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July 2008

 

Stress Management for Investment Professionals

 

Firm Success: Leading Your Investment Firm
Jim Ware, CFA, Jim Dethmer, and Jamie Ziegler 

The investment profession provides plenty of opportunity to test one’s stress management skills. The field is populated with high achievers who compete for their share of the elusive alpha, knowing that it’s a zero-sum game: some will win, many will lose.

 

Highly competitive types thrive on challenge. Lately, though, we’ve noticed that even highly motivated professionals are expressing an unusual level of stress. Reasons include the subprime debacle and its fallout, the battered credit markets, economic recession, and concerns that stocks are heading into bear territory while the dollar hits new lows.

 

Stress is relevant to investment professionals because it affects their ability to think well. Investments is the ultimate knowledge game; only the best and brightest will create added value. Understanding the effect of stress and how to counter it is important to investment professionals.

 

Why Is Stress Bad?

Brain expert, John J. Medina, director of the Brain Center for Applied Learning Research at Seattle Pacific University, writes:

 

“Stress hurts the brain, and that inevitably hurts productivity in the workplace. … Nowadays our stresses are ongoing: hectic workplaces, screaming toddlers, bad marriages, money problems. Our bodies aren’t built for that. The brain wasn’t built to endure chronic stress.”1

 

What happens when we are chronically stressed?

 

“Stress causes the body to produce a really nasty set of hormones going [by] the tongue-twisting name of glucocorticoids … Stressed people don’t do math very well. They don’t process language very efficiently, and they have poorer memories, both short and long term. One study even showed that adults with chronically high stress levels performed 50% worse on certain cognitive tests than adults with low stress.”2

 

But there is hope. Listen to another brain expert, Dr. Robert Sapolsky, professor of Neurology at Stanford University, discussing what happens over the long haul to a stressed out individual:

 

“Over the course of days to weeks of sustained stress, we now know that these neuronal processes, these things neurons use to talk to each other, are beginning to atrophy and retract in the hippocampus. But it’s reversible at this point, so if you stop the stress, you’ll be okay.”3

 

Great, so how does one stop the stress? Read on. We can’t change the current market conditions, but we can provide some resources to help investment professionals deal with stress by managing their energy and well-being.

 

Stress: Definition and Triggers

To start, let’s define stress:

 

Stress is a condition or feeling experienced when a person perceives that demands exceed the personal and social resources the individual is able to mobilize.

Stress = Demands > Resources

 

What causes stress? In our view, these are the triggers:

  • Resisting what is
  • Wanting to change what is
  • Wanting approval
  • Wanting control
  • Wanting security

 

In short, Wanting = Lack = Stress. When we “want” for something, we feel a lack and the lack causes stress.

 

Step one in solving the stress issue is to locate it properly. Many investment professionals listen to our thoughts about stress management (i.e., staying open and curious, “above the line”) and respond, “Sure, but our performance is terrible right now! How could we possibly not feel stressed?” They have located the problem outside of themselves: “The poor performance is making me feel stressed.” This is a “victim” response because it assumes that the individual is at the mercy of the markets.

 

We certainly agree that bad performance could trigger a stress response, but an individual does not have to buy into that response. The world out there will do whatever it does, and we have the freedom to choose how we react. Watch people’s language: it reveals whether they are in victim mode. Notice the subtle but important differences between the following statements:

  

Victim statement

I’m stressed out

I’m overwhelmed

I’m burned out

Why is this happening to me?

Responsible statement

I’m stressing myself

I’m overwhelming myself

I’m burning myself out

How am I doing this to myself?

 

In each case, the “responsible” statement locates the issue within the control of the individual. The important point here is that the responsible version of the statement implies that the individual who created the problem can solve it. The victim statements imply a powerlessness: “As long as our performance is bad, I’m going to feel stressed out.”

 

Assess Your Current State

We find it useful to think of the “stress problem” as an energy management issue. How are you managing your energy? What choices are you making? Specifically, how are you doing in the following four critical areas?4 Read the statements and check the ones to which you respond “no.”

 

The body

 I sleep well and wake up refreshed

 I eat healthy food

 I exercise three times a week, including some strength training

 I take regular breaks during the day to refresh and recharge


The emotions

 I mostly enjoy my work and feel relaxed while at work

 I spend enough quality time with my loved ones

 I spend time at hobbies that I really enjoy

 I express my appreciation to others often and feel generally grateful

The mind

 I focus easily on my work and am not distracted

 I choose to work on important projects, not at putting out fires

 I spend time reflecting and thinking creatively

 I take “down time” for my mind on weekends, evenings, and vacations

The spirit

 I spend 80% or more of my time doing the work that I truly love

 My work feels meaningful

 My work contributes to the success of the firm; I make a difference

 I feel connected to my colleagues

 

If you were able to answer “yes” to each of the 16 items, then you have excellent energy management skills. If you answered “no” to six or more of these statements, then you probably are feeling stressed. The suggestions below may help.

 

Take Responsibility and Relieve Stress

Start with the 16-statement checklist above and make the necessary changes. If you are not eating properly, choose to eat healthy meals. If you are not exercising, get to the gym. If you are not doing work that interests you, change.

 

Other quick fixes: 

  • Ask for support and be willing to receive all the support the universe has to offer
  • Laugh
  • Limit chemical stressors: caffeine, alcohol, nicotine, sugar
  • Take a break every 75–90 minutes (honor circadian rhythm)
  • Say “no” and set boundaries, don’t overpromise
  • Share withholds; get them out in the open, don’t bottle them up

 

The more long-lasting fixes that have been most effective with our clients are listed below. They are not quick fixes but are well worth pursuing.

           

Develop a meditative practice, something that quiets the mind and provides deep relaxation. As the brain experts above indicate, the body and brain are not built to endure chronic stress. Humans, unlike animals, can get locked into a vicious cycle in which they don’t allow their bodies to relax and detoxify. They become addicted to the adrenaline rush and never allow their systems to return to homeostasis (equilibrium). We have written on this topic and recommended several practical and effective tools for deep relaxation.5

 

Learn to manage your time and energy more effectively. For years we have been practicing and recommending the work of David Allen (Getting Things Done). In our view, he is the leading authority on stress-free productivity. There is a white paper on the science behind his approach, which we would be happy to send you.

 

Learn to release feelings. Simple as it sounds, the best answer to stress is just to release the feelings as they arise. Children and animals do this naturally. Adults tend to get sticky with their feelings; they form beliefs and behaviors that lock feelings in place, rather than releasing them. Most adults believe that you have two choices when a feeling arises: repress it (stuff it) or express it (shout, etc.). There is actually a third choice: release it. This choice involves fully accepting the feeling (not stuffing it), and then choosing to let it dissolve, rather than acting on it. This release process is a clearly defined skill set that is described in detail in Hale Dwoskin’s book, The Sedona Method.

 

Discover your area of “genius” — what you truly love to do — and do it 80% of the time. Most of the Focus Consulting Group’s coaching assignments involve this exercise of clearly identifying unique talents, so they can be aligned professionally. We’ve discovered that it is difficult to feel stressed when you are doing what you love, regardless of outside circumstances.

 

Connect. In a book called Connect: 12 Vital Ties that Open Your Heart, Lengthen Your Life, and Deepen Your Soul, James Hallowell (a Harvard-trained medical doctor) describes 12 ways in which people are strengthened by connecting. This includes both work and personal connections. The danger with being stressed is that we often lose our key connections: to colleagues, to friends, to family, to nature, and so on. Hallowell’s book is an excellent reminder that connection is key to happiness and health.

  

 Top of page

1 John Medina, Harvard Business Review, May 2008, pg 52.

2 Ibid. pg 53

3 Dr. Robert Sapolsky, from his website.

4 Adapted from Tony Schwartz and Catherine McCarthy, “Manage Your Energy, Not Your Time,” Harvard Business Review, October 2007, 43–54.

5 See our white paper, “Why Every Investor Should Meditate.”