Language is powerful. Oftentimes it gets lost in subtlety. During your next conversation listen for whether the person says, “I think” or “I feel.” It’s quite telling.

Feelings are great. The beauty of humanity is we experience emotion. Thoughts are great too. The beauty of humanity is we are capable of thought without limited capacity for doing so (well, at least some of us – ha!).

When financial markets rise do you think or feel about what investment decisions, if any, you should be making? When financial markets fall do you think or feel about what investment decisions, if any, you should be making?

Consider this graphic. Do you find yourself falling into the emotional camp or the logical camp?

The downside of being human is we have biases. Here are some that infect our ability to make logical decisions – investment or otherwise:

RECENCY: Extrapolating the recent past to ‘validate’ that a stock plunge or meteoric rise will continue.

CONFIRMATION: We seek support for opinions while discounting contrary evidence.

HERDING: We’re not contrarians no matter how much we delude ourselves. We don’t want to be left behind and, similarly, our pain is lessened if others suffer the same fate.

With year-end fast approaching we’ll undoubtedly be deluged with ‘important’ data. The Fed might raise rates, China might slow down, ISIS might strike again, holiday sales might disappoint, etc. Are these actionable? Unclear. If action is warranted should it be grounded in our thoughts or our feelings?