What Is Emotion Regulation?

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Emotional regulation is as vital as financial knowledge for sound investment decisions.

Urgency and fear often masquerade as actionable information during market volatility.

The illusion of control in finance can be costly and fuel unnecessary stress.

Many of my entrepreneurial clients have recently come to my practice wanting to work on money. The more I’ve sat with them, the more I’ve noticed that making sound financial decisions often requires some of the same skills we try to develop in therapy: strong relationships, patience, self-awareness, emotional regulation, and tolerating uncertainty.

The strongest example of this goes back six years, when COVID was ramping up in late March of 2020, and financial markets were tanking. I remember when my dejected client described the moment he sold everything. He pops in for a therapy tune-up roughly yearly and, despite his progress, still laments how hard it is for him when markets dip; he knows markets tend to recover, but he still couldn't help himself in 2020.

In hindsight, he was referring to emotions and fear much more than money: needing to do something when a feeling becomes unbearable. It is a posture I see in couples struggling to slow down to attune to each other, and trauma survivors struggling with the uncertainty of what may arise during trauma reprocessing. The stock market was where my client's fear most showed up.

I am not a financial advisor. But after spending decades learning about investing, often the hard way, I began noticing that aspects of clinical training explained many of my own and others' financial mistakes and successes potentially better than traditional finance principles did. Here is how I think that translates to your portfolio.

1. Time in the market is partly a distress tolerance skill. The longer we stay invested (such as in index funds like VOO, VT, or VXUS, for example), the better we’ll do in most cases. As Buffett repeatedly said: "The stock market transfers money from the impatient to the patient." Trying to time the market can be seductive, just like an anxious person’s impulse to check their phone one more time or a couple's impulse to have the........

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