It's been a difficult year. From Sept. 11, to the anthrax scare, to the war on terrorism, we've been stressed to the max. Now, to top it off, we're watching the stock market take a wild ride while we hang on for dear life. The ups and downs (OK, it's really the downs we're concerned about, isn't it?) of the market may be unavoidable, but your stress level isn't. Mental health and financial experts alike say both your mind and your portfolio can weather this latest blip on the ticker tape.
The first step to getting a grip on your "stock market stress," says John Alexander, PhD, is to "unglue" yourself from all the information that's out there. In other words, turn off the TV and shut down the computer. "There's a temptation in times of high market volatility to keep that ticker rolling," says Alexander. "But it's in these times particularly when it's best not to spend too much time following the market.
"Be aware of the data, but not so aware that you're reacting to every gain and loss," says Alexander, Breazeale Professor of Finance at Clemson University in South Carolina. "When you do that, you have a tendency to make hasty decisions. Instead, leave the house, get up from your desk, go out for lunch, don't look at the TV first thing in the morning or last thing at night. Distance will give you perspective."
Alexander's second tip: "Think twice before you follow the herd." Avoid the knee-jerk reactions of other investors. "If you hold off from making a quick decision, things can change," he says. "If you do what everyone else is doing (which, in this kind of market, usually means selling), you're running up your stress as well as your commission charges."
Third piece of advice? Do your homework. In the '90s, says Alexander, we could pretty much follow whatever advice our financial analyst gave us and come out OK. Now, it's time to do our own research. "This doesn't mean you have to do it all yourself," says Alexander. "But you do have to ask your financial planner questions. Why is this a good company? Do you have information I can read about it?" If you do your homework, you'll have more faith in yourself, in your financial adviser, and in the market.
Alexander's last tip? "Keep a historical perspective. Since 1926, the stock market has returned, on average, slightly over 10 percent a year ... and that takes into account the crash in the '30s.
"We got spoiled in the '90s with 30% years," Alexander says. "And 2000 and 2001 were not good years, but when we get to 2005, I'm confident we'll maintain our historical average."
Elisabeth Plax, CFP(R), PhD, a certified financial planner in Cleveland and a former mental health counselor, agrees with Alexander. "The market will bounce back," she says. "It's always been on an upward scale." If you want to avoid this kind of stress in the future, says Plax, get back to basics of managing your finances.
As with any relationship, Plax says, the one between you and your financial advisor should be one of open communication. "This is a partnership," she says. "If you haven't heard from your planner, pick up the phone. He or she will help you weather the storm ... whether that means financially, or just giving you the reassurance you need."
Stock market fluctuations may not only be leaving your portfolio bruised, but your general outlook on life as well, says Len Tuzman, DSW, director of social work at Hillside Hospital in New York. People by nature want to have control over their environment, says Tuzman. In the absence of control, we tend to second-guess our decisions, feel anxious, and blame ourselves -- or anyone else we can think of.
"The downturn in the market has had a real impact on life choices and decisions," says Tuzman. "For many people, life plans need to change." That may mean not being able to retire early, or in Tuzman's case, not being able to give up his clinical work and pursue an academic career.
"There's a lot of soul-searching and belt-tightening going on," says Tuzman. "That can affect your mood and your general attitude."
But this period of uncertainty can have an upside, says Tuzman. Now may be the time to take personal inventory of which qualities in your life, aside from money and material possessions, are important to you. "Crises can move people to a better level of well-being," he says.
Now is also the time to re-energize and to reinvigorate, especially if retirement does not look like it's around the corner anymore. "Develop new challenges and new interests," says Tuzman, advice that he has taken to heart himself by beginning new projects at work. "I'm getting interested and excited about new things."
He's also doing what he can to stay on top of the financial situations that he can control. That means no new car, consolidating credit card debt, indeed, not using credit cards at all. Contrary to what we've been told, says Tuzman, "it's not unpatriotic to tighten your belt. You have to take care of yourself."
Part of taking care of yourself is watching your health as well, says Ken Siegel, PhD, a management psychologist and CEO of The Impact Group Inc., in Beverly Hills, Calif. "Get your exercise, take your vitamins, watch your diet," he says. "Anything you can do to keep yourself physically healthy helps you withstand stress."
But remember too, Siegel says, that stress -- on a short-term basis -- is not a bad thing. "Stress is your body's natural response to some type of change. Stress is healthy. It's a wake-up call that something has changed." It's when stress becomes prolonged that it becomes distress, says Siegel.
To deal with this short-term turn of events, acknowledge that you're part of something that's bigger than you, Siegel advises. And realize that you're not alone. Almost everybody is in the same situation. "Commiserate. Social support is a great way to deal with stress."
Don't let stress turn into pessimism, Siegel says. Make a list of ways you can deal with your financial situation. Can you get a part-time job? Can you offer your services as a consultant? Can you seek the advice of a financial planner? "Just coming up with ideas -- even if they're not all practical -- makes you feel that you're more in control," says Siegel.
It's also important to have fun, Siegel says. "Every day, do something that you really enjoy. See a movie, go for a ride in a rowboat, make dinner for someone you love."
And finally, says Siegel, as difficult as this may be to hear, keep in mind that you will have the opportunity to make things different in the future. "If you and your family is healthy, you have what's most important."
All the rest? "It's just money."
