Published December 29, 2025
“Your social personality is at stake.”
That, from my first branch manager, the guy who hired me into the business (to whom I will be forever grateful). Chester was a kind of Casey Stengel character, an old school trader from Brooklyn who could always be counted on for a Stengel-like comment. Back in the day, we had no training schools. You got the books to pass the Series 7 licensing exam and once in, your education came from hob nobbing with the brokers in the office, reading on your own and for me, listening to Chester Stein.
His comment was in response to my consternation over a stock I had picked for clients that was not doing well (remember, this was 1981 or so). I was on an emotional roller coaster and just didn’t know what to do about that. I felt guilt at my clients’ losses. While the stock was down 50%, the allocation was small so the overall effect was not debilitating but clearly called into question my judgement. I felt I had let my clients down.
Of course, these are normal growing pains for a professional. And if you don’t take these things personally, at least early on, your inability to feel the pain of the client loss points to troubles down the road for you.
And what was between my ears was confusion.
What he was saying was to pull out of my mind my personal issues. Whether a bad pick would hurt my business, cost me clients, lower my standing among my colleagues and the public. Take out of the decision process the things that really were of no consequence to the actual decision to be made…buy/hold/sell. All of that was independent of my personal issues.
What was important was to focus on the stock itself and look with a clear and cold eye at it and make the call. But that was quite impossible as long as I was in that mélange of doubt and personal malaise. Because my decision might be overly influenced by killing off my own pain, not what was purely good for the client.
Now we live in an age where chat rooms are widely used. Indeed, as we saw in the meme frenzy that erupted around Gamestop, they can be very powerful forces…investors ganging up on a name and pushing the issue. Personally, I have no issues with that. I think people should be free to invest as they see fit, and if some believe that the social interaction with others helps them, by all means.
But just to say, that ultimately, I do not believe it does.
In addition, we have the inevitable chatter among people about their stocks. What they own and why they like it or whatever. As a professional, you might assume that people ping on me for my opinion, they want to hear how I feel about something. Well, here is how that goes.
First, when markets were doing really well, and people found out what I did, some would ask my opinion about the market. This was especially so at the bar in any hotel/club/restaurant/party. It substitutes for talking about the weather with the added glow people have when their profits are expanding.
Now I have a rule about all of that. My clients paid me for my opinions and I felt it was not a particularly respectful thing to then turn around and give that away for free. But you’re stuck, right? You don’t want to be a jerk, but you really don’t want to answer the question either. So, I would always say something that really imparted no opinion at all.
“Well, it’s a difficult situation and I think bears close watching. Just very uncertain.”
Now you would think that would close the door on it (take the hint, buddy) but most often what you get is this:
“Hunh. I guess. But let me tell you what I think…”
That is, the question wasn’t really posed to generate an opinion they would consider deeply and then perhaps act on. It was really just their way of saying they were really excited about how well they were doing and they wanted people to hear about it. Because inevitably, the response tended toward a kind of how-smart-am-I story about some stock they picked and owned, with always a dash of self-depreciation. “But it could go south tomorrow! Hee-hee-hee.” So, the ask was merely the prologue to their monologue.
When the market was really lousy, the narrative changed. Same question (generally, what did I think about the market). But this time, I had a listener on my hands. That is, they were presumably taking losses that concerned them (their facial expression said that) and they needed some hand holding. But my response changed in that situation.
“Well, if anything you want to be sure you’re controlling your risk.”
Actually you need to control your risk before the risk emerges, but that would get into a kind of tsk-tsk-tsk admonition and I always reminded myself that my clients were paying the tab for my breezy conversations at the bar. But it was good advice (I do have a conscience) but not specific and into the sauce of what I/we were doing at the time.
You see, this all points to a destabilization of rational and cogent investment analysis. Once you begin to feel the need to tell people about how you’re doing, or what you have, your emotions have shouldered their way into your thought process to a significant enough extent they will skew your judgment. And emotions in play are not a positive for judgement.
More, if you talk about whatever is in your investment portfolio, your social personality is at stake. Let’s say I see you at the bar and I’m a friend and you tell me how well you’re doing with XYZ. Worse, you advise that I could “do worse” than to buy it. Later on, you learn that I did! Initially flattered and happy to share the wealth!
Two weeks later, XYZ has suddenly dropped 10% on some product issue and I nervously ask you what to do about it. Now you, yourself, you want to sell the stock. But being an honest person with a well-developed guilt complex, you’re suddenly stuck. If you already sold it, then what about your friend who you just told to buy it? If you’re ready to sell it, are you ready to tell him to do the same and memorialize a 10% loss?
Quite suddenly, you’ve added your relationship to him, and his portfolio onto the rest of the things you have to consider. It is my best guess that you’re not going to lie to him (say, sell and not tell him) and your most probable course of action will thereby be to hold onto the position. Your instincts were to sell, but you’ve just sabotaged yourself.
We’ll round the bases next month and complete the thought about talking your book. How to handle all of that.
