Saturday, July 26, 2014

Trading and Life Satisfaction

Recent posts have emphasized the role of emotional well-being in creativity, health, and productivityWell-being is also likely to moderate the frustrations that can lead to lapses in trading discipline.  When we maximize positive experience, we broaden our thinking and build new competencies.

But what is well-being?  We commonly equate well-being with happiness, but that is only one dimension of positive experience.  Our physical and emotional energy are also crucial to well-being, helping us turn goals into achievements.  Well-being also stems from experiences of affection and the development of close, meaningful relationships.  Finally, our positive experience depends upon our level of life satisfaction.  It is difficult to pour ourselves into trading, for example, if we are dissatisfied with trading

A 2013 Pew Research poll found that 81% of Americans say they are satisfied with their lives.  Interestingly, however, only 50% rate their relationship with their partner/spouse as "excellent"; only 38% describe an "excellent" spiritual life; 28% rate their employment situation as "excellent"; 27% rate their health as "excellent"; and only 13% describe an "excellent" personal financial situation.

A tempting inference from these findings is that most people are satisfied with less than excellence.  There is, however, a different possibility.

A very interesting study found that personality changes over the lifespan--and those personality shifts are more responsible for changes in our life satisfaction than our changes in income or employment.  Indeed, changes in personality accounted for 35% of changes in life satisfaction, compared to only 4% for income and employment and less than 4% for marital status.

What this suggests is that life satisfaction may be more about who we are than what we do.  Subjects in the research study who rated themselves as less agreeable over the years also reported lower levels of life satisfaction.  Conversely, those that reported becoming more open to experience also described higher life satisfaction.

This leads to an important question:  How has involvement in financial markets affected your character?  Has trading made you a better person or a worse one?

I strongly suspect the answers to those questions are meaningfully connected to traders' life satisfaction and, ultimately, the ability to sustain a successful career in markets.  Profits from markets can make us happy, but what might be more important to long term well-being  is the perception that we are personally profiting from our trading experience.