Wilson, Stopping the Noise in Your Head

Reid Wilson is director of the Anxiety Disorders Treatment Center in Chapel Hill and Durham and adjunct associate professor of psychiatry at the University of North Carolina School of Medicine. He’s the author of Don’t Panic, which went through three editions (Harper Perennial), and has spent most of his 35-year career working with anxious clients. I think it’s fair to say that his credentials are significantly above those of the average self-help guru. The question is what can he do for traders and investors. As it turns out, a lot. In this post I can only point to a few.

“Anxiety’s best strategy,” Wilson writes, “is to convince you to spend most of your energy worrying about how to protect yourself or someone else against harm. It scores points by getting you to worry and then step back instead of step forward into the action.” (p. 8) It gets you to play defense or, in the language of the markets, to focus on risk (viewed as a negative). It gets you pass on promising positions, to dump your winners too soon, to play too small.

We want security, we want to know what’s coming next, we want certainty and comfort. But this is impossible in general, and quintessentially so in the markets. And therefore, to become a winning player, “your job will be to purposely and voluntarily choose to seek out uncertainty and distress.” (p. 9)

Just as a fitness coach doesn’t put you on the elliptical machine on a steady incline at a constant pace but mixes things up because disruptive change builds strength and increases stamina, so a “mental” coach disrupts your pattern and gets you out of your comfort zone “to build your ego strength and your mental muscles and to increase your grit and resilience so you can handle distress and rebound after a loss. By doing all that, we will improve your performance.” (p. 170)

Put another way, “step toward, not away from, your challenges. … Think of the aphorism ‘When you’re in the jungle, run toward the roar.’ What you’ll discover over time is that when you run toward rather than away from what is difficult for you, you’ll arrive on the other side of your challenges because you’re not resisting them anymore.” (p. 182)

What does this thesis have to do with worry and anxiety, signal and noise? “Worry is supposed to be only a trigger for problem solving. It is not supposed to last a long time. But Anxiety’s goal is to get you confused as to what is a valid concern and what is noise and then to get you to dwell on the worry instead of solving the problem.” (p. 51)

Some of the tipoffs that we’re trying to protect ourselves instead of looking for ways in which we can grow are: stalling or procrastinating, becoming numb or feeling flat, retreating to a safer place, over-preparing, continually researching, continually seeking advice, checking repeatedly, seeking the “right answer,” detailed thinking through of all possible options, and worrying! (p. 101)

Wilson develops his thesis (and recommendations) over 350+ pages. There’s a lot of solid advice in this book, advice that, if followed with conviction, might actually improve one’s bottom line.