Procrastination is an investor’s worst enemy

James Gruber, assistant editor for Firstlinks and, looks at the science behind procrastination and what you can do to overcome it.
By Morningstar | Mar 20, 2023

I was talking with a work colleague in December, and we were consoling each other about the performance of our personal investment portfolios last year. He mentioned that he regretted not partially selling stocks he held at the start of 2022. He knew the stocks were overvalued but he liked them and put off selling anything. The market went down and by then it was too late.

My colleague’s dilemma is common. It’s often the investment decisions that we don’t make which we come to regret the most.

Why do we delay making decisions, sometimes forever?

Let’s first explore the science behind botulinum toxin, otherwise known as Botox, for some clues.

Botox and emotions

Originally developed to help people suffering from facial muscles spasms, Botox has become one of the world’s most popular cosmetic treatments. It works by paralyzing the nerves that cause the muscles in the face to contract.

In the early 1990s, researchers found that injecting the chemical into the frown lines between the eyes caused partial paralysis of the forehead - it reduced wrinkling.

A scientist at Barnard College in New York, Joshua Ian Davis, wondered whether Botox could change a person’s behaviour. If you immobilize part of the face, could that reduce the emotional experiences that you have?

The theory harkens back to the 19th century American philosopher and scientist, William James, who believed that thought and emotion didn’t precede action, but followed it. James surmised that you didn’t think and then act, but you acted and then formed a thought about that action. The same went for emotion.

Davis tested the theory on two groups of women. One group had just undergone Botox treatment, while the other group went for an alternative treatment that involved injecting a filler into the forehead. Both treatments sought to give a more youthful appearance, but only the Botox paralysed the facial muscles.

Davis asked the women to watch several video snippets: a serious documentary on Jackson Pollack, a humorous clip from America’s funniest videos, and a stomach-churning video of a man eating live worms. After seeing the videos, Davis asked the women to rate how they felt. The women who’d undergone Botox reported less of an emotional reaction to the clips compared with the group who’d had filler treatment.

The conclusion? Immobility causes a loss in emotional experience.

The Zeigarnik Effect

If actions can precede emotions, what about thoughts? In the 1920s, a young Russian psychology graduate, Bluma Zeigarnik, sought an answer.

One day, she was having tea with her university supervisor in a café in Vienna. The pair was watching how the waiters and customers behaved and noticed an interesting pattern. When a customer asked for the bill, the waiter could easily recall the food that the customer had ordered. But when a customer paid the bill, and then disputed the bill, the waiter struggled to remember anything about the order. It appeared that once a customer paid for the meal, it finalized the matter in the minds of the waiter and the details of the order were erased from their memory.

Zeigarnik went back to the laboratory to test the idea. She asked people to do a set of simple tasks, such as putting toys into a box and stacking wooden boxes. On occasion though, she stopped the participants before they had finished the task. As she’d observed with the waiters, Zeigarnik found that the unfinished tasks stuck in people’s minds and were easier for them to remember.

Zeigarnik concluded that starting an activity causes a type of mental anxiety. Once you finish a task, your mind has a sense of relief and the task is quickly forgotten. But if you don’t complete an activity, for whatever reason, then your mind nags at you until you finish what you’ve started.

Fixing procrastination

What has Zeigarnik’s experiments got to do with procrastination? Procrastination often happens because you become overwhelmed by the size of a task. Zeigarnik’s research suggests that if you just start an activity, your mind will be anxious to complete that activity.

Going back to my work colleague’s regrets about his investment portfolio, he would’ve been better off starting the sale of his stocks, even in small increments. That way, he’d have been more likely to complete the sales, rather than putting them off.

It’s often the investment decisions you don’t make that prove costly. 
  • When interest rates rise, take advantage of the higher deposit rates.
  • When there is a market downturn, take advantage of good stocks on sale.
  • When in the midst of a bull run, exit the junk in your portfolio.
  • You want to invest in the market but fear is holding you back; you’re afraid that a market downturn may be around the corner. Then, buy a small position in a fund that you selected or buy equal portions over a 6 or 12-month period (systematic investment plan, SIP). The latter is a smart way to overcome procrastination and the fears and anxieties which often come with it.
  • You need to do your investment nominations, put it on your monthly To-Do list. Start by tackling a few every month.

More on Behavioural Finance

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