Does Your Mood Affect Your Investment Choices?

Kate Levinson investment choices
Dr. Kate Levinson November 5, 2020

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Can having a bad or good day affect your investment choices? Before you decide to buy or sell that next stock ask yourself why you are doing it.

Dr. Kate Levinson, author of Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money and a licensed family therapist, shares the role that emotions play in financial decision making. She and Doug explore the question of why many women avoid financial responsibilities in their day-to-day life. She tries to empower women to take an interest in their financial situations.

Everyone is vulnerable, and it’s important to recognize that even the wisest decisions might not turn out how we want. Learn how to build a positive relationship with your money!

Is “loss aversion” costing you more than you think?

Doug reviews his interview with Nobel Prize winner Daniel Kahneman about loss aversion and offers tips on how to fight against it.

To listen to Doug’s original interview with Daniel Kahneman, click here. If you are interested in learning how Doug avoids loss aversion in his personal portfolio, watch How Do You Manage Your Own Money?

To follow Dr. Kate Levinson visit her website or read her book, Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money. Dr. Levinson is also on Facebook and Twitter.

If you’re not already receiving updates on new episodes, sign up now, and as a special bonus, receive Doug’s free ebook The Retirement Planning Book.

Watch Does Your Mood Affect Your Investment Choices? on YouTube.

Read the Transcript

Interview with Dr. Kate Levinson

Dr. Kate Levinson, who’s an author and a marriage and family therapist, shares insights on why women need to be more involved in making financial decisions in the family/relationships.

Douglas Goldstein: I’m very excited to have on The Goldstein on Gelt Show, Dr. Kate Levinson, who is the author of a book called Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money.

Kate is also a licensed marriage and family therapist. I sometimes make a joke and say that I’m a financial advisor, and a marriage counselor too.

I say this because people come into the office, and they are so tied up in knots, especially between couples about their money, that I spend a lot of time talking to them to try and bring them down from on high, so that they can begin to talk to each other.

How do you see people developing the tools to be able to talk about money in a constructive way with one another?

How Can Women Become More Confident in Talking about Money?

Dr. Kate Levinson: I’m so happy to hear that you do that, Doug, because if I have any mission it’s that we start talking about money, that we break the taboo against talking because we have so much to learn from one another.

It’s a way for us to work out our issues around money.

The first is that you recognize, as you well know, that money is emotional, that we have an emotional relationship with it, and that to have a healthy relationship with money, we need to work with that.

We need to understand ourselves and understand our partners, as we would any other emotional aspect of our lives.

Douglas Goldstein: How do you do that? Let’s bring it down to real life because this literally happens every week in my office.

We like to think that in today’s world, people are more equal about how they handle things, but it’s just not my experience.

I’m not qualifying this - I’m just saying it’s not my experience, usually when I have a meeting with a husband and wife, especially if they’re older.

However, even with younger couples, the man kind of takes over and the woman just nods politely, and sometimes she’ll just say it straight out: "Okay, Doug, why don’t you and my husband just take care of this"?

I’m a bit floored and think, “Wow, don’t you understand that you’re part of this relationship too"? What will be a good thing for me to say at that point, to bring everyone together?

Women Shouldn’t Give up All Their Power to Their Partners

Dr. Kate Levinson: I think that encouraging women, and helping them realize that they are way too vulnerable when they give up all of their power to their partner, is important.

I understand. I think we’ve been acculturated to have a man take care of us and that doesn’t change with the second wave of feminism.

These are long-held habits that are going to take generations to change, and I think they’re beginning with younger women, but they’re embedded in us.

Women need to understand that their husband probably will die before them, and to not have knowledge about how your finances are invested, or what you have is, actually a catastrophe waiting to happen. You’re not alone in this.

Women come to me all the time, who want to get through their fears of engaging so that they can engage with their money lives more fully, but even to get to that point where you have to wake up to the fact that often times, men, in the surveys that they take, overestimate their capabilities and women underestimate their capabilities.

Douglas Goldstein: Women are actually better investors, the studies seem to show. This is what’s so funny about it.

Dr. Kate Levinson: That’s right, but the experience is that we don’t know what we’re doing and that until we know 99%, till we have that confidence, we let someone else make the decisions.

We’re never going to have that confidence.

Women never have that confidence. Men can, but women never do it. We’re not wired that way, so wherever we begin is the place to begin.

We don’t have to have complete knowledge of all the financial markets.

Douglas Goldstein: No one does. The investing that most people do, I don’t think it’s about having great knowledge about the financial markets.

It’s about understanding yourself.

It’s a little bit ironic that we’re discussing about how women aren’t involved in the world of finance, because when I started, I was partners with my mother, who was a vice president in a major firm.

My mother’s mother was one of the first women to be licensed as a stockbroker in America, so my grandmother and mother were financial advisors, and then my wife is a licensed investment advisor as well.

To me, it seems normal for women to be involved in it.

Money Decisions Can’t Always Be Rational

Dr. Kate Levinson: It’s very unusual. I think that’s one of the problems.

My belief is that we need to feminize money more, if you will, that our relationship to money has been purely financial.

We’ve been taught that our feelings, our emotions about money, are dangerous to sound practices, and as your grandmother knew, and as your mother knows, and as you know, and your wife knows, bringing emotion and bringing our values, and our longings, and our desires to our financial life, helps us to make better choices.

The dominant belief in financial markets and services has been that you’re supposed to be rational.

Again, I think there are so many ways that women feel alienated and overwhelmed by looking at their finances, and that’s another thing to tell the women that what they bring to the table, is really important.

That their partner or husband won’t always make the best decisions for the family as a whole; you need the intelligence.

We need the intelligence; our own intelligence. They need their own intelligence to be included in any decisions because it will be a more balanced portfolio, and a more balanced financial life.

Douglas Goldstein: That is true. These are real facts here that men statistically will pre-decease their wives, and this is something I see all the time.

Widows come into my office and they’re not prepared to handle money because their husband did everything. They could be living on their own for decades, and it’s really crazy that people are not sharing the responsibility.

Dr. Kate Levinson: I’m sure you’ve seen this as well, where the woman puts total trust in their husband, but meanwhile the husband’s gambling or buying a yacht, or having a bad business decision investment.

Douglas Goldstein: You said the word “vulnerable,” before.

I think it’s interesting because you said - you were advising me and I appreciate it - I should let the women know that they’re very vulnerable if they let their husbands handle everything. But they might be thinking, "It’s not that I’m vulnerable. It’s that I trust him." But isn’t it part of trust to allow yourself to be vulnerable?

The Market Is Unpredictable and We Are All Vulnerable

Dr. Kate Levinson: We need to recognize that we’re all vulnerable, that even the wisest decisions might not turn out that well.

The market is unpredictable, and our needs in the future are unpredictable.

It’s this idea that if we just do it right, we don’t have to worry, and I think that we all would like to be taken care of that way.

Unfortunately, I don’t think that’s true. I don’t think there is a magic formula. It can be like the Bernie Madoff scandal. People we thought were making all this money actually weren’t.

I think that it’s recognizing that we’re all vulnerable and that it’s unpredictable, and that we’re making the best decisions we can, and there isn’t someone who’s going to decide everything for us.

We have to participate.

In terms of protecting ourselves, the best we can do is to be engaged. Maybe we don’t decide which mutual fund, and we don’t decide which stock, but we say this is the kind of risk we can tolerate, or we make sure that the advisor we’re working with is really looking after our own good.

Not all advisors are.

How to Follow Dr. Kate Levinson

Douglas Goldstein: We’ll have to wrap up at this point, but I just want to stress that picking individual investments is a technical thing to do.

It doesn’t matter whether the husband, or the wife, or the advisor does it for you, but what is important to do is talk about the bigger picture things; what your goals are, why you are investing in the first place, and how much risk you can really stand.

Kate, you have a huge amount to talk about, and I have a whole list of other questions I want to ask. Unfortunately we are just about out of time today. Tell me, in the last few seconds, how can people follow you and follow your work?

Dr. Kate Levinson: My website is, and the book, even though it was written with women in mind, has been of benefit to men who have gotten past the subtitle with lemons.

The book is Emotional Currency, and I will be doing a webinar shortly, a repeat webinar with the Abbot at the San Francisco Zen Center, and I’m doing a webinar for women with inherited wealth the beginning of next year.

All of that’s on my website. You can find me on Facebook and the Twitter handle is @DrKateLevinson.

Douglas Goldstein: Okay. Dr. Kate Levinson, thanks so much for taking the time.

Dr. Kate Levinson: It’s been a pleasure, Doug. Thank you for all your good work in the world.

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