Madoff. Then the best example popped into my head. Even God, I thought, makes mistakes. “The LORD was sorry that He had made man on the earth, and He was grieved in His heart.” (Genesis 6:6)

Now you may not believe in God, or if you do, you may think God’s “mistake” anthropomorphic and allegorical (i.e., so that we humans can understand) or explained away with deep theology (e.g., God is timeless and unchanging). But the simple words that God was grieved for what he had done were comforting to me, being at the time “grieved” for what I had not done (not selling a stock). My only point is that it gave me a chuckle. Just a chuckle, nothing more-but it came when I needed a change of spirit.

My second confession is more awkward to disclose, a personal reaction of which I am not proud. It was another down day in the market, but not particularly bad, and I was taking a taxi. I guess the cumulative effect got to me and I found myself about to give the driver a reduced tip (around 15 percent instead of my usual 20-plus percent). Mind you, that although I was suffering like everyone else, the totality of the crisis had not and would not change my lifestyle. But yet I was about to reduce this poor driver’s tip by pennies! I even recall, if my memory is not playing tricks, that I tried to justify this evil deed by thinking, “Well, everyone should share the pain.”

I gave the driver a 30 percent tip. He was surprised and thankful (pennies, remember) and I felt much better. A few days later I sent a notinsubstantial monetary gift to my former and much-deserving secretary, who had recently lost her job.

So now, whenever I begin backsliding and feeling sad at my loss of net worth, I fight the feeling by giving higher tips. Each time I feel a twitter of misplaced anxiety about depleting my reserves a little more but each time I batter back that absurd notion and give the larger tip.

I leave you to ponder a favorite Chinese saying. As I heard it, it was about “Wang,” an ordinary person, and a “horse,” one’s most valuable possession (at the time). The saying is short and you will at first think it incomplete-and if not complete then empty or absurd. Stay with it.

Wang lost his horse…
But he didn’t know whether it was
a bad thing or a good thing.

Robert Lawrence Kuhn, an international investment banker and corporate strategist, is a long-time advisor to the Chinese government and senior advisor to Citigroup. Dr. Kuhn’s forthcoming book is How China’s Leaders Think: The Inside Story of China’s 30-Year Reform and What This Means for the Future. His television series, Closer To Truth: Cosmos, Consciousness, God, is broadcast on PBS and noncommercial stations.


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