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“Piglet noticed that even though he had a Very Small Heart, it could hold a rather large amount of Gratitude.”—A.A. Milne, Winnie-the-Pooh
***Warning — A personal challenge is about to be issued. That’s because there are traders and investors who read this weekly missive, study Van’s materials and STILL believe that the psychological aspect of trading isn’t that important.
Here’s my challenge — do the two exercises at the end of this article. If your trading and your experience of life (i.e. your happiness) aren’t significantly enhanced, I’ll personally donate $50 to the charity of your choice. If you knew the size of Van’s newsletter subscriber list, you’d understand how confident I have to be about the usefulness of these exercises! I make this challenge because I’d love to find a way to have a massively positive influence on everyone reading this newsletter as my Thanksgiving gift to you.
My Experience With Gratitude
Almost 24 years ago, I experienced a day of gratitude that was so special and affected me so deeply that it is still vividly etched in my memory. Our daughter Meg (our first born) was only a few months old, and she was being baptized at our church. We had invited friends and family, some traveling great distances. Our pastor graciously allowed me to deliver the message that day. I spoke about God’s love for each of us, a love so deep that it is pursuing us even before we are aware of it (John Wesley called it God’s prevenient grace).
Until that day I had experienced parenting at a perfunctory level — helping with chores like diapers and baths, etc. But it wasn’t until I explained what parenting meant to me, how I felt about parenting and how this little miracle of a girl had changed me and the very way I look at the world that I really understood what it meant to be a dad. And the gratitude that I felt for that experience — for my awakening to the joy of being a parent — was overwhelming.
So in the spirit of this season of gratitude and thanksgiving, I hope that you find some enjoyable and useful information here!
The Thanksgiving holiday is upon us here in the U.S and it really does kick off the whole end of year holiday season (although you could argue otherwise since Christmas ads have been running for four weeks …).
There are so many distractions that can keep us from being truly thankful this week. For example, people like to argue over whether the first Thanksgiving celebration was attended by pilgrims in Massachusetts, English settlers in Jamestown 15 years earlier, or by Spanish explorers in Texas or Florida years before that.
We could also worry about the perfect way to cook the turkey and gravy, whether or not our relatives and in-laws will behave themselves or if anyone over age of 7 will watch the Macy’s Thanksgiving Day parade.
And last but not least, the NFL will be most grateful that all three Thursday games feature teams that are still in the playoff hunt. And since I also have a few of the starters on my fantasy team playing this Thursday, I guess the relatives will just have to watch the games along with me…
And yet I digress . . . The Thanksgiving holiday intends to remind us of the most useful of all human expressions — gratitude.
We all know gratitude Is a good thing but… can we PROVE it?
Robert Emmons is perhaps the world’s most prominent researcher in the study of gratitude. In one of his early papers, he defines gratitude as “a felt sense of wonder, thankfulness, and appreciation for life.” Most discussions or articles on gratitude become, for me, an exercise in anecdotes and platitudes. Happy anecdotes and platitudes, mind you, but somehow unsatisfying. We all seem to know intuitively that what our grandmas told us is true: saying “thank you” is a good thing.
Now, thanks to Dr. Emmons and his contemporaries, we have a sound scientific footing that proves the usefulness of showing gratitude. The early studies from Emmons (and his various co-authors) showed that people who are consistently grateful are happier, more hopeful and more energetic. In addition, they are less likely to be neurotic, lonely, anxious or depressed.
While Emmons’ early research did not conclusively show causality, subsequent research has done just that. In one study, researchers asked a group to complete a gratitude exercise similar to the one below. Compared to the control group, the gratitude test group showed significant improvements in both outlook (feelings of happiness, optimism and satisfaction) and physical health (reduced incidences of everything from acne to headaches). In addition, researchers gave the same exercise to both young and older people with chronic illnesses. As in other experiments, the “gratitude group” achieved similar improvements in outlook and health — which included getting more hours of quality sleep.
Okay — Psychologists proved Grandma was right. How does this help Traders?
Digging deeper into the work on gratitude, Dr. Sonya Lyubomirsky summarized eight positive results from practicing gratitude. I’ve added commentary to each on how they are applicable to us as traders and investors:
1.) Grateful thinking helps us savor positive life experiences.
I’ve known too many traders who beat themselves up over losses or bad trades and then could never stop to appreciate a well-executed trade. Such imbalance actually pushes us toward bad trading behavior just so we can feel something. Enjoying the process of trading, “the game” as it were, is a key to longevity in the business.
2.) Expressing gratitude bolsters self-worth and self-esteem.
During tough periods, traders’ confidence can plummet in a downward spiral. It’s almost impossible to trade well when your confidence is shot. Finding things to be truly grateful for can slow or stop that cycle of decline.
3.) Gratitude helps people cope with stress and trauma.
Traders are certainly exposed to stressful situations more than most. Anything traders can do to cope better with the stress and uncertainty of the markets should be embraced!
4.) Expressing gratitude promotes moral behavior.
Here, the researchers translated gratitude to mean kindness, helping others etc. In a business that is the ultimate meritocracy, thinking beyond one’s self is a good thing.
5.) Gratitude can help build social bonds (where people are more than a means to an end).
Trading can be a singularly lonely endeavor. When you lack a strong social network, trading can turn into a cut and dried proposition of win or lose. With that kind of outlook, other people can become simply means to an end. Do you have useful information for me? If not, then away with you! Building a social network, especially with other traders and investors, is useful for breaking out of the “me against the market” mentality. One easy way to do this is to attend seminars. Probably the most under-appreciated aspect of attending workshops is the ability to network with like-minded professionals! Beyond that, however, gratitude can help us see every person we meet as a unique and valuable creation rather than just a useful/not useful entity.
6.) Expressing gratitude tends to subdue individual comparisons with others.
If you go around trying to compare your results to Soros’ 40% annual compounding for decades, or to Paulson’s or Seykota’s records, you’ll have a long, tough go of it.
7.) Practicing gratitude diminishes negative emotions (anger, bitterness, etc.).
It’s plain tough to do any cognitive processing while harboring negative emotions. And likewise, it’s difficult to be negative and grateful at the same time!
8.) Gratitude helps thwart hedonic adaptation (just wait, it’s better than it sounds).
Here’s a quick summary of hedonic adaptation in simple terms: humans act with an emotional thermostat, returning to a near baseline state after an outside change. When we get bad news, we are able to mentally adapt and carry on instead of feeling low or being out of commission for long periods. That’s a good thing in most cases. Unfortunately, the same principle applies for our reaction to positive events. When something good happens, our emotional thermostat guides us over time back down to our “happiness set point” from before the event. In short — gratitude helps us keep a positive (and usually more productive) mental state for a longer time.
And Now For The Challenge
So the scientific evidence is clear — being grateful is not just a good idea, it’s a way to enjoy a fuller life. Does science also give us ways to grow our “gratitude muscle”? Thankfully, the answer is yes.
Here’s my challenge: complete both of the projects below to receive two benefits. First, you’ll find yourself in a happier, more productive state more of the time. And second, your trading will improve (largely because of the previous benefit and the eight listed above).
If you earnestly follow both parts of the challenge and don’t receive any benefit, let me know and I’ll gladly donate $50 to the charity of your choice.
Project Number 1: Weekly Gratitude List
Every Sunday night for the next 10 weeks, follow this simple exercise (from Dr. Lyubomirsky): “There are many things in our lives, both large and small, that we might be grateful about. Think back over the events of the past week and write down on the lines below up to 5 things that happened for which you are grateful or thankful.
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
It’s important that you only do this once per week! Research shows that more frequent repetition diminishes the effect. The researchers believe that a more frequent requirement turns the project into a “chore” instead of remaining fresh and meaningful.
Project Number 2: Express Gratitude Directly to Another
Think of someone in the field of trading or investing for whom you are grateful. Perhaps a mentor, thought leader, coach, model trader, researcher, system designer, etc. If this is someone you know, great. For some it may be someone you know only through their work or reputation. This works equally as well.
Within the next seven days, write this person a letter of gratitude telling them exactly what they have done that has impacted you in a positive way. Also write the specific change it has made for you.
If possible, deliver the letter in person. If not, mail or email will work as well. And don’t be shy about asking your gratitude recipient for a response. This will complete the gratitude circle and add to your experience.
It’s hard to imagine anyone not experiencing positive results from these two activities. I hope that you’ll accept the challenge and reap the benefits.
May you and your family enjoy a Thanksgiving full of gratitude, love and joy. If you’re not in the U.S., take a few moments on Thursday to flex you gratitude muscles right along with us!
As you can tell, I really admire researchers who give us applied psychology tools (and Van has been doing it for decades). I’d love to hear your thoughts and feedback — just send an email to drbarton “at” vantharp.com. Until next time…
Great Trading,
D. R.
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