by Ted Richards Click to listen to the latest episode of The Richards Report with Ellen Jackson.
This episode I spoke with Ellen Jackson, from Potential Psychology. Ellen is a psychologist, internationally published writer, speaker and consultant.
I’ve spoken many times before about the irrational ways we can be our own worst enemy when it comes to decision making. In a time of heightened stress and anxiety as a result of the COVID-19 pandemic, I thought it would be valuable to speak with Ellen about how our lives are being impacted and some tips and advice we can implement day to day to mitigate stress.
How do we respond to stress?
Stress and anxiety can manifest in many different aspects of life, including health, finance, work and others. Ellen explains that our brains like predictability to make meaning in life, but often there’s a lot of uncertainty, which leads to stress.
When uncertainty increases in our life we can become more focused on ourselves (seen in toilet paper panic buying, for example). At times when we’re feeling out of our depth, we seek to control what we can. This isn’t always rational, be it hoarding toilet paper, or selling investments at the worst possible time.
Ellen describes how, in times of uncertainty and unpredictability, we also search for information to fill gaps to provide us with something called ‘cognitive closure’. This could be times when we look at our news apps, Twitter feeds or stock prices looking for an update, because new information can help settle agitation for a period of time.
Often we have only received a small piece of information and further gaps remain so, before long, we check again for more ‘cognitive closure’ and this process continues to loop over and over. As we do this time and time again it makes us even more stressed. You may recall feeling this way yourself with the need to repeatedly check a phone for a football score update or stock price movements.
The reality is, when it comes to investing, we don’t have control over market movements and this uncertainty day to day can be stressful. When black swan events occur and markets gyrate, as they have recently, it can increase stress and anxiety and the search for ‘cognitive closure’ that Ellen outlined.
This is part of the reason it’s so important to invest according to your own risk profile and to diversify your investments. The world is uncertain, but diversification protects against an unknown future.
How can we manage stress day to day?
Ellen suggests to focus on the things we can control. Here are some tips that we discuss in the episode:
- Stay calm by taking some deep breaths at times of heightened stress. She suggests around five deep breaths is enough to activate our relaxation response and begin to calm down.
- Form good, consistent sleeping habits. Sleep gives our body and brains the opportunity to recharge and reset and is important for mood regulation. Get to know how much sleep you need to wake up feeling refreshed and put things in place to make sure you get that amount every night.
- Exercise whatever way you can. At the time of recording (March 2020) unfortunately many traditional gyms and recreation centres are closed so you may need to start new habits and routines in your day to get exercise into your day.
- Reflect on previous stressful events in the past and reframe how you view the current situation.
These are life skills that may be applicable no matter what is causing an increased level of stress and anxiety in your life.
When it comes to investing, looking at the market in 2020 in isolation can make investors nervous. But, following Ellen’s advice and zooming out with an exercise to take perspective, we can see that over history there have been many market events like this over the years, and that history suggests that it’s usually not that long before markets rebound.
To find out more information about Ellen and Potential Psychology, visit the Potential Psychology website. You can also listen to Ellen’s podcast or visit her Facebook page.
Six Park can set up and manage your own diversified portfolio to create your own passive income. To set up your portfolio click ‘Get Started’ at the bottom of the page.