The Hidden Benefits of Gratitude

Editor's note: Our offices are closed Thursday, November 28 and Friday, November 29 for Thanksgiving. Please look for the next Altimetry Daily Authority on Monday, December 2. We wish everyone a safe and enjoyable holiday.

Thanksgiving is all about reflecting...

It's a time for being with loved ones and reconnecting with what's important. And it's a time to be grateful for people, experiences, and all the other blessings in our lives.

Amid all the travel, family time, and traditions, it can be hard to pay attention to the markets.

And that's OK...

In fact, it can actually be good for your portfolio. As I'll share today, the giving of thanks isn't only great for your mental state. It's also a boon for your investing acumen.

Being grateful actually leads to compounded benefits over time...

It has been shown to improve sleep and even reduce stress. And better sleep is important to better everything.

Research published in the Cureus medical-science journal found numerous studies linking lack of sleep to irritability, depressive feelings, and even impulsive behaviors.

Put simply, people who don't get enough sleep at night are emotionally hampered. (Just ask them and see how ferociously they deny it.)

So we should be doing everything in our power to get better sleep... particularly when it's as simple as practicing gratitude.

In terms of stress, consider a study from psychologists Robert Emmons and Michael McCullough, reported by Harvard's health-publishing division.

Emmons and McCullough asked a group of participants to write about things they were grateful for each week. Another group wrote about things that irritated them, while a third wrote about their experiences with neither a positive nor a negative bend.

The researchers found participants from the "grateful" group were much happier after 10 weeks. They even exercised more and reported fewer doctor's visits than the "irritated" group.

This is crucial for anyone with money in the markets. Happier investors are more secure in their choices... and less likely to make rash trading decisions that lead them to trail the markets.

Uncontrolled emotion is poison to your portfolio...

It's also a main reason that folks lose money when investing... or at least underperform.

There are even a number of terms for these situations. You've probably heard some of them...

• Amygdala hijack – When fear prevents the use of the brain's prefrontal cortex, overriding a person's logical thought process. It can lead to buying or selling a stock out of anger or frustration.
• Fear of Missing Out ("FOMO") – Emotional investors might see the herd buying into a stock, throw caution to the wind... and throw away their money without doing their due diligence.
• You Only Live Once ("YOLO") – The other side of the "FOMO" coin. Folks use the YOLO mindset as an excuse to justify taking excessive risks. It's a way to shut down all logical thought and proceed purely on emotion.

These three emotional responses have cost novice investors untold millions. It's the same reason people often sell at the bottom of a bear market right when they should be buying.

The same goes for overexuberance. People ought to be taking profits at market tops. Instead, they hold on when all signals say otherwise.

Gratitude alone won't beat these common investing traps. It takes a lot of practice, discipline, and confidence. However, this small practice can make a big difference to your mindset.

That goes for both your portfolio and your life outside of the markets.

This Thanksgiving, spend your time with family and friends... guilt free.

Even if you're not giving much thought to your investments for the day, you're still doing your portfolio a favor.

By choosing gratitude, you'll improve your mental state. And that will translate to better investing decisions when the holiday is over.

As for me... I'll be having turkey in Turkey this weekend. It's a beautiful part of the world. I'm grateful to be sharing the experience with family and friends.

I wish you and your families love, joy, and peace this Thanksgiving. Thank you for reading.

All the best,

Joel
November 27, 2024