How Your Anxiety is Affecting Your Life
Sometimes when my husband isn’t home at the expected time I assume he’s dead on the side of the highway being eaten by wolves.
So far, this hasn’t happened (but that doesn’t mean it won’t).
Hi, my name is Nicole and I am a Catastrophist.
Catastrophisizing is but one of many cognitive distortions we all fall prey to from time to time, sometimes on a daily basis.
Psychologytoday.com defines catastrophizing perfectly into two parts so I’m quoting them:
Part 1: Predicting a negative outcome.
Part 2: Jumping to the conclusion that if the negative outcome did in fact happen, it would be a catastrophe.
It’s interesting that anyone thinks like this because it so obviously doesn’t serve us, either in leadership or in our personal lives. Yet we do, because we want so badly for the good to happen, that we put equal amount of energy into fearing the worst might happen too.
Catastrophizing is – excuse the redundancy – catastrophic for leaders. As a leader you need to be a beacon of resilience. And unfortunately…
Excessive Worrying Reduces Resilience
One of the most important traits for a leader is resilience. Inherent in leading, building teams and building a business are setbacks. Actually “setbacks” has a negative connotation to it; really what we should call them are “events that happen that move us towards the events we’d rather happen.”
It’s part of the game. It’s actually part of life in general and resilience is crucial for your personal life too, but when it comes to leadership, resilience or the lack thereof can make or break you.
You therefore want to build an arsenal of tools that support the tendency of resilience. You want sleep, exercise, a good diet, recuperation time, and a growth mindset to focus on challenges as opportunities.
The irony about anticipating stress is that it creates stress, so you immediately bring into your life the very thing you’re trying to avoid when you worry that it will come into your life.
Assumptions and expectations that cause anxiety arise from our past experiences, what we witness from other people’s experiences, and what we see in society from film/TV/books/magazines/etc.
You might have been fired in a past job and assume you will be fired in your new job. You might have seen someone else get fired and assume you will also be fired. You might have seen someone in a movie get fired for something similar to what’s transpiring in your own life and you assume you will be fired too.
These are all fictions and fiction never fully reflects reality.
Furthermore, the future is a landscape that doesn’t exist. Worrying about the future is the same thing as worrying about anything that doesn’t exist. Would you worry that you’re never going to get to visit the country of Alparnia? Probably not, because it’s a country that doesn’t exist.
Keep your mind focused on what exists, which is the moment you are living. It is the only timeline you can control. This will help build a resilient attitude, which will in turn:
- grow your self-confidence
- give you a flair for adaptation and flexibility
- cultivate the belief that you can influence life events
The Benefits of Anticipatory Anxiety
- Makes you feel terrible
- Creates the reality you fear most
- Raises your blood pressure, stress level, and can lead to disease
- Stresses out everyone around you
- Makes you look incompetent, non-resilient, and fearful
- Emotional contagion will spur others to leave you
Obviously none of these are benefits, but I wanted to label them as such to shine a light on our flawed thinking.
There’s an illusion of strength with your anxiety, that it is giving you control over the eventual outcome. Somewhere in the back of your mind you think “If I worry over it I can effect the outcome I want by thinking of everything I need to do to make sure what I don’t want doesn’t happen.” This is neurotic behavior that only attracts what you don’t want, because you’re only focusing on what you don’t want.
What you do want is nowhere in the equation.
Would you go about making a cake by focusing on all the ingredients that you wouldn’t want to be in it? You’d never make a birthday cake with broccoli, cumin, beef, sesame oil, and a microphone. At least not for someone you love.
Worrying about what you don’t want to happen is putting all of the aforementioned ingredients into a bowl, stirring them together, and putting it in the oven, all the while saying, “I hope I don’t make this cake.” And the only thing you’re doing is making it.
Why some of us are prone to anticipatory anxiety and excessive worry comes down to our core beliefs, which I wrote about here.
How to Deal
- Take a moment to stop the train. You may have to forcibly take a moment to stop doing what you’re doing and just pause. Sit, breathe, close your eyes, and project what you want coming true rather than what you don’t want.
- Find Something Immediately that Makes You Happy. It can be a video, a picture, a memory, it
- doesn’t matter, just go there mentally, visually. You need to replace the anxiety with different thoughts. For me, it’s animals.
- Full Steam Ahead. The best method is to proceed as though catastrophizing is something you’ve never even heard about. Make small choices towards your goals; keep putting one foot in front of the other towards the end game. This helps focus on the here and now while simultaneously keeping the anxiety at bay. What you don’t want is to sit in a chair ruminating without taking any action and/or taking preventative action towards a reality that doesn’t exist.
- Make the Choice. The easiest and hardest part of moving past your anticipatory anxiety is making the choice to move past it. You have to want to move past it; you have to consciously choose happiness over suffering; resilience over stagnation; growth over regression; peace of mind over anxiety. It’s a choice, and the good news is you always have that choice available to you. Make little choices rather than huge sweeping ones. So, agree with yourself to make the choice not to have anticipatory anxiety. It’s not easy, and it’s not an immediate cure, but it’s a start.
Let go of the delusion that your worry is controlling the external world and creating desirable circumstances. Worry is not control.
The solutions, as the saying goes, “are in your head.” You may not permanently solve your catastrophizing, but you can learn to deal with it more effectively.
Sizing up Strategic Beta
Interest in strategic beta ETFs is rising. A few simple guidelines can help investors pick from among the often-bewildering number of options.
The number of strategic beta ETFs has grown at 20% a year, consistently in good markets and bad, since the year 2000. With good reason: Strategic beta ETFs offer a more thoughtful passive option than cap-weighted indexes—and they can do so with a more transparent process and lower fees than actively managed funds.
Bright future, dim past
All well and good, but how should investors assess any particular strategic beta ETF? Close to 40% of these funds have been in operation for less than three years. This lack of an established track record can make it hard to validate their claims. ETF sponsors may try to make up for that shortcoming with back testing, running simulations of holdings they might have had against actual past market performance, but that has its limitations:
Back testing doesn’t always account for fees, liquidity or transaction costs.
Back tests are “selection biased”—that is, back testers have a tendency (conscious or not) to engineer positive outcomes. Live outcomes are therefore likely to be inferior.
Too great a focus on recent history can lead to “driving in the rearview mirror.” While an index or ETF may solve the problems of yesterday well, an investor’s focus should instead be on solving the potential problems of tomorrow.
Three steps to an informed judgment
Because the indexes tracked by strategic beta ETFs are by design somewhat exotic, effective assessment of them calls for some digging:
- Investors first have to understand who the index designer and asset manager are (they may not be the same people). They should have a clearly expressed investment philosophy and the expertise to enact it in practice.
- The properties of the portfolio should reflect the investment philosophy. Not only does the transparency of ETFs allows examination of the holdings to ensure that this is the case, it also measures such as active share relative to a cap-weighted benchmark or turnover can indicate whether an ETF is performing as designed.
- Performance can also be used to confirm that an index is doing its job. While short-term results shouldn’t be given too much sway, the index designer should be able to explain when and why an index will perform and when it might not.
One key aspect of performance shared with traditional passive management is tracking error. Like earlier cap-weighted index tracking funds, strategic beta ETFs should have minimal tracking error to their own indexes. Beware, though, the tracking error to the benchmark can be large and dynamic, it is by this differentiation that strategic beta adds value.
Made to measure
Strategic beta does not defy analysis, despite its novelty. Indeed, it has a lasting advantage over standard active manager due diligence. Strategic beta, after all, is rules-based. What an investor sees in straightforward, well thought-out index composition rules is what the investor will get. In that sense, strategic beta is relatively immune to the personnel changes, style drift and index hugging that can challenge actively managed mutual funds.
Learn more about ETF due diligence here.
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor’s own situation.
Opinions and statements of market trends that are based on current market conditions constitute our judgment and are subject to change without notice. These views described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. ETF shares are bought and sold throughout the day on an exchange at market price (not NAV) through a brokerage account, and are not individually redeemed from the fund. Shares may only be redeemed directly from a fund by Authorized Participants, in very large creation/redemption units. For all products, brokerage commissions will reduce returns.
J.P. Morgan Asset Management is the marketing name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. J.P. Morgan Exchange-Traded Funds are distributed by SEI Investments Distribution Co, One Freedom Valley Dr., Oaks, PA 19456, which is not affiliated with JPMorgan Chase & Co. or any of its affiliates.
For additional disclosure
For a longer discussion, please see our recent publication Strategic Beta’s due diligence dilemma (J.P. Morgan, April 2017).
- 1 of 1397