behavioral psychology

An Attitude of Gratitude: Get Yourself a Slice

photo shows a small heart pendant with the words "i am grateful"

The Harvard Medical School published an essay some time ago on the power of gratitude, explaining:

“Gratitude is strongly and consistently associated with greater happiness. Gratitude helps people feel more positive emotions, relish good experiences, improve their health, deal with adversity, and build strong relationships.”

Relish, improve, deal, build… Those are verbs we can get behind! Gratitude can be about past blessings, current conditions, or reflect a hopeful and optimistic attitude about the future. One of the best things about an attitude toward gratitude is that it can be cultivated.

In one cited study, three groups of people were directed to write a few sentences each week. One group was instructed to write about irritations or things that had displeased them. The second was directed to write about things that had affected them. The third group was directed to focus on things that had happened for which they were grateful.

After ten weeks, one group was more optimistic about life, and had a greater sense of wellbeing. (That group also happened to exercise more and make fewer visits to the doctor.) You can guess which.

We believe there are interesting implications for the work we do together with you. Short-term fluctuations in the markets may cause irritation, but gratitude for long-term returns might give us a broader perspective. The economy and markets always seem to be a mixed bag, but gratitude for opportunities may help us avoid a focus on problems that might prevent us from investing effectively.

At the heart of all this is a simple truth, that we get to choose what gets our attention. Does choosing gratitude make us healthier, wealthier, and wiser? No guarantees, but we might have more fun while we find out together.

Clients, if you would like to talk about this or anything else, please email us or call.

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An Attitude of Gratitude: Get Yourself a Slice Presents: The Best of Leibman Financial Services

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Tend and Befriend

© Can Stock Photo / KalengUang

One concept we hear about in the investment and financial planning world is a real downer. This is the idea that evolutionary bias may force us into unwise decisions. Supposedly, our caveman brains are stimulated by ‘fight or flight’ tendencies in the face of uncertainty or danger.

We have always believed we can learn, we are trainable, we can use reason and logic to our advantage. In other words, there is more in our heads than caveman brains. But it still irritates us when we see the implication that we humans are doomed to stupidity by evolution.

We recently read about another supposed product of evolution, a far more optimistic and different instinct.

‘Tend and befriend’ is a concept first outlined by psychologist Shelley Taylor. It refers to the instinct to reach out to those around us, to strengthen our ties to others and to care for them when threats arise. This seems to us to be the opposite of fight or flight, and is a much more helpful concept.

We do not suffer threats from saber tooth tigers anymore, but volatility in the markets, scary headlines, and viral rumors may produce the appearance of threats and danger.

Back in the early part of my career, I envisioned having clients who, if I took care of them, they would take care of me. This evolved into the belief that the better off you are, the better off we will likely be. Now we read about ‘tend and befriend.’ This strikes me as a wonderful way to think about how we strive to work with you.

Clients, if you would like to talk about this or anything else, please email us or call.

Every Share Sold is Bought


We talk a lot about cycles, but there’s one truth to them that we could come right out and say more often: there are no ups without downs, no downs without ups. Night and day. Yin and yang. Buy and sell.

People sometimes lose sight of this reality, especially when talking about the waves of selling that engulf the markets from time to time, cratering prices. They might say, “Long term investing is all well and good, until the financial crisis comes and wipes out half your account—that happened to me.”

In the last crisis (2007–2009), the markets recovered and went on to post gains for many years. When I inquire whether their accounts have bounced back since then, some reply, “Of course not! Everybody had to sell out to save what was left!”

Life is too short for most arguments, isn’t it? We move on to other topics. But the fact remains: even on the worst days in the depths of the crisis, when the market was suffering large percentage losses, we believe every share sold was also bought. There are two sides to every transaction, a buyer and a seller. Not everybody “had” to sell out.

In the fall before the market bottom in March 2009, noted investor Warren Buffett wrote in The New York Times that the economy was likely to be larger—and company profits higher—ten and twenty years in the future.1 Therefore, he was buying.

We felt the same way.

But it may feel as if everybody is selling. In the crisis, one of you told us it was no longer possible to talk about the economy or markets at coffee in the mornings, because every single person there called you a fool for staying in or told you all your money would be lost. Another said the same thing about the Friday night dinner crowd—you felt lonely. But you persisted.

It is popular lore among financial advisors to presume that people are really not capable of investing effectively, pointing to behavioral economic studies. You know we have worked hard to find you, the exceptions: people who either have the native good sense to invest effectively or who can learn how to do it.

We believe that every share sold is also bought. We have a choice, which side of those transactions to be on. Clients, if you would like to talk about this or anything else, please email us or call.

Notes and References

1. Warren Buffett “Buy American,” The New York Times: Accessed: September 24, 2018.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing, including stocks, involves risk including loss of principal. No strategy assures success or protects against loss.


Pain Fades Away

© Can Stock Photo / pressmaster

Some pundits calculate the current run-up in the stock market as the longest bull market in history. It seems many have forgotten how tumultuous and uncertain things have felt at times during the rise.

Before the rise began, a punishing drop in the market (and investment account balances) happened, from mid-2007 to spring 2009.

Then, just a couple years into the recovery, we had one of the most turbulent periods ever. In August 2011, after dropping more than 5% the week before, the Dow Jones Average dropped another 5% on Monday, August 8. This 634-point drop was partially offset by a sharp rebound on Tuesday, a 429-point gain. Wednesday reversed again, with a drop of 519 points. Thursday’s gain of 423 points ended a string of daily moves greater than 400 points, down-up-down-up.1

Since the market was much lower then, an equivalent 4% move today would be about 1,000 Dow points! Imagine that four days in a row. We lived through it.

Why did this happen? Developments developed, happenings happened, and pundits spewed punditry. It would spoil our story to detail the details. As it turns out, they don’t matter.

We’ve been asking people whether they remember this episode. Few do. Thus our conclusion: the pain is temporary.

If you do a little math with our story, you’ll note the Dow dropped more than 10% in six days1. This was alarming to those who were paying close attention. Yet from the longer-term perspective, it probably would have been a mistake to sell at any point in there.

After all, this turmoil happened during the longest bull market in history!

The next round of turmoil is always out there. When we counsel patience, it is with the long term—and a knowledge of history—in mind. Clients, if you would like to talk about this or anything else, please email us or call.

Notes & References

1Standard & Poor’s 500 index, S&P Dow Jones Indices: Accessed September 4th, 2018.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

You Are Somebody, Not Everybody

© Can Stock Photo / Bialasiewicz

Our pursuit of effective strategies for successful investing covers a wide range of disciplines. Economics and mathematics are obviously needed, but history and psychology play surprisingly large roles.

As contrarian investors, avoiding stampedes is a fundamental principle for us. We often find ourselves going against the crowd. It turns out that there is a lot of conventional wisdom with which we disagree.

The world is complex; humans use shortcuts all the time to keep things simple enough to handle. The problem arises when characteristics of a group are ascribed to each individual within the group, as a shortcut way of dealing with people.

For example, Americans on average are sedentary and overweight. But if you watch who enters the door of the YMCA at 6 A.M., you know that the group characteristics do not apply to every individual. We use this same principle to find clients who will not sell out at low points or fall for the latest overpriced fad.

Behavioral economics indicates that humans tend to behave in counterproductive ways when it comes to investing. But just as the “Y” does not treat each member as if they were overweight and sedentary, we know that counterproductive behavior is optional at the individual level. We choose to try to avoid it.

We were reminded of this recently in reviewing some studies about happiness. The studies show that people quickly take new things for granted, homes and cars for example, so the initial happiness soon wears off. But in our experience, this is a matter of choice.

When in Louisville, I live in the humblest quarters ever since I graduated from college. I am grateful to have an abode that meets my modest needs. In Florida, my days are spent in a nice home that is wonderfully suited to our family. My gratitude and appreciation and happiness about that never flags. This just puts me right in the middle of the pack of the greatest clients in the world. (Our opinion.)

When we read studies about behavior, we will always remember that you are somebody, not everybody. Economists and psychologists can prove all they want about human tendencies, but we will not accept their findings as your fate or ours.

Clients, if you would like to talk about this or anything else, please email us or call.