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Ah, emotions… the spice of life; they are the medium by which we experience joy and happiness, motivation, fulfillment, and self-actualization. They push us along toward our goals, and serve as a check and balance on our behavior. I see emotions as a sort of yin-yang relationship: when they are in balance, we can perform optimally. When they are not, we can run into trouble.
They are also the medium by which we experience unhappiness and despair, addiction, obsession, depression, envy, and greed. They can in turn prevent us from reaching our goals, by serving as an artificial cage, with our mind trapped within. I know that I sometimes personally feel that they serve as nothing more than a cage, and if only I could turn them off!
Part of the path toward increasing our life’s expected value (EV) is learning how to deal and manage our emotions. We are human, after all, and the vast spectrum of emotions that we experience are part of who we are.
The evolutionary advantage
Every emotion that we feel began as an evolutionary adaptation, which stuck with us since it helped increase our survival. Of course, we no longer run around in the brush, and those pressures that kept our bodies and minds in top shape are no longer around. Indeed, most of us would probably not survive if transplanted to the brush today.
Since we are no longer kept in tip top shape by evolutionary pressures and by the environment, we have to train our bodies and minds. Just as we do physical activity to train our bodies and keep them in good shape, so we have to do mental activity and mental exercises in order to train our mind and emotions and keep them in good shape, too.
The utility of emotions
Let’s look at a few big emotions that influence a lot of our behavior in many aspects of our life, including investing:
Fear
The evolutionary angle: Fear kept us from leaping into a lion’s den or into a bear’s cave without looking. Fear kept our senses sharply tuned whenever danger lurked near. Fear kept us wary and alert whenever strange men or animals appeared at the border. In short, fear kept us alive.
The good: A healthy dose of fear keeps us from taking brash action that could get us into trouble or worse.
The bad: Too much fear can paralyze us and poison our thinking process. When we get too wrapped up in fear, either we are unable to take any action, or we take the action of escape, which might not necessarily be in our best interests. A pertinent example: When the stock market crashes, it is often the best time to buy to capitalize on the pending recovery. The worst thing to do is to sell at the low. Fear, however, drives people to focus exclusively on the short-term losses, and do just that.
Envy
The evolutionary angle: Envy is what helped drive learning and growth. Whenever Grok saw that Agor was able to hunt with far more skill, he naturally felt envious and tried to learn from Agor so that he could be successful, too. This kind of envy helped increase the well-being of Grok and the whole group as well.
Envy also helped keep the resources distributed more equitably. If a few hunters were exceptionally successful, but hoarded all the proceeds to themselves, the tribe as a whole would be worse off. Other people’s envy helped distribute the proceeds more equitably, so that the tribe as a whole would have a better chance at survival. This balanced interplay between the envy of others, the hunter’s greed to keep what he earned as well as his generosity to help out his fellow tribe members, while ostracizing those who freeloaded, is what helped the tribe function smoothly and prosper.
The good: Envy can motivate us to improve ourselves in those areas where we are lacking, and can help us to improve our own situation in life.
The bad: It is often said that envy is the main driver behind the discontent and unhappiness of those in the lower income strata of society, not greed. When envy is taken too far, it becomes about dragging those higher than you down, rather than raising yourself to meet their level.
Envy, and its associated group action, redistribution, can work and can help group survival when everyone’s interests are aligned, everyone knows everyone and everyone can successfully punish the freeloaders, but it doesn’t work quite so well in a national setting where people’s interests are very different, nobody knows anyone, and where redistribution leaves some groups better off at the expense of others and at the expense of the survival and growth of the nation as a whole.
Envy can also cause someone to focus their life exclusively on trying to outspend and outcompete their neighbours, at the expense of their personal satisfaction and the happiness of their family.
Managing your emotions
In order to successfully manage our emotions, we need to accept them instead of denying them and trying to bottle them up or shut them out. Instead of saying things like “you shouldn’t feel envy and greed, if you do then you are a bad person”, we need to accept that these emotions come along with the package. To deny the existence of some of our emotions or to say that they are “bad” is to deny our nature as human beings.
We should instead work at understanding our emotions and our responses to them, and then work at training them through self-introspection and analysis, rather than shutting them out and bottling them up.
I was recently interested in this due to a very interesting conversation I had at Andrew Hallam’s blog about how emotions taken to excess can be the downfall of investors, and how otherwise very smart people can make what seems like bone-headed mistakes, due to being overly manipulated by their emotions.
I believe that it is all about keeping things in balance, and that it is important to understand why you feel the way you do, what is the cause, and then look at the situation from different angles and understand the situation better. With a better understanding of the situation and increased information, we can make a more informed decision, and our emotions will reflect this increased knowledge.
I would love to go over more emotions and more aspects of them in our lives, but I will turn this into a 5000-word post that nobody will read 
Instead, I’d like to start the discussion with you, the reader: How have you been affected by your emotions recently? Have you made any bone-headed decisions as a result of taking things out of balance? How have emotions helped or hindered you in your journey through life?
Related posts:
- A Little Capital Philosophy
- Five Personal Finance, Economic and Life Lessons Learned from “The Lion King”
- Future Imperfect: How to Prepare for an Uncertain Future
- Expected Value
- Falling Prey to Temptation: Self Control in an Age of Excess
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