Return On Stress
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September.
\\nWas.
\\nUgly.
\\nThe S&P 500 was down more than 9% in the month of September alone.
\\nMarkets were dropping, and investors were stressing.
\\nWhen it comes to investing, we have a lot of metrics and measurements to analyze investments. We typically like to express these measurements in ratios \\u2013 allowing us to compare one particular figure with another. Think return-on-investment or price-to-earnings ratios. Here\\u2019s a ratio you won\\u2019t find in your financial textbook: return on stress.
As you might imagine, these markets have led to skyrocketing levels of stress for investors. Anxiety is peaking, as uncertainty seems to be at an all-time high. Yet, let me remind you that return-on-stress is always zero. Our anxiousness, our fears, and our stress do not add an ounce to our investment returns. It\\u2019s these very emotions that typically get us in trouble \\u2013 I can\\u2019t begin to describe how much financial damage has been caused by poor investor behavior.
\\nWell, I was blessed with the opportunity to deliver the message at my church this last Sunday, and I think there were a few tidbits from this sermon that are applicable to investors and our discussion today. In my intro, I spoke about what fear and faith have in common, as they both deal with an undetermined future (h/t John Gordon). We either choose to fear what the future has in store for us (negative anticipation), or we choose hope/faith, believing that goodness lies ahead (positive anticipation). I went on to explain how faith is often misunderstood, and how our experiences can sometimes derail our faith. I explained that faith is not having clarity in the process, but rather having clarity in the outcome.
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