The Day I Felt Like a Failure Every Time I Had an Unrealized Loss—Taking Distance from Self-Criticism [Investing x Psychology]
I was blaming myself before the unrealized loss
When I first started investing, every time I had an unrealized loss, before blaming the stock itself, I would often end up blaming myself.
For example, when I opened my account on my smartphone during my lunch break at work.
The stocks I held, which I hadn't been that worried about in the morning, had dipped slightly by noon, and the valuation had slowly decreased.
Even though it was only a few percent, only a matter of a few tens of thousands of yen, just seeing those red numbers would sometimes make my mood suddenly heavy.
It wasn't as if some major bad news had come out right then and there.
The premise of the financial results hadn't collapsed either.
In the long run, it's just a price movement along the way.
I know that in my head.
Even so, I would carry those numbers with me long after I closed the screen.
Even while working in the afternoon, somewhere in my head, words like
“Why did I buy it then?”
“I should have waited longer.”
“I’m doing the same thing again.”
would flow through my mind in small whispers over and over.
Moreover, what was painful wasn't the unrealized loss itself, but the fact that it would immediately turn into a discussion about my own personality and judgment.
Instead of “This stock is down,” it would quietly shift to
“I am a failure for buying this stock.”
Thinking about it now, I think I wasn't really watching the market, but rather using the red numbers as a trigger to start criticizing myself.
Today, I want to talk about this “psychology of being prone to self-negation due to unrealized losses.”
The movement of the heart—unrealized losses can erode the heart more than numbers
I think it is natural to feel down when an unrealized loss occurs.
The problem is what happens after that.
In my case, at first, I would just think, “This is unpleasant.”
But if I left that emotion as it was, it would gradually stop being about the market and start being about me.
From “This stock went down” to “I was naive for buying this stock.”
And from there,
“It was like this before too.”
“I misjudged it that time as well.”
“If I fail this time too, maybe I’ll be a failure forever.”
And then, even my past failures would start to line up neatly.
Even though it's just one unrealized loss, in my head, it can sometimes become like a compilation of my failures.
Moreover, at times like these, it's easy to become concerned about other people's success stories.
My own account is red, but someone else's profit report looks strangely vivid.
Then, more than the fact that it went down, the pain of comparing myself is added, making it easier to blame myself more than necessary.
The psychology behind it—linking results too closely to one's own value
I believe there are several layers of emotional movement overlapping here.
One is that the pain of a loss is felt more intensely than the joy of a gain.
When I have unrealized gains, I can think of them as 'still subject to change,' but when I have unrealized losses, they feel strangely real.
Because of that, my heart reacts more strongly than the numbers themselves.
Another is linking results too closely to one's own self-worth.
In investing, no matter how carefully you think things through, you can still be wrong.
There is the market environment, interest rates, and exchange rates.
There are many factors in the market that are beyond my control.
Even so, when I see an unrealized loss, I sometimes
'I am losing'
↓
'My judgment was wrong'
↓
'Therefore, I am a failure'
and connect them all at once.
But in reality, having an unrealized loss at a certain point in time and a person's worth are completely separate things.
The fact that these two are so easily linked is what makes this psychology so difficult.
The scary part—becoming afraid of yourself before the market
The scary thing about this psychology is that it doesn't end with just feeling down.
Once you start blaming yourself, your decision-making axis becomes prone to shifting.
Even though I really want to see if 'the premise has collapsed,' before I know it,
'I just want to end this feeling of losing money'
'I don't want to get hurt anymore'
becomes the standard.
As a result, I might want to let go of stocks that haven't even collapsed yet, or conversely, I might want to make reckless 'averaging down' trades because I don't want to admit defeat.
And in the moment, that can even look like a calm judgment.
The stronger the desire to escape the pain, the more likely the judgment is to lean toward 'running away' rather than 'analysis.'
Even if an unrealized loss is temporary, the connection of unrealized loss = I am a failure is likely to remain for the next investment.
I feel that this is scarier than the amount of money itself.
Countermeasures—viewing unrealized losses and yourself separately
What made me feel a little better wasn't trying to eliminate unrealized losses, but trying to view unrealized losses and myself separately.
The first thing I became conscious of was writing down only the facts.
What went down and by how much?
Have the performance or premises collapsed?
Or is it just the market environment or temporary supply and demand?
When I think only in my head, it's easy for my self-evaluation to get mixed in, so I first try to separate what actually happened.
Next is separating judgment from personality.
Reviewing your decisions is necessary.
However, that means looking at whether the reason for buying was valid or if the current premises still hold, and there is no need to extend that to thinking, 'I am a failure as a person.'
Just not mixing these two up makes a big difference.
And another thing, not rushing to conclusions on tough days was also important.
On days when my heart is worn down by unrealized losses, my perspective tends to narrow.
If I try to reach major conclusions on such days, I am more likely to lean toward pessimism than necessary.
Recently, on tough days, I just acknowledge that 'today is a day when my heart is tired' and sometimes postpone making conclusions.
I feel that even just doing that weakens the momentum of self-criticism a little.
In summary
I think it is natural for unrealized losses to be painful.
The feeling of money decreasing weighs heavily on the heart all by itself.
But you don't have to criticize yourself for it.
Having an unrealized loss and your own value are two different things.
There are many waves in the market that you cannot control yourself.
Even so, we sometimes take on too much responsibility for everything.
That is why I think it is important to keep a little distance between the numbers and yourself.
You can reflect. You can review.
But you don't have to judge yourself while you are hurt.
On days when I see unrealized losses, I want to quietly remind myself of that.
To everyone who has read this far
There was a time when the process of starting to blame myself for the unrealized loss was more painful than the loss itself.
What kind of words tend to come to your mind when you have an unrealized loss?
If you'd like, I would be happy if you could share in the comments if you have ever experienced such a situation (^-^)