Read

September/October 2002 Living Now
Money and Spirit

by Fred Brown

The stock market can teach us many life lessons if we are open to learning them. This thought runs through my mind as I review a case of a couple I worked with who had suffered severe losses in the recent stock market decline.

Terry, the husband of Joanna, had been playing the role of house husband taking care of their two young children. He got caught up in the stock market because he thought he could make some easy money. When the stock market collapsed, Terry became so despondent that Joanna asked him to come with her to see me for some counseling. "It looked so easy," Terry said, as the couple took their chairs in my office. "All my friends were telling me of how much money they made trading stocks on the internet and I couldn’t resist trying to trade for myself." "I can believe it," I replied," I have tried to warn many clients that making money trading stocks is not simple especially in the markets we have today which are so volatile. I would tell them that even with my many years of helping clients invest; I wouldn’t feel comfortable trading stocks in this market. But they wouldn’t listen to me. They also couldn’t resist." I paused and then continued. "Terry, why do you think losing money this way made you so despondent?" I asked, "We all feel badly when we lose money, but Joanna said you went into a real funk."

Terry thought for a while: then looked at Joanna sheepishly. "I think it’s tied to my feeling a lack of self-worth," he said. Terry explained that ever since he had taken on the job of house husband, he had felt sort of emasculated, and jealous of Joanna who earned a large salary. He had been brought up to believe that it was the men in the family who made the money and the women who took care of the children. While he had always told Joanna that his role didn’t bother him since he loved taking care of the kids, in truth, he had never been able to shake off his family’s belief, and it made him feel inadequate not to be the bread winner. Joanna looked surprised. I could see she wasn’t aware of Terry’s feeling this way. Terry continued; since he knew that he wasn’t good at making money, when Joanna suggested that he take care of the children, he was glad to do it. He tried doing a few part-time jobs while he stayed at home to make a financial contribution, but they didn’t work out. When the stock market craze came, he couldn’t resist getting in it as he saw his chance of redeeming himself.

As he didn’t have any savings, he had to borrow against Joanna’s stock account to get the funds for investing. At first he made $20,000 on paper, but when the market declined he had paper losses of over $70,000. He had felt so guilty at losing Joanna’s money, he couldn’t talk to her. But in retrospect, he felt the losses weren’t the real cause of his depression. It was the feeling of inadequacy at once again failing to be a breadwinner. Once Terry was able explain himself to Joanna, he felt much better. In honestly confronting his feelings and his self-worth issues he realized the folly of chasing after money in the stock market when he had no experience in investing and that caring for his kids was more important to himself and Joanna than being a bread winner.

Joanna also had her lessons to learn. She had always been intimidated by the stock market and had never paid much attention to her stocks. Her father had given them to her with the warning that she should never sell them.

Before he gave the stocks to Joanna, her father had held them for over 30 years and had made a lot of money on them and was convinced that the best way to invest was to buy and hold. Joanna used his caveat "never to sell" as her excuse for not selling her stocks although she admitted that it was really her fears that prevented her from making any stock changes. When Terry wanted to buy stocks she wouldn’t let him sell the stocks she owned and use the proceeds to invest. Instead she agreed to let him use her stocks as collateral in a margin account. Using this account he could borrow 1/2 the market value of Joanna’s stocks.

When the stock market went down she did what she always did: "she put her head in the sand", as she said, and even when Terry showed concern over the stocks, she never looked at them. When Terry finally got her to look at the losses he had accumulated, she was horrified since both her stocks and his stocks had gone down. Only her concern for Terry prevented her from hurling judgments at him. As Joanna examined her fears about the market in our session, she realized that she was partially responsible for the losses since she failed to monitor the stocks herself and take any action on them. When she learned why Terry had gotten into such a depression over the losses, she was more than willing to forgive him. Moreover she felt she had learned a big lesson about her need for taking responsibility for her stocks not just to protect against further losses, but to help her overcome her fears of the stock market which often spilled over into fears of managing her other finances.

Since the stocks Joanna owned had declined almost as much as the stocks Terry had bought, she knew that she had to let go of her father’s caveat "never to sell" since her losses would have been much less if she had sold her stocks and let Terry use the proceeds to buy his own.

For me it was nice to see Terry and Joanna hold hands as they finished our session. The session had obviously brought them closer together. Just as they were about to leave, Joanna said with a smile. "And what do you think is our big lesson in all of this? I laughed and said " That losing money in the Stock Market isn’t as important as maintaining your love." If you have had losses in this recent stock market sell off, don’t feel guilty about them. Realize that when the stock market goes down as significantly as it has, it takes its toll on almost everyone. Review your portfolio objectively with your broker and advisor and don’t be afraid to make appropriate sales and purchases. See if there are any lessons you need to learn from your losses, and act on them.

Whatever you do, don’t panic and keep your center.