How do you manage your emotions?
Someone once said "emotions are the enemy of a balanced person". Which is the case when you work in a fast-paced environment where large amounts of money are at stake.
Living the markets' ups-and-downs can be rationalized after a while but how do you manage not to bring home with you that detachment necessary while on the job? Dragging home the "detached" mood end up being detrimental to relationships.
The fact that you're asking this questions shows a lot of maturity and introspection.
Honestly, not taking home a tough day is one of the hardest things I've found in my career. This is the very first thing I noticed when going from sell side to buy side -- my mood went from being exposed to office politics to 3x exposed to daily PNL moves. Here's a few tips:
1) Make sure you have other hobbies and work out;
2) Use your partner or family as a way of expressing frustrations by talking to them and letting them know what's going on at work BUT:
a) Try not to take it out on them. The most common way this happens is by being sensitive to things that you normally wouldn't be and turning into a volatile mess with them. Small things that you used to not care about now become BFDs.
b) Realize they have a limit to your complaints and frustrations -- they don't want to hear about it every day, all day, especially if you're in a protracted tough period. Also make sure to listen to their complaints in their own lives as well -- if you're the majority bread-winner in the family, it's easy to just railroad their own life concerns and keep focusing on yours since you subconsciously think they're more important. If you want to stay married, realize it's about give and take;
3) Realize handwringing is unproductive. Identify a set period of time each day where you will reflect on what went well and what didn't, and what you will do to change it in the future, if anything;
4) Have a good process for post-mortem analysis. I have something called the 24 hour rule. For any major win or loss, I compartmentalize it if I need to make immediate investing decisions. Then once that's done, I give myself 24 hours to either celebrate or mourn the position and figure out what went right or what went wrong to learn from it. Then I move on emotionally and don't revisit it unless I think there is a lesson to be learned that takes more time to flesh out;
5) Realize wins are just as dangerous to your investing performance than losses. Wins can make you overconfident, especially if you aren't honest with yourself on why the position won, and can lead to excessive risk-taking. Losses can lead you to change your investment philosophy when in-fact the losses were idiosyncratic, or can lead you to take less risk for fear of additional losses. Have a process for discerning between idiosyncratic and process-based losses.
Thank you for sharing your thoughts. Very interesting to consider.
This just saved me. Today. In my own life.
Thank you.
OP here
Extremely valuable approach, thanks for sharing this. Past life experiences probably made me land in this field and the psychological aspect is the one I care the most.
I'm still quite early in my career (4yrs of exp) but I learnt that if you can't manage yourself you won't be able to do this job.
Since you touched on that, how do you live the fact that managing a book is a never-ending project? I feel like you can't really cheer on good performance, because it takes literally less than a few weeks to screw up good results you had in the past. It's not like having a deal to work on, closing it and passing to the next one. Your multi-year winning streak can be reversed in a few months (look at markets this year) so I live as if every win weren't definitive.
Really positive advice. Thank you!
The thing about wins also being dangerous is amazing advice, and so overlooked. Thanks for the great response
Wait, you are saying you cannot go home and slap around the missis or chase the kid with a belt...what?
Jokes aside, explain to your partner that for about 90 minutes after work you will be in your "decompression" mode where you will not be 100% present and will be coming off the high energy environment. Some people choose to meditate, some people choose to workout, some just go read and stay quiet, others listen to a podcast.
Very early on understand that this is your career and its a marathon, there is always another trade and things change all the time. As the other poster said no reason to dwell ever or party on. Endurance is key. So many top investors/traders had their career year much later into their careers.
OP here
Thanks for your thoughts!
How you manage that this career is more a marathon than a 100 metres? As I wrote above on another comment, your winning streak can be turned upside down in a matter of months or even less. How you celebrate for good results knowing that the next week you might have lost all of that?
It's not a deal-by-deal job where you can close one and move on to the next, but rather a continuous line that goes from day 1 (when you start managing a portfolio) to the end of your career - or at least that's how I see it, that's why I run marathons lol
To start consider that a "marathon" is made of various 100 metre chunks. And every 100 metre chunk is a learning experience over time. So no matter what you are always seeing "market action" and learning.
Next how to manage up/down over time you need to figure out your risk management style and need to figure out how best to take profit. You are basically at the point where now you consider "entry/exit", "liquidity" and spillage.
No need to celebrate big wins profusely but also no reason to worry MTM can always wipe you out. Just remember performance over time is worth more than trying to hit out of the park everytime.
90 min of decompression can be a team activity with the spouse in bed
How about 90 seconds?
One of my former mentors was a clerk and worked his way up on the HKEX. He would tell me about how his colleagues would go home and take their stress out on family. Many would also smoke or take drugs. However, what he did was he would go home, lay on his bed, and just think about something peaceful such as beautiful mountains or even a plain white background. Sometimes he would just do this for 5 minutes or 30 minutes. The goal is to eliminate all thoughts, don't overthink anything.
I know this seems super cliche or maybe even "cringe" as Gen Z says but I use this technique everyday after work (especially helpful with how the market is these days).
This is an awesome suggestion and a much healthier way to decompress than anything I've previously tried. +1 SB
Wow wasn't expecting this response, glad this helped! I was expecting someone to be like "well then aren't you thinking of not thinking" or "lame." I think what happens is that people (esp in finance, tech, etc) are extremely rational and always overthink everything as if it's a chess game.
when you say HKEX, you mean Hong Kong exchange right?
yes.
Read about Stoicism.
OP here
I read Meditations (Marcus Aurelius) and Letters from a stoic (Seneca) and I completely subscribe to the philosophical school. It works perfectly for reducing negative emotions while on the job, but I find tough to maximize positive ones out of the workplace - so ending up feeling less overall. Will have to work on that
Practice gratitude. You may be taking life and everything you have for granted.
Some examples:
Basically - just practice being grateful, feeling gratitude, and not taking *anything* for granted and over time, the positive emotions will build on themselves. Just remember - there is no good or bad, positive or negative in the natural world. 100% of all the problems definitionally exist in the mind.
Gotta agree with this. Just remember you're going to die and your 20bps of underperformance will seem a lot less important
So interesting to read through responses as an entry level associate… have yet to experience any emotional response to market/P&L moves. I shall save this advice for the day it hits me.
Very helpful method, many thanks for sharing. I think my past experiences are what led me to this profession, and I'm more interested in the psychological side of things.
Despite the fact that I have only had four years of experience, I have already learned that this profession is impossible for someone who cannot handle themselves.
Since you mentioned it, how do you deal with the fact that running a book is an ongoing task? Since it literally only takes a few weeks to sabotage past successes, I don't think it's appropriate to applaud strong performance. It's not like working on a deal, closing it, and moving on to the next. Your extended run of success can
Therapy’s a great way to work through frustrations. I’m literally twice as productive when I take an hour each/every other week to talk with a therapist about any negative emotions I’ve been feeling.
Whatever the Hulk did for End Game also worked for me. Didn’t have to rip as many shirts…
What is the trading style at your fund? How long do you hold your positions? Also, are you running your own portion of the book?
There are already a ton of great suggestions - that I already agree with - so rather than repeat those, I'll try to add some additional ideas.
-Discuss it with close co-workers / friends in the game at other funds: you do not have to go into details you do not want to share, but it is helpful to talk it out with someone else, especially someone who personally understands the stress. Those who do not manage risk / P+L struggle to understand the experience and properly empathize with the emotional turbulence that comes with the job.
-Exercise Class: Exercise / working out has already been mentioned, but I find that when I am most feeling the pains of performance, I struggle to really throw myself into a workout. If I go to a class like Barry's / Rumble / et al..., the instructor does the heavy lifting of pushing me to my limits which I find to be helpful.
-Cooking: Preparing / cooking a really nice meal can be an opportunity to detach from markets and feel a sense of accomplishment (if successful!).
The PnL is a trailing indicator, it’s best to focus on process. The negative feedback from loosing money on any given day is unrelated to the quality of work you’re doing at the time, it’s best to try to separate the two. Here’s some coping methods that have helped me:
- it’s good to change the scenery and step away from the screen, go on a scenic drive or something, visit a rest stop and write the phone number of the analyst who downgraded your long in all the bathroom stalls
- invert the colors on your monitor so that all the red becomes green
- Call mgmt and ask why the stock is down. They like it when you check in. Tell them to do a buyback
- wrap mgmts house
- Impulse purchase a home or vehicle
- read about Tiger
- remind LPs of your investment long horizon
- visit an unrelated industry conference, talk your book in all the meetings, pee on the toilet paper roll
- engage in intellectual debate on bbg macro chat. It’s a great way to get a 1000 foot view, always profound. Bring an intriguing topic like 9/11 or affirmative action
- go play paintball, friendly fire, make a pack of twelve yr olds cry (realize you have a dormant violent streak, it’s probably nothing)
- hit on the intern
- fire the intern
- see how much you can eat
- blind swipe tinder, no bites. Blind swipe grinder. You’re back at the rest stop, some guy offers you bath salts. You run into the sell sider who downgraded your long. You pretend not to know each other. You’ve all got monkeypox now
- Yolo everything in your most hairy stock
- When it doesn’t work, write a long LinkedIn post about how you had an epiphany about the soullessness of capitalism, you’re moving to Nairobi to teach English at a mission school
- your students are your world and you love to watch the spark of realization when they learn something new, you’ve finally found your place
- your best friend in Nairobi asks you for help, his parents still live in a rural village one of the last holdouts yet to be crushed by the faceless conglomerate diamond mining giant that runs west Kenya through a sickening web of bribes and corruption
- you and M’buntu are going to save his parents’ village, you start to ask around and learn that a priceless blood diamond disappeared, the company suspects the villagers, they’re turning up the heat
- your letters to the embassy go unanswered, they must be on the take. Figures.
- There’s a massacre at the village, the media blames it on an a ragtag hasbeen group of freedom fighters, the Uktu. The Uktu are nothing but mercenaries now. You know the order came from the crisp corporate offices of the mining conglomerate. enough senseless violence and innocent collateral damage. Its time to take action
- You look back at 40 stories of glistening mirror glass towering over the slums of downtown Nairobi, it looks just like it is - out of place - evil. They knew you were coming, you’re carrying M’Buntu on your shoulder, his blood soaks your shirt. You vow to take care of his parents and he thanks you with his last breath, you hear Uktu trucks on the side streets approaching. You drop him in a fountain and run for dear life
- how did they know you were coming? You didn’t tell anybody but each other and your trusted teaching assistant. The teaching assistant! You trusted him
- you kidnap his family and he reveals he knows where the missing diamond is, you don’t believe him, but he brings it back to you the next day. You kill him and the family anyway
- it feels weird to be back in the classroom bur slowly it feels normal again
- you meet the daughter of a British diplomat, she’s a nurse volunteering with refugees. That is until her father tragically died is suspected terrorist attack on the DeBeers tower. Noones claimed responsibility, you tell her it was probably the Unku and look away
- She must never know about your past. You tell her you’re a wealthy philanthropist and you’re only teaching temporarily as diligence for a charter school you’re planning to establish
- You fall for each other and she makes you feel like a green P&L, you nickname her Beat’n’Raise. It all seems so long ago
- You’ve been dragging your feet and if you don’t establish a Kenyan charter school soon she’s going to get suspicious
- there’s obviously only two options. You could sell the diamond, but it’s risky. Or you could just kill her
- You don’t want to kill Beat’n’Raise, you love Beat’n’Raise. How have you become so cavalier about life and death.
- You think back to paintball. Maybe it’s always been there. Maybe establishing a Kenyan charter school doesn’t just have to be an elaborate way to get laid. Maybe it could be your redemption.
- You go to meet the fence in Mumbai. It’s a sting, Interpol has had your phone tapped for 14 months and you’re wanted on terrorism charges
- You don’t fight. You’ve fought enough, you wonder if you’ll ever see beautiful Beat’n’Raise again
- You don’t have to wait long, she’s here, why is she here? She smirks and introduces herself as Special Agent Paloma. She says you won’t want to miss the press conference, it’s dedicated to her father
- your lawyer manages to get you moved to an American prison, its 2035 and prisons aren’t so bad. You spend all day in your cell and barely takeoff your Oculus to eat
- the multiverse is a thing now. You prefer it to prison
- In the multiverse your name in Patrice Westerloo and you sell antiques in rural Iowa. You’re known worldwide as the expert on Midwestern grandfather clocks
- The years pass and you age. You can’t afford the premium version so your avatar ages too
- at 74 you realize you’ve been running this antique shop for the majority of your life.
- Its peaceful, in the evening, the dim Midwestern dusk and the sound of your renowned collection of NFT grandfather clocks
- You listen to the sound they make tick…. Tick… tick….
- and you realize that you’ve peace with the ticks after this time
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