I want to expand on my blog post from last month. The timing of that entry was strangely prescient. Since then, the U.S. stock market has entered “correction” territory with a jolting series of ups and downs. Our blog post from last week was appropriately titled “Some Thoughts on This Week’s Stock Market Roller Coaster.”

A roller coaster is an apt metaphor for investing in the capital markets. We remind people that they can’t really complain about ups and downs if they get on the roller coaster ride of their volition. We also remind them that it is always slow going up and fast going down. The stock market has been that way for as long as we have recorded its movement, but over the long run—and by that, I mean 20–30 years—investors can be rewarded with higher returns for taking those risks.

The market’s gyrations last week sparked all kinds of news articles and analyses. This week’s Time magazine had an article titled “Retiring Minds Want to Know How to Prepare for Unexpected Risks” by Walter Updegrave. He described the three risks that people who are contemplating retirement or have already retired need to guard against, and emotional risk is one of them.

This is the risk of getting carried away by your emotions and letting them sway your investment strategy. Another way to put it would be “Don’t panic and do something you will regret later.” The solution Updegrave proposed is a good one—create a written asset allocation strategy, and stick to it.

It is the emotional factor that intrigues me—our tendency to act impulsively based on our feelings. The market’s ups and downs last week happened at the same time I had been pondering the value that Aspire delivers to our clients. Why do people hire a financial planner? It is a strategic question that we ask ourselves periodically. As I thought more about it, it dawned on me that perhaps the primary value that we deliver to clients is naming and dealing with one of those key emotions—fear.

That idea caused me to look up the word “fear” in the dictionary. Here is what I found:

… an unpleasant often strong emotion caused by anticipation or awareness of danger.

And then I found all these related terms: dread, fright, alarm, panic, terror, and trepidation. The subtle nuances between these words reminded me again of the power of language to reflect the complexity of our emotions.

Fear is the most general term in the group, and implies anxiety and usually loss of courage. I think that is the way a lot of us feel about our financial futures:

If the dangers are real, then our fears are real and well-founded. We must come up with ways to avoid or protect ourselves against the dangers. This is the challenging and creative part of financial planning.
If the dangers are not real, then our fears are not real. We must understand why we have these fears and discover ways to overcome them. This is the more challenging and difficult part of financial planning.

My favorite definition was the one for “panic”—unreasoning and overmastering fear causing hysterical activity. That is our number one job at Aspire—to sort through your financial fears with you, to figure out which ones are real and which ones are not, and to help you, above all, avoid panic.