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Want to survive the latest financial panic?

by | Mar 14, 2023 | News Room Media

Gaining Perspective podcast

Want to survive the latest financial panic? Separate your feelings from action

By Lori Walsh, Ellen Koester

Lori Walsh:
If you are getting nervous about the economy, now is a good time to check in with your emotions.

Here are highlights about why you might be feeling uncomfortable about your investments. On Friday, the government closed Silicon Valley Bank. On Sunday, New York regulators closed Signature Bank. California-based Silvergate was also recently shuttered. All that happened in one week.

That probably has nothing to do with your portfolio, but national news about a run on a bank makes people nervous.

Meanwhile, inflation numbers continue to cause pain in the pocketbook, and the Federal Reserve further signals about corrective action to slow inflation. That kind of adjustment has thrown markets into a tantrum before.

Add all this to what we might have learned or internalized about investing and about gambling, and you might feel the urge to make decisions based on those complex emotions and not what’s actually in your best interest.

But hold on. Is investing done right really gambling?

Let’s bring in our financial therapy expert. Rick Kahler is a wealth advisor and international thought leader in the financial therapy movement. He’s based out of Rapid City and he joins us frequently to unpack the emotional impact of money and markets. Rick Kahler, welcome. Thanks for being here.

Rick Kahler:
Thank you. How much time do we have today?

Lori Walsh:
Well, we’re building on a foundation of years of Rick Kahler segments!

Some of this has nothing to do with your investments, other aspects of it does. We’re going to zero in on this idea of investing versus gambling. Because I think a lot of people, especially from South Dakota, kind of grew up not being sure if what they were doing was financially safe — how do you evaluate that risk? Where do you want to begin with just that distinction?

Rick Kahler:
Oh, my. Well, let’s just go with that distinction because that’s something that we hear a lot. ‘Oh, investing in the stock market is just like gambling.’ And like so many things, we try to make things over-simplistic because that’s what our limbic, our emotional brain wants to do because it takes more energy to think. And I’m not being condescending with that statement. I mean, it’s actually researched that the thinking happens in the cerebral cortex and the reacting happens in the limbic system, which is way faster and much less effortful. So we really do have to unpack what is investing and what is gambling. And so there’s lots of variables here.

And if we want to get into the weeds a little bit, when we gamble, the odds of losing, your odds of losing are always 100% when it comes to gambling. That’s the way the games are constructed. Blackjack is the best game to play because over time you’ll only lose 1 or 2%. One of the worst games to play is keno or the slot machines where your chance of losing is up to $50 for every $100 you play.

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