Force for thought — 21.02.25

To Have and To Hold

How do you hold onto a good thing and not let it go before it has time to work its magic? By mobilising a method that works. No one is insulated from the challenges of sticking with something promising — not a diet, nor an exercise regimen, or even a first date — the moment it becomes uncomfortable and hard. Why should investing be any different?

We’ve collected more than four million data points that demonstrate how a particular methodological communication enables investors to hold on for the ride. The proof stretches beyond investing: our ability to hold on when we least want to — in order to withstand things that can cause our undoing — has application everywhere. Each week, we’ll show how and why a mechanism for holding on, in investing and in life, is so powerful.

Zooming in

At the University of Albany, a study was undertaken to determine the costs of exercising self-control when it came to alcohol consumption. First, participants were asked to sniff water and/or alcohol. Then, they completed two self-control exercises: stopping themselves from responding when a tone sounded, and squeezing a handgrip for as long as possible, before repeating the exercises again with the alternate drink. Afterwards, they were tested for mood, arousal and urge to drink. Their assessments were revealing: after sniffing alcohol, the urge to drink alcohol was greater and the overall performance of participants in the self-control exercises was worse, irrespective of mood or arousal. But they hadn’t had a sip of alcohol! So, how is this possible? The experiment showed that the mere exposure to a cue (the smell of alcohol) that required participants to effortfully resist temptations (avoid drinking) diminished their capacities to behave effectively.

So, what does this mean for investors? Every day, investors confront an environment that is filled with cues which can derail them at any moment, and which reinforce the “negative relationship between resisting a temptation and subsequent self-control”. Outside of controlled experiments, pervasive drinking cultures make the removal of common cues near-impossible — and, similarly, the noise surrounding the stock market is hard to avoid and drown out. Doing so may also require immense (and impractical) effort, which can be costly. Instead of managing for self-control (very hard), it is better to implement effective and routine methodologies, like Force500’s feedback system, which enable investors to plug in to the information cues they need in order for them to succeed with their investments. In the real world, we cannot remove or control for the turbulent investment environment, however by shifting individual focus away from self-control to habitual and incremental progress, we can maximise the likelihood of success.

To Have on Hand

Proactively electing to tune in to certain information cues can vastly impact our outcomes — and will have far greater payoffs than attempting to inhibit behaviours or urges when they arise. American philosopher and psychologist, William James, articulates this neatly: “… we must make automatic and habitual, as early as possible, as many useful actions as we can… The more details of our daily life we hand over to the effortless custody of automatism, the higher mental powers of mind will be set free for their own proper work.”